Minnesota employers are not required to offer PTO to employees.
But there is a sick leave law that you need to follow. Employers are required to:
- Offer an accrual sick leave policy where employees earn at least one hour of sick time for every 30 hours of work.
- Are not required to pay out unused sick time or PTO when the employee leaves the company.
There’s lots of details and some exceptions related to both these requirements.
The Minnesota Earned Sick and Safe Time Law (ESST) Details
The new Minnesota Earned Sick and Safe Time Law (ESST) went into effect on January 1, 2024. Under this law:
- Any employee that works 80 hours a year is covered.
- Independent contractors are not covered.
- Employees must earn at least 1 hour of sick time for every 30 hours worked.
- The law has a maximum of 48 hours of sick time per year. Employers can offer more if they want.
- The sick leave must have at least a total cap of 80 hours. This can be reached by carrying over sick time from one year to the next.
- Unused sick leave must carry over each year.
- Accrual begins on the first day of employment.
- Employers can use any 12-month period that they want to define a year. But if the year doesn’t start on January 1, they must give 48 hours front-loaded on January 1.
- Sick time accrual is not required while employees are on any type of leave.
- Sick time can be used for mental and physical health, as well as a few other reasons.
- Sick time must be recorded on employee paystubs.
- The time can also be used to care for sick family members.
- If a company has a PTO policy that meets or exceeds these requirements, the sick law is covered.
If you don’t want to go the accrual route, you can do a lump sum model. I always recommend folks do accrual but it’s up to you. You have two options for doing a lump sum model (Minnesota calls it “front-loading”):
So you can either have a cap of 48 hours each year, grant it all on January 1, and pay unused hours out at the end of the year at the employee’s hourly rate. OR you can have a cap of 80 hours per year, grant it on January 1, and wipe any remaining PTO at the end of the year.
If you have offices across the US, a “use it or lose it” PTO policy can be extremely problematic. Colorado has some pretty strick PTO payout laws for example. In Colorado, PTO can never be taken away under any circumstance. To avoid running into issues, I recommend that folks never adopt a “use it or lose it” PTO policy. So I’d definitely avoid “Option 3” for Minnesota entirely.
Personally, I’d just stick with the accrual method and avoid both lump sum models in Minnesota.
Are There Any Minnesota PTO Laws Though?
Nope. Minnesota doesn’t have any laws for PTO.
But the sick leave law is fairly substantial. It effectively operates as the PTO regulation for the state. Many states have pretty low sick leave requirements, or none at all. The fact that Minnesota requires at least 48 hours per year and a cross-year cap of 80 hours makes it a legitimate leave policy. If a company is offering a 2 week/year PTO policy, Minnesota’s sick leave law already covers more than half of it.
And if you offer employees 2 weeks of vacation time per year on top of the mandated sick leave requirement, you have a pretty solid leave policy. It’ll certainly be good enough so you don’t have to worry about it impacting turnover.
Minnesota PTO Payout Requirements
When employees leave your company in Minnesota, you are not required to pay out unused PTO or sick time.
The only situation where you have to pay our unused sick time is if you use the “front-loading” sick time option where you give employees 48 hours in a lump sum model at the beginning of the year. For any sick time not used at the end of the year, it must be paid out at the employee’s normal hourly rate.
But even if you’re using that sick leave model in Minnesota, you still don’t have to pay out unused sick time when employees leave the company.
That said, I STRONGLY recommend that you always pay out unused sick time and PTO when employees leave the company.
Some states have extremely strict requirements around requiring PTO payouts, it’s quickly becoming standardized regulation. It’s gotten to the point that most folks across the HR industry consider paying out unused PTO as a standard practice. No one really debates this these days.
It’s also the right thing to do in my opinion. The employee earned that time, they should benefit from it somehow.
So pay out the unused PTO.
What Should Minnesota Change About Its PTO Laws?
First, Minnesota has done a great job with their sick leave law. It’s way ahead of the curve compared to a lot of other states. So I applaud them for the work they’ve already done.
But there’s a few things they could tighten up:
- Expand sick leave to all PTO. When an employee needs a day off, give it to them. The problem with constraining it to just sick time is that employers can require verification that the sick time is being used for a qualified reason. That’s nonsense. If people have the time, let them take it off. At the very least, add a clause that sick time can be used for any personal reason and does not require verification.
- Scrap the alternate lump sum options. Having multiple “front-load” sick leave methods, with different carry over and pay out requirements, it’s a mess. Just scrap that stuff, it’s too complicated. And accrual leave is really easy to track with any payroll software these days.
- Require PTO payouts. For any accrued PTO or sick leave, companies should be required to pay it out if the employee leaves the company for any reason. This is already considered standard practice across HR departments. On this item, Minnesota is way behind other states. That time should be considered earned wages.
Remember the Family and Medical Leave Act
Don’t forget that everyone needs to comply with the federal Family and Medical Leave Act (FMLA). It provides most workers with up to 12 weeks of unpaid leave to care for themselves or a close relative.
Watch Out for Local Ordinances in Minnesota
Some local ordinances in Minnesota already have paid sick time in place, including in St. Paul and Minneapolis. For example, Minneapolis law has some unique requirements on the “front loading” sick leave options that differ from the state requirements.
If your company falls under the jurisdiction of a local sick and safe time ordinance, it should align its earned sick time policy with whatever regulations are more restrictive. That’s how you stay compliant.
Trustworthy Resources on Minnesota PTO Laws
When you’re setting up your Minnesota PTO policy, rely on these resources:
- Minnesota Earned Sick and Safe Time Law (ESST): This is the official page for the law. Plain english and tons of great info. The site also has tons of other info on employment regulations in Minnesota.
- Minnesota Earned Sick and Safe Time Law FAQs: Every nitty gritty detail that you’re looking for. Also easy to understand language with tons of great examples.
- Minnesota Session Laws – 2023, Regular Session: The exact changes that were made during the legislative section that enacted the sick leave laws.
- Minneapolis Sick and Safe Time Regulations: Good resource that goes into the specific requirements in Minneapolis.
