LaCanne-Liz-Fonts-ESST-Podcast

Minnesota's Earn, Stick, and Save Time (ESST) Act requires employers to provide paid time off to employees. The Act applies to all employers with at least one employee and covers various situations, including physical illness, domestic abuse, and weather emergencies. ESST can be accrued or front-loaded, and employers must choose a method that suits their business. Noncompliance with the law can result in penalties and lawsuits. Employers with existing paid time off policies may need to update them to comply with ESST. Employers must also track and pay ESST, reflecting it on employee pay stubs. Welcome to the first episode of Bassford Briefs. Today, we will be talking about Minnesota's Earn, Stick, and Save Time, which is effective January 1, 2024. My name is Olivia Lisvance and I am joined by my colleague Beth LeCann. We are both attorneys in Bassford-Rumley's Employment Litigation and Advice Practice Group. Now, normally our practice group sends out employment-related legal updates via the Workweek, but today we'll be supplementing the Workweek with this podcast. The Act, Earn, Stick, and Save Time, requires employers to provide the employees pay time off, also known as ESST. The Act may require a significant change for some employers and their time off policies and only minor changes for others. Regardless of which group the employer falls into, every employer is likely to have some work to do to ensure complying with this new law. Now, this podcast will provide an overview of the law and then we'll also dive into a discussion about the practicalities of ESST. Thank you, Olivia. Before we get into the substantive content, we have a few disclaimers. After all, what would a podcast by attorneys be without disclaimers? The first disclaimer is that the content of this video should not be relied upon as legal advice from Bassford-Rumley and does not create an attorney-client relationship between Bassford-Rumley and any listener or reader of the materials. The other disclaimer is that we will not be addressing the local city ordinances that require paid time off. There's several cities in the state of Minnesota that do require paid time off similar to the state law and those include Bloomington, Duluth, Minneapolis, and St. Paul, but we will not be touching on those in this podcast. With those disclaimers in mind, let's dive into the important piece of this podcast. And Olivia, tell me, what is the Earned Sick and Safe Time Act about? Yeah, so the Earned Sick and Safe Time is a paid leave that employers must provide to each employee in Minnesota. So employers have to provide each employee at least one hour of paid sick and safe time for every 30 hours worked up to at least 48 hours of accrued earned sick and safe time a year. That sounds like it is going to be a significant impact for employers, but does it apply to all employers? Is there a minimum number of employees that an employer has to have in order to be required to provide ESST? Yeah, so Minnesota ESST is pretty broad. It applies to any individual or business with at least one employee. So quite a few individuals and businesses will fall into this category. So a single employee triggers ESST. Is there any situation where an employer doesn't have to provide ESST? Only in limited circumstances. So generally ESST must be provided when an employee performs at least 80 hours of work in Minnesota. So temporary and part-time employees are covered under the law. A few of the limited circumstances where ESST is not required is when there are independent contractors, federal employees, building and construction employees that are subject to a collective bargaining agreement in which ESST is waived. Additionally, out-of-state employees who perform less than 80 hours of work in Minnesota are not covered under this law. So ESST applies pretty broadly to employers within the state of Minnesota. Is it equally as broad in how employees can use sick and safe time? It is. So employees can use their earned sick and safe time for things employers would expect, such as the employees, physical illness, treatment or preventative care or that of a family member. But there are some unique provisions to this Act as well where it covers absence due to domestic abuse, sexual assault or stalking of the employee or a family member. In addition to that, closure of the employee's workplace due to weather or public emergency or closure of a family member's school or care facility due to weather or public emergency is also covered under the law. So putting that into context, if my child's daycare is closed because of an RSV outbreak, is that covered? That is absolutely covered. So that would be a family member's care facility due to weather or public emergency. And you mentioned family member and we've obviously keyed in on how broad the new law is. Is the definition of family member or what is considered a family member equally as broad? It is. It is very broad. So employers will expect coverage for children, spouse, parents. But the Act goes beyond that to include a designated individual that an employee designates annually. So it's important for employers to know that it does go beyond immediate family members, which they may be used to seeing in these kinds of policies and laws and extends to anyone who the employee designates. We know who is eligible for ESST and why ESST can be used. What about how ESST is calculated? So there are two methods that comply with ESST. There's the accrual method and the front-loading method. And the key difference between these two is how the hours become available. I'm sorry, when the hours become available and what the employers can do with unused sick and safe time hours. So the accrual method, this is where the employer provides each employee with one hour of sick and safe time for every 30 hours worked up to the 48 hours. Accrual in this situation begins when the employee starts working for an employer. Employers then must allow each employee to accrue up to at least 48 hours per year, carry it over from year to year until the 80-hour maximum accrual is reached. Front-loading, on the other hand, is when the ESST hours are made available to the employee at the beginning of the employer's calendar year. So if an employee starts working within that calendar year, the full sick and safe time hours must be given at the start of their employment. Unlike the accrual method, the front-loading method doesn't require employees to carry over unused ESST hours. And it doesn't permit employers to prorate or part-time or seasonal employees either. If an employer uses the front-loading method, what or how many hours do they have to front-load? So the employer has two options. They can do 48 hours or 80 hours. If the employer chooses to front-load 48 hours, this will require the employer to pay out any unused sick and safe time hours at the end of the employer's calendar year. If the employer chooses to front-load 80 hours, the employer is then not required to pay out the unused sick and safe time hours. So an employer has two options. Well, three actually. They have three options of how to implement an ESST policy. What should employers think about or how do they choose what method to use? Yeah, that's a great question. So choosing the appropriate method is really going to depend on the employer's business. They should consider their employee base and administrative and management resources available to keep track of this law. We've created a chart that summarizes the earned sick and safe time and some pros and cons to each of these methods. We'll link that to this podcast for listeners to reference. Sounds like a lot of work for employers, especially small business owners. Is it really that big of a deal if an employer doesn't comply with the new law? Yes, it is. It's a really big deal. So the Minnesota Department of Labor and Industry is responsible for enforcing these ESST requirements. Noncompliance can lead to administrative proceedings and civil lawsuits. So there are penalties, fines that the employers can be subject to, but effective employees can bring a civil lawsuit to address ESST violations. And in addition to recovering damages, they can recover attorney's fees, which we all know can add up pretty quickly. So it's important for employers to understand the law and comply with it. So, you know, we've talked about a lot about what the law says. Let's talk about what ESST means for employers in practice. So, Gus, if an employer already has an existing paid time off policy, do they need to do anything? They do, depending on what their policy says and does. The good news for employers that have existing paid time off policies is they don't have to provide an additional 48 hours or whatever it may be so long as their policies comply with the statute, both as to the amount earned and how it can be used. This is going to require employers to look at their, take a look at their policies to make sure that they, it reflects some of the changes that the law has, including those unusual circumstances of domestic violence or a closure of a daycare or school. Those things need to be factored into policies to the extent they aren't already in the policy. Even if an employer has a policy that meets the minimum requirements, they do need to provide notice to their employees under the statute. And that might include updating the employee handbook, if one exists, or posting a notice somewhere within the work site that an employee can access or easily access. Okay, so reviewing policies and updating those policies, letting employees know about the new law, do employers then need to do anything special to track or pay ESST? They do. The tracking of ESST is something that is going to be reflected on an employee's pay stub. Employers should already have certain things on a pay stub as required by another statute, which we won't get into. When the ESST becomes effective, the pay stubs that an employer provides to their employees has to reflect the amount accrued if the employer uses the accrual method, and then the amount available and the amount used in the pay period. This is a good time for employers to check in with any payroll company they use to issue and process payroll to make sure that that company is including earned, sick, and safe time information on pay stubs. As far as how much or how it's paid, ESST has to be paid at the employee's standard hourly rate. Okay, so what does this look like in terms of using it? What if an employer, an employee only needs to use part of the day or needs part of the day off? Yeah, that's an important question and nuance to this. If an employer has, an employer can require that the hours be used or subtracted based on the increment of time that the employer uses for payroll purposes up to four-hour increments. So, in other words, if an employer's payroll system only tracks 30-minute increments and an employee is gone for two hours and 15 minutes, then the employer can deduct two hours and 30 minutes of earned, sick, and safe time. Okay, and what about exempt employees? Assuming I'm an employer that uses the accrual method, how do exempt employees accrue ESST hours? Yeah, so, yes, exempt employees are exempt employees are presumed to work 40 hours a week for purposes of calculating the amount of earned, sick, and safe time that the exempt employee is accruing. Again, as you noted in your question, this is only applicable in circumstances where an employer uses the accrual method. The other note to that is if an employee, an exempt employee's regular work schedule is less than 40 hours, then accrual is based on the actual regular workweek hours that the exempt employee works. Okay, so let's talk about the other end of that. What about employees who only work part-time or employees who work overtime? That's also a great question that can be pretty complicated, but we'll try to make it a little easier to understand. In circumstances where the employer has a part-time employee, they can prorate the accrual so long as the employee is still accruing one hour for every 30 hours worked. An example might be an employee who works 15 hours per pay period. The employer may give 0.5 hours or a half hour of earned, sick, and safe time for that pay period. The other option the employer can do is wait until the second pay period during which the employee has worked 30 hours to give the full one hour of earned, sick, and safe time. If an employee is working overtime, that time also has to be calculated in the accrual of ESST. If an employee works, say, 80 hours, you know, 40 hours per week during a pay period plus an additional 10 hours of overtime during that same two-week period, that employee has earned three hours of sick and safe time that must be put into their bank of time off. Okay, so you can accrual when you work overtime. What if the employee is out sick or on vacation? Are those hours still accruing? They are not. It is only based on the hours worked that accrual is calculated. So, you know, this new law is a lot to understand for employers and employees. Are there any protections in place to mitigate some hardship for the employers or prevent misuse by the employees? The nice thing about the statute is that it does provide some ways for an employer to mitigate hardship or the impact of an employee's time away from the business. One way is to require employees providing notice if they are going to be taking time off. The caveat to that being an employer can only require notice if they have a written policy that puts – that sets out what an employee has to do in order to give notice. And if it's a situation where it's a foreseeable use, such as a scheduled doctor's appointment, notices can only be required up to seven days before that appointment. If the sick and safe time use isn't foreseeable, so, for example, somebody's daycare closes due to a snowstorm, an employer can only require notice as soon as practicable. So, an employer may require a notice if it's in their policy, but can an employer require documentation related to the ESSC use? They can in certain circumstances, but not for all use. The circumstances where documentation can be required is if an employee is using or has used three consecutive days of ESST. And what can be required or what is sufficient to – for documentation to show that the use was for a purpose covered under the new statute is very dependent on what the reason for being out is. An example is a situation where an employee is – an employee is out due to having to find alternate housing and moving because of a domestic violence situation. In that circumstance, an example of adequate or sufficient documentation might be the signature or signing of a new lease and any moving company's expenses that were paid. Great. So, Beth, we've talked about, you know, reviewing policies, updating the policies, and how these hours can be implemented, whether it's crude or front-loaded, and the notice that needs to be provided by employees, but what about at the end of employment, right? What if an employee resigns or is terminated? Do employers have to pay out the unused ESST? Again, you know, another part of the statute that is nice for employers is that they don't – aren't required to pay out any unused ESST for employees, whether it's under the accrual method or the front-loading method, if that employer is terminated for whatever reason. So, one situation where they – the unused ESST becomes a factor is if that employee is hired back within a certain time frame, that unused ESST they had at the initial termination has to be loaded back into their ESST bank. Thank you, Beth. You know, this is a lot of information, and of course, we didn't cover every aspect of ESST today, but our practice group has written resources on ESST, which are going to be linked in the comments, linked to this section. Additionally, we and our colleagues at Basford Remley are available by phone or email to help employers assess their policies and procedures for compliance with the new ESST laws. If you find yourself in an unfortunate situation of an administrative or legal proceeding due to purported violations of the ESST laws, our practice group members are here to assist you. Finally, if you don't already receive the workweek, there will be a link in the comments section to get added to the distribution list. Basford Remley looks forward to the opportunity to advise and represent employers. That's all we have for our first episode of the Basford Briefs. We hope to see you soon.