Navigating Minnesota’s paid sick leave laws – creating a policy that works Presented by: Heather kaiser, jd HR consultant Heather.kaiser@associatedbrc.com www.associatedbrc.com

National Trends & Minnesota Developments agenda National Trends & Minnesota Developments Minneapolis and St. Paul Sick Leave Rules Implementation

National trend on paid sick leave Wisconsin cities won’t be a target – law passed in 2011 preempting any existing city laws (Milwaukee) and keeping it so only state could take action. No proposed measures.

Minnesota Developments Municipalities preemption bill defeated by Governor Veto: legislature had sought to prevent cities from enacting labor laws like minimum wage and sick leave (however, legislature was able to overturn Minneapolis’ ban on plastic bags…) Minneapolis and St. Paul implemented a sick/safety leave effective 7/1/17 Duluth started study exploring similar law

Minnesota Developments Minneapolis ordinance initially covered any employer, regardless of location, if an employee worked within city limits Chamber of Commerce et al brought a lawsuit challenging the ordinance In January, the district court ruled the city could move forward with the ordinance, but the ordinance did not apply to companies based outside of Minneapolis City of Minneapolis Appealed; Affirmed on September 18

Minnesota Developments Chamber’s main arguments were that state law covers sick leave and prohibits the additional requirement of municipal sick-leave on businesses, the city lacked authority, and that it extended too far Appeals Court affirmed the existence of the ordinance, but that it could not extend to non-resident businesses The Chamber intends to appeal the matter to the Minnesota Supreme Court

Mpls & st. Paul sick & safety leave (For now) Who’s covered and who’s eligible for paid leave Mpls - employers with 6 or more employees and operate within the city St. Paul – employers with 24 or more employees (all employers starting 1/1/28) and operate within the city Covered employees are those who work 80 or more hours in the city

Mpls & st. Paul sick & safety leave 1 hour of paid leave accrues for every 30 hours worked Maximum annual accrual is 48 hours Unused time rolls into next year with maximum leave band capped at 80 hours Time starts accruing immediately upon hire, but 90-day waiting period can be imposed before it can be used Unused time does not have to be paid out upon termination, but employees rehired within 90 days must have balances reinstated

Mpls & st. Paul sick & safety leave Employees can be required to provide at least 7 days of notice for foreseeable absences Employees can’t be required to find subs for the shifts they will be missing A mandatory poster will be created, and a notice of leave rights must be included in employee handbooks Employers can substitute their current PTO / sick practices, so long as they’re at least as generous

Mpls & st. Paul sick & safety leave Front-Loading Front-loading is an alternative method of accrual for employers who want to reduce the calculations and record keeping of per-pay-period Give 48 hours for first year of employment and 80 hours automatically each subsequent year

Mpls & st. Paul sick & safety leave Advancing Advancing accrual for employers based on expected hours (e.g. providing 10 days of at the beginning of the year PTO) Must still meat all requirements (1/30, 48 hours annual, carryover, and 80 cap) Must still maintain calculations and record keeping of per-pay-period Fulfills all accrual and carryover requirements

Mpls & st. Paul sick & safety leave Advancing – Scenario by the City of MPLS Mumtaz is a business owner who employs Sara and provides sick and safe time hours per year. At the beginning of Sara’s employment, Mumtaz provides Sara 48 hours. Sara does not use any of these hours and the hours carry-over into the next benefit year. At the beginning of the second benefit year, Mumtaz adds an additional 32 hours, up to the 80 hour overall cap. During the second benefit year, Sara uses 70 hours. At that point in time, Mumtaz could provide Sara 16 hours (before reaching the 48 hours benefit year cap) or allow Sara to accrue one hour for every 30 hours worked (up to the 48 hours benefit year cap).

Mpls & st. Paul sick & safety leave Front loading 80 hours every year No reductions for part-time employees Employers only have to record once a year and do not have to carryover from year to year (no calculations or records of use) Employees get immediate access to the front-loaded hours a the beginning of each year and do not accrue hours throughout the year Satisfies the compliance requirement of both 48 hours per year and carryover with the 80 hours Higher cost long-term, depending on your paid time off policy Advancing Hours based on time worked Can account for reduced hours of part-time employees Calculations required and records maintained Employees get immediate access to the advanced hours at the beginning of the year and do not accrue hours throughout the year Satisfies the compliance requirement for time accrued, but must still allow carryover and new accrual Employees know what they have to use and account for, less guessing, better planning Cost-controlled

Implementation How does your company approach paid time off? Sick (and safe?) time No paid time off PTO of 40 hours or fewer, no sick time A combination of PTO and sick time of 40 hours or fewer PTO of 80 hours or more A combination of PTO and sick time of 80 hours or more How does your company approach the variations in sick and safe leave requirements in different jurisdictions? One policy that applies to all jurisdictions. One primary policy with addendums for jurisdictions that have special requirements. Two or three versions that account for most of the jurisdictions. Separate policies for each jurisdiction that has its own requirements.

Scenario one: no paid time off or sick leave Implementation Accrue at least 1 hour for every 30 up to 48 hours Advance based on number of hours expected to work Record keeping for tracking amount accrued and amount used Scenario one: no paid time off or sick leave or sick leave only

Scenario two: paid time off only Implementation Advance based on company policy (is it enough time?) New hires - consider whether the awarded PTO is enough and when it can be used Revise policy to reflect that it accounts for city sick leave Standard record keeping for tracking amount accrued and used Scenario two: paid time off only (advanced)

Scenario three: paid time off only Implementation Accrue at least 1 hour for every 30 New hires - consider whether the awarded time is enough and when it can be used Revise policy to reflect that it accounts for city sick leave No requirement for reason of use Record keeping for tracking amount accrued and amount used Scenario three: paid time off only (accrued)

Sample PTO policy language Implementation All paid sick and safe leave required to be accorded to employees under federal, state, and local laws and ordinances must be taken as part of PTO, so use of PTO should be planned accordingly. Sample PTO policy language

Scenario four: paid time off and sick leave Implementation E.g. advancing 10 PTO and 3 sick days Sick and PTO can be combined Once an employee uses his/her 3 days, their 4-6th days come from the PTO bank Advance based on number of hours expected to work Half time employee gets advanced half the time Record keeping for tracking amount advanced, accrued and amount used Scenario four: paid time off and sick leave (advanced)

Scenario five: paid time off and sick leave (accrued) Implementation Sick and PTO can be combined E.g. – accrue 1/30 PTO and 1/40 sick time will be sufficient because the PTO is applied to the sick leave Record keeping for tracking amount accrued, amount used, and type used Scenario five: paid time off and sick leave (accrued)

Special Considerations: variations among jurisdictions Implementation State and Local Variations Covered employees Covered family members Permissible uses of leave Accrual rate Accrual cap Usage cap Minimum time increment for use of leave Carry over requirements Rate of pay Treatment of new employees (accrual and use) Reinstatement of leave balance upon rehire Notice requirements Special Considerations: variations among jurisdictions

Special Considerations: multiple sick leave eligibly Implementation If an employee works in multiple jurisdictions, sick and safe leave will not accrue in each jurisdiction once the combined total maximum accrual is reached for the most favorable jurisdiction to employee “Highest common denominator” approach - providing all employees with the greatest amount of sick time required under the most liberal law applicable to your operations Special Considerations: multiple sick leave eligibly

Special Considerations: Implementation For employers with sick time and PTO, with the carryover sick time – use matters So long as you allow a carryover of (#) hours, whether PTO or sick time, or a combination, it will be sufficient 80 hour cap on carryover + accrual Special Considerations: carryover

Special Considerations: Implementation Separate record tracking for amount accrued and used Separate matrix for multiple jurisdictions Consider tracking technology Special Considerations: Part-time employees

Special Considerations: Implementation Update your policies to reflect that the company will discipline if it suspects abuse of leave use Special Considerations: Abuse of use

Implementation Resources Payroll Tracking STD paid time off management Many use spreadsheets which is timely and more likely to have errors Payroll Tracking Companies like ABRC connect you with the right vendors and ask the technical questions that identify the best solutions based on your size, scope and budget STD paid time off management Some STD offer paid time off management (still self-funded)

Questions / ABRC resources Upcoming webinars (FREE SHRM and HRCI credit): Intro to benefits administration part I: Implementing new hire benefits and key benefit concepts (Oct.18) 2 CEU HR technology consulting services (Oct. 24, Nov. 21, or Dec. 5) Intro to benefits administration part II: Administering employee changes, payroll and tax considerations and more (Oct. 25) 2 CEU Wage and hour: Beyond the basics of calculating overtime (Oct. 26) 1.5 CEU Recent developments in HR and benefits law (Oct. 27) 1 CEU How to explain the Medicare puzzle to your employees aged 65+ and still working (Nov. 2) 1.5 CEU Risk management compliance audits Employee benefit consulting and tools HR Hotline for clients of ABRC (guidance, templates documents, FLSA flowcharts) Onsite training for managers and employees Employee handbooks Safety consulting Heather Kaiser, J.D., HR Consultant Heather.Kaiser@AssociatedBRC.com