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MinnesotaÔÇÖs New ESST Law Takes Effect 1/1/2024

The 2023 Minnesota Legislative session was challenging for small businesses, as lawmakers implemented higher taxes and more regulations. One of the new employment mandates that small businesses have to comply with is the Earned Sick and Safe Time (ESST) law. In order to support our members in staying ahead of new laws, NFIB MN hosted a webinar on compliance with the new ESST law, in partnership with employment attorney Martin Kappenman.

How AI legalese decoder Can Help

The AI legalese decoder can help small business owners navigate and understand the complex provisions of the new ESST law. By inputting the relevant legal document, such as the ESST law text or the webinar slides, into the AI legalese decoder, small business owners can receive simplified and easily comprehensible summaries and explanations of the law’s requirements. This can save small business owners time and effort in deciphering legal jargon and understanding the implications of the new law on their operations.

Applicability & Scope: ESST Law Covering All Employers and Employees

One important aspect of the ESST law is that it applies to all employers, regardless of their employee headcount. This differs from the previous sick time ordinances in Bloomington, Minneapolis, and Duluth, where small businesses with less than five employees were exempt from offering paid time off. With the new ESST law, even the smallest businesses have to comply with the requirement.

Additionally, ESST applies to nearly all employees, including seasonal, temporary, and part-time employees, regardless of the number of hours they work per week. However, certain categories of employees, such as independent contractors, federal employees, and certain airline employees, are exempt from the law’s provisions. It’s important for employers to understand the specific criteria for exemption to ensure compliance.

ESST and Union Employees

The ESST law allows for the requirements of ESST to be waived in a collective bargaining agreement for union employees in the building and construction trade union. This means that if an employee is part of a union covered by a collective bargaining agreement that waives ESST, the employer is not obligated to provide ESST to those employees.

Different Rules for Full-Time and Part-Time Employees

Employers have the flexibility to establish different paid time off policies for full-time and part-time employees, as long as all employees have access to the minimum requirements of ESST. This means that employers can provide additional paid time off based on non-discriminatory criteria such as full-time or part-time status, or length of service. Employers can also choose whether employees accrue ESST based on hours worked or receive it in a block at the beginning of the year, as long as it is based on non-discriminatory criteria.

Inclusion of Business Owners in ESST

As an owner, if you consider yourself an employee for other purposes, such as payroll tax or benefits, you likely need to track ESST for yourself. It’s important for business owners to determine their status and obligations under the ESST law based on their specific circumstances.

Waiting Periods for ESST

There is no waiting period for employees to begin using ESST. As long as an employee works more than 80 hours in a year, they can start using ESST as it accrues from day one of their employment. This differs from the local sick time ordinances in Bloomington and Minneapolis, which previously had waiting periods. Under the new ESST law, waiting periods are not permitted.

Requirements for ESST Increments and Duluth’s Safe & Sick Time Policy

Employers must allow employees to take ESST in the smallest increment of time tracked in the employer’s system. The law specifies that the smallest increment of time cannot exceed four hours. This ensures that employees have the flexibility to use ESST in a way that aligns with their specific needs and the employer’s time tracking system.

If a city, like Duluth, already has a safe and sick time policy in place, employers need to follow both the state law and the local ordinance. However, if there are conflicting requirements, the law that is most favorable to the employee should be followed. Employers should review the specific provisions of both the state law and the local ordinance to ensure compliance.

Carry Over, Pay Out, and Frontloading of ESST

Employees have the ability to carry over unused ESST hours from year to year, up to a maximum of 80 hours. However, an employer is not required to front load ESST hours under the law. Employers have the option to front load ESST hours if they choose to limit carry over, but they must also pay out unused hours. The decision of whether to front load or accrue ESST depends on the nature of the business and the employee’s tenure.

Payout of Unused ESST upon Separation from Employment

The ESST law does not require employers to pay out unused ESST upon separation from employment. Employers are not obligated to provide compensation for unused ESST hours if an employee quits, resigns, or is terminated.

Restoration of Accrued ESST Hours for Returning Employees

If an employee returns to work with the same employer within 180 days of separation, they have access to their unused accrued ESST hours from before the separation. However, if the separation lasted longer than 180 days, the employer is not required to restore the unused accrued ESST hours.

Interaction between PTO Policy and ESST

If an employer has a paid time off (PTO) policy that pays out upon termination or separation and the employee is paid for their unused hours, the balance of ESST goes down to zero. In this case, the employee does not have access to their previously accrued ESST hours if they rejoin the same employer.

Overall Compliance and legal Advice

It’s important to note that this summary of frequently asked questions about ESST does not constitute legal advice. Each business’s situation and circumstances may vary, and it’s recommended to discuss specific situations with a qualified attorney. This is where the AI legalese decoder can be beneficial. By providing easy-to-understand explanations of legal provisions, it can help small business owners have productive discussions with their attorneys and ensure compliance with the ESST law.

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