Minnesota’s 2024 Legislation Updates: Employment Law

At a Glance

• Minnesota Governor Tim Walz has signed several new laws bringing updates and changes to the state’s employment law landscape, including changes and updates to Minnesota’s earned sick and safe time law, the Minnesota Paid Leave Law and Minnesota’s pregnancy accommodation law.
• The new laws further provide for a method of using oral fluid (saliva) drug, cannabis and alcohol testing for employees or job applicants, clarify Minnesota’s laws prohibiting employee misclassification, standardize the minimum wage in Minnesota and update the Minnesota Human Rights Act.
• The new laws also void employee non-solicitation restrictions in service contracts.
• The legislature also passed a law imposing new requirements on employers — beginning January 1, 2025 — to include salary ranges and a general description of benefits in job postings.
• Gov. Walz has also signed a new law setting minimum compensation for Uber and Lyft drivers.

As we reported in an alert last year, in 2023 the Minnesota Legislature enacted sweeping changes to the employment law landscape through the Jobs and Economic Development and Labor Omnibus Budget Bill. Now, Governor Tim Walz has signed the 2024 Omnibus Labor and Industry Policy Bill and the 2024 Transportation, Housing, and Labor Omnibus Budget Bill, which bring about several notable changes to Minnesota law covering pregnancy accommodations, restrictive covenants in service contracts, minimum wage, information required in job postings, and oral fluid drug, cannabis, and alcohol testing. The bills also contain provisions enacting changes to Minnesota’s earned sick and safe time law, paid family and medical leave, and worker misclassification, and changes to the Minnesota Human Rights Act have also been enacted.

This article highlights some of the more notable changes, but employers should review their practices and policies and develop a plan to revise them prior to applicable effective dates to ensure compliance with the latest changes to the employment law landscape in Minnesota.

Table of Contents

1. Changes to Earned Sick and Safe Time, Minn. Stat. § 177.27, 177.50, 181.032, 181.9445, 181.9446, 181.9447, 181.9448
2. Modification to the Minnesota Paid Leave Law, Minn. Stat. §§ 268B.001 et seq.
3. Modifications to Pregnancy Accommodations, Minn. Stat. § 181.939, subd. 2
4. Allowing “Oral Fluid Testing” for Cannabis or Drug and Alcohol Testing of Employees and Job Applicants, Minn. Stat. §§ 181.950, 181.951, 181.953
5. Updates to Employee Misclassification Prohibitions, Minn. Stat. §§ 177.27, 181.722, 181.723
6. Changes to the Minnesota Human Rights Act, Minn. Stat. § 363A et seq.
7. Requirement for Providing Salary Ranges in Job Postings, Minn. Stat. § 181.173
8. Restrictive Employment Contracts Void in Service Contracts, Minn. Stat. § 181.9881
9. Modifications to Minimum Wage, Minn. Stat. §§ 177.23, 177.24
10. Minimum Pay for Uber and Lyft Drivers, Minn. Stat. § 181C.01 et seq.

Changes to Earned Sick and Safe Time, Minn. Stat. § 177.27, 177.50, 181.032, 181.9445, 181.9446, 181.9447, 181.9448

As reported in last year’s alert, Minnesota created a statewide sick and safe time leave law, entitling employees as of January 1, 2024, to accrue at least one hour of sick and safe time for every 30 hours worked, with various requirements related to sick and safe time. The new law provides that employers who fail to allow the use of earned sick and safe time under Minnesota law will be liable to the employees who were not provided or allowed to use sick and safe time an amount of money equal to that time that they were not provided or not allowed to use, plus an additional equal amount as liquidated damages. The law also provides that employers who fail to keep records sufficient to determine whether employees have been provided the sick and safe time to which they are entitled are liable to the employee for an amount equal to 48 hours of earned sick and safe time for each year the earned sick and safe time was not provided — again, plus an additional equal amount as liquidated damages.

The new law also amended the language in the statute addressing the wage rate to be paid to employees for their use of earned sick and safe time. The law previously provided that earned sick and safe time must be paid “at the same hourly rate as the employee earns from employment.” The law now provides that earned sick and safe time is to be paid at the employee’s “base rate,” defined to mean:

1. for employees paid on an hourly basis, the same rate received per hour of work;
2. for employees paid on an hourly basis who receive multiple hourly rates, the rate the employee would have been paid for the period of time in which leave was taken;
3. for employees paid on a salary basis, the same rate guaranteed to the employee as if the employee had not taken the leave; and
4. for employees paid solely on a commission, piecework, or any basis other than hourly or salary, a rate no less than the applicable local, state, or federal minimum wage, whichever is greater.

The amended statute also makes clear that “base rate does not include commissions; shift differentials that are in addition to an hourly rate; premium payments for overtime work; premium payments for work on Saturdays, Sundays, holidays, or scheduled days off; bonuses; or gratuities . . . .”

Moreover, the law adds to the list of reasons an employee may use earned sick and safe time, specifying that sick and safe time is available for making funeral arrangements or to address financial or legal matters after the death of a family member. In addition, the new law provides that an employer may not require reasonable documentation to support the use of earned sick and safe time until the employee takes leave for more than three consecutive scheduled work days.

The new law also makes some changes to employer recordkeeping and statement requirements. Employers will no longer be required to provide earned sick and safe time on pay statements but may “choose a reasonable system” to provide each employee’s total number of earned sick and safe time hours available and those used during each pay period. Records must be kept for three years. In addition, employers will no longer be required to provide sick and safe time to employees for which work hours are tracked in increments smaller than 15 minutes, but employers will continue to be prohibited from requiring the use of earned sick and safe time in greater than 4-hour increments.

The above changes are effective immediately.

Finally, the new law provides, and the Minnesota Department of Labor and Industry has explained, that when employers provide employees with more paid leave than the minimum required under Minnesota’s earned sick and safe time leave law for absences from work due to personal illness or injury, then the additional time must meet the same requirements that apply to the rest of their employees’ earned sick and safe time, including requirements about notice, documentation, and anti-retaliation.  The accrual requirements of earned sick and safe time, however, do not apply to such additional time (e.g., paid time off or vacation leave) over the statutory minimum requirement for sick and safe time.  Moreover, employers may continue to use their notice and documentation requirements that were in effect as of December 31, 2023, when their employees use leave that accrued on or before that date.  Employers may not, however, require employees to use leave that accrued after January 1, 2024, before using leave time that accrued before January 1, 2024.

This provision is effective January 1, 2025.

Modification to the Minnesota Paid Leave Law, Minn. Stat. §§ 268B.001 et seq.

As reported last year, Minnesota also passed a paid family and medical leave law in 2023 requiring all Minnesota employers — beginning January 1, 2026 — to provide almost all employees paid family and medical leave for up to 12 weeks, with partial wage replacement related to a serious health condition, and up to 12 weeks with partial wage replacement related to leave for pregnancy, bonding, safety, family care, or a military member’s active-duty service or impending call to active duty in the United States armed forces, with a cap of no more than 20 weeks of total combined leave per benefit year. The new law makes certain changes to Minnesota’s Paid Leave Law, including:

• Increasing the payroll tax from 0.7% established in 2023 to 0.88%.
• Allowing an authorized representative to apply for leave on the employee’s behalf.
• Adding or clarifying several definitions, including for terms such as “benefit year,” “financially eligible,” “initial paid week” and more.
• Providing a mechanism for excluded entities to opt into coverage.
• Requiring employers to grant leave in minimum increments of one calendar day.
• Providing that employers may provide employees with wage replacement during an absence, but if the total amount of paid benefits and supplemental benefits paid exceed the employee’s usual salary, the employee must refund the excess to the employer or the paid leave division.
• Providing that if an employer provides wage replacement to an employee for weeks that should be paid by the division, the department may reimburse the employer for those weeks.
• Providing that employees may receive disability insurance payments in addition to family and medical leave benefits, and disability insurance benefits may be offset by family and medical leave benefits paid to the employee pursuant to the terms of a disability insurance policy.
• Providing for a detailed mechanism for appealing commissioner determinations.
• Providing for changes in how premium rate adjustments are made.

The new law also provides that small employers with 30 or fewer employees and for which the average wage for the employer is less than or equal to 150% of the state’s average wage in covered employment are eligible for different premium rates — namely, 75% of the annual premium rate, with 25% paid by the employer and the remaining paid by the employee through a wage deduction if any additional amount is due.

Moreover, if employers change from a private plan to a state plan or vice versa, the plan under which the employee was covered when benefits are approved must continue paying benefits, but if the employee requests an extension or if recertification is required, the employee may reapply for benefits with the new plan.

Effective dates for specific changes and clarifications in the law vary, but note that under the 2023 law, payment of benefits and the payroll tax supporting the program will go into effect on January 1, 2026.

Modifications to Pregnancy Accommodations, Minn. Stat. § 181.939, subd. 2

Minnesota’s pregnancy-accommodation law has also been updated to provide that during any leave provided as an accommodation for a pregnant employee’s disability, employers must maintain coverage under any group insurance policy, group subscriber contract or health care plan for the employee and any dependents, but the employee must continue to pay any employee share of the benefits’ cost.

These changes will be effective August 1, 2024.

Allowing “Oral Fluid Testing” for Cannabis or Drug and Alcohol Testing of Employees and Job Applicants, Minn. Stat. §§ 181.950, 181.951, 181.953

The new law adds an additional method by which employers may test an employee or job applicant for drugs, cannabis or alcohol. Rather than only using a testing laboratory, employers may use “oral fluid testing” — that is, saliva samples.

When drug, cannabis or alcohol testing is authorized by law, employers may request an employee or job applicant undergo such oral fluid testing, and the employer must inform the employee of the test result at the time of testing. If the test is positive, inconclusive or invalid, then the employee or job applicant may, within 48 hours, request that the employer utilize a testing laboratory at no expense to the employee or applicant. If the testing laboratory result is positive, any confirmatory retesting requested by the employee or job applicant is at their own expense.

This new law will be effective August 1, 2024.

Updates to Employee Misclassification Prohibitions, Minn. Stat. §§ 177.27, 181.722, 181.723

This new law imposes harsher penalties on employers for misclassifying employees. In addition, it changes the independent contractor test for those performing building construction or improvement services. Under the new statute, no person may:

• Fail to classify, represent, or treat an individual who is an employee as an employee under applicable law.
• Fail to report a person as an employee when required by applicable law.
• Require an employee to misrepresent or misclassify themselves as non-employees, including as an independent contractor.

Officers or agents who engage in the above prohibited activities can be deemed personally liable. Compensatory damages to any misclassified person may be available, along with penalties of up to $10,000 for each misclassified person and each violation, and a penalty of up to $1,000 for each person who fails to cooperate or obstructs an investigation into violations of the classification law. Additional clarifications and additions specific to construction employees and contractors have also been added.

Changes to Minnesota’s employee misclassification law will be effective July 1, 2024.

Changes to the Minnesota Human Rights Act, Minn. Stat. § 363A et seq.

Gov. Walz has also signed into law several noteworthy changes to the Minnesota Human Rights Act. For example, the term “discriminate” now includes harassment generally (rather than only sexual harassment), and the definition of a “disability” has been expanded to include “an impairment that is episodic or in remission and would materially limit a major life activity when active.”

The definition of “familial status” has also been clarified, referring to “the condition of one or more minors having legal status or custody with (1) the minor’s parents or the minor’s legal guardian or guardians or (2) the designee of the parent or parents or guardian or guardians with the written permission of the parent or parents or guardian or guardians.” The definition has also been expanded to include “residing with and caring for one or more individuals who lack the ability to meet essential requirements for physical health, safety, or self-care because the individual or individuals are unable to receive and evaluate information or make or communicate decisions.”

Religious associations, corporations, societies and educational institutions may still limit admission, give preference based on religion or denomination, and take other actions within the limits of the First Amendment and the Minnesota Constitution, but only if the conduct is related to the religious and educational purpose for which the particular entity is organized. This exemption does not apply to secular business activities engaged in by a religious association, corporation, society, or educational institution, the conduct of which is unrelated to the religious and educational purposes for which it is organized.

Finally, respondents found to be in violation of certain provisions of the Minnesota Human Rights Act must pay a civil penalty to the state based on “the seriousness and extent of the violation, the public harm occasioned by the violation, whether the violation was intentional, and the financial resources of the respondent.” Where the respondent engaged in unfair discriminatory practices, courts must order respondents to pay compensatory damages, including mental anguish or suffering — up to three times the damages actually sustained. If a political subdivision is a respondent, however, punitive damages may not exceed $25,000. Courts may also award hiring, reinstatement, restoration to membership in a labor organization, admission to apprenticeship or training programs, and other relief befitting the circumstances.

These changes will be effective August 1, 2024.

Requirement for Providing Salary Ranges in Job Postings, Minn. Stat. § 181.173

The new law now requires employers with 30 or more employees in Minnesota to include a salary range — based on a good-faith estimate — in each job posting, as well as “a general description of all the benefits and other compensation” that the employer will provide, such as health or retirement benefits. The salary range and benefits must be included in postings the employer makes directly as well as postings made indirectly through third parties, electronically or in print. The law does not require employers to make job postings, but when job postings are made, employers must comply with the salary range and benefit-disclosure requirements of the new law.

Employers who do not plan to offer a salary range must list a fixed rate of pay, and open-ended salary ranges are not permitted.

This law is effective January 1, 2025.

Restrictive Employment Contracts Void in Service Contracts, Minn. Stat. § 181.9881

This new law makes restrictive employment covenants void in service contracts, providing that “[n]o service provider may restrict, restrain, or prohibit in any way a customer from directly or indirectly soliciting or hiring an employee of a service provider.”  

The new law provides for one exemption, stating that the prohibition on such restrictive covenants does not apply to workers who consult for computer software development and related services through a service provider and want to become permanently employed by a customer at a later date.

This provision is effective July 1, 2024, and it only applies “to contracts and agreements entered into on or after that date.”

Modifications to Minimum Wage, Minn. Stat. §§ 177.23, 177.24

The new law also provides greater standardization of the minimum wage in Minnesota, removing the carveout for a lower minimum wage for small employers, employers of foreign workers on J nonimmigrant visas in the hospitality industry, and employers of individuals under 18 years of age.

In addition, the annual minimum wage increase is now calculated by taking the lesser of 5% (increased from 2.5 percent) or the percentage calculated by the commissioner (rounded to the nearest cent), increasing how much the minimum wage can rise each year because of inflation.

The new minimum wage law is effective January 1, 2025, but the amended method of calculating the minimum wage increases each year is effective August 1, 2024.

Minimum Pay for Uber and Lyft Drivers, Minn. Stat. § 181C.01 et seq.

Gov. Tim Walz has also signed a new law which, among other things, sets a minimum rate of pay for transportation network company (rideshare) drivers, such as Uber and Lyft drivers. Uber and Lyft drivers are required to be paid a minimum of $1.28 per mile and $0.31 per minute — before any tips — with a minimum of $5.00 for any single ride. An additional $0.91 per mile is charged for any transportation in a vehicle with wheelchair access, and if the rider or company cancels a ride after the driver has departed to pick up the rider, the rider must pay 80% of any cancellation fee.

The minimum compensation that drivers receive must be calculated over a reasonable time period, not to exceed 14 calendar days, meaning that the minimum rates are not calculated for every single trip, but are rather based on an average over time.

The new standards for rideshare driver pay are effective December 1, 2024.