As we enter 2025, Minnesota employers are facing significant changes in their leave policies regarding the new Earned Sick and Safe Time (ESST) law passed this year. As an HR consultant with Elevate Results Consulting, I’m here to guide you through these changes and help you navigate the complexities of implementing this new law and the updates coming in 2025 for your organization.

Overview of the 2024 ESST Law

Effective January 1, 2024, Minnesota passed a new ESST law requiring employers to provide paid leave to employees who work in the state of Minnesota. This complicated some HR scenarios when businesses found themselves either employee workers in Minnesota even if they were registered elsewhere or if they were Minnesota businesses that hired residents of other states but worked in Minnesota, even if it was just seasonally or temporarily.

That was the case for one of our clients, who was registered as a company in Texas but then sent employees to Minnesota to help with construction work or storm damage assessments. They had to provide accrued sick leave time for the time they were here. And that was just one weird scenario.

Here are the key points of the updated ESST law:

  • Eligibility: Employees anticipated to work at least 80 hours in a year for an employer in Minnesota are eligible.
  • Accrual: Employees earn one hour of sick and safe time for every 30 hours worked, up to a maximum of 48 hours each year..
  • Usage: ESST can be used for various reasons, including personal illness, care for a family member, or to seek assistance in cases of domestic abuse, sexual assault, or stalking..

Take Note of These Important Updates for 2025

While the law took effect in 2024, crucial updates are coming in 2025 that employers need to prepare for:

  • Rollover Increase: In 2024, 48 hours of sick leave can be rolled over. However, this increases to 80 hours in 2025.
  • PTO Application: Starting January 1, 2025, if an employer provides PTO that exceeds the ESST requirements, the additional PTO must meet the same requirements as ESST hours when used for ESST-qualifying purposes.

Because of these changes and the expense they do not impose on businesses, many of our clients were asking the question, “What if we were just to bundle benefits?” Cost is a valid concern, but one where the results can be short-sighted unless you’re looking at the bigger picture of “what ifs.”

To Bundle or Not to Bundle: PTO and Sick Leave

Because of long-term financial concerns, one of the most significant decisions employers face today is whether to bundle PTO and sick leave or keep them separate. So, let’s break down a few of the pros and cons of possibly bundling ESST benefits.

Bundling PTO and Sick Leave

Pros:

  • Simplifies administration and tracking.
  • Offers employees more flexibility in how they use their time off.
  • Employees can now carry over up to 80 hours of accrued time off.
  • May increase overall employee satisfaction and work-life balance.

Cons:

  • All bundled time becomes protected under the new ESST law, potentially increasing costs.
  • May lead to increased payouts upon employment termination if the company provides PTO payouts.
  • Could result in employees coming to work sick to save PTO for vacations.

According to Attorney Alemayehu Z. Ditamo with Kennedy & Graven, Chartered, “Under the front-loading method, employers must provide employees with 48 hours of ESST if the employer pays out unused ESST at the end of the year. If the employer does not pay out unused ESST at the end of the year, an employer using the frontloading method must frontload 80 hours of ESST.”

Keeping PTO and Sick Leave Separate

Pros:

  • Allows for different accrual rates and usage rules for each type of leave.
  • May reduce the financial liability of unused vacation time payouts.
  • Ensures sick time is available when needed for health reasons.

Cons:

  • More complex to administer and track.
  • May lead to employees using sick time for non-health-related absences.
  • Requires careful compliance with both ESST law and existing PTO policies.

Here are a few more noteworthy considerations for Minnesota employers today.

(1) Minnesota businesses: Under the Earned Sick and Safe Time (ESST) law, which was enacted on January 1, 2024, employees must be paid at their regular rate for sick leave taken.

The base rate for pay is the same rate the employee would earn if they were working, excluding overtime pay, shift differentials, holiday pay, gratuities, or commissions. There are also some employment status exceptions:

    1. Hourly employees: The base rate is the same hourly rate the employee would have earned if they had not taken leave.
    2. Salaried employees: The base rate is the employee’s regular pay.
    3. Non-exempt employees paid by other means: The base rate must be at least the highest applicable minimum wage.

(2) When it comes to mitigating potential abuse of sick leave, there are few recourses a business may have.

For absences exceeding three consecutive days, employers can request a doctor’s note, at which point expected consequences can be implemented. Again, these actions and consequences should be provided prior to any incident through written documentation as an employee handbook.

Scenario: Bundled PTO and Sick Leave in 2025

There are a multitude of scenarios that “could” arise, and although it’s not likely you could identify everyone to take a proactive approach, it helps if you can consider a few when it’s time to make a strategic decision about how you will provide ESST benefits and communicate those provisions to your workforce.

Let’s consider a scenario where an employee, Sarah, takes personal sick time off in 2025 under a bundled PTO policy:

Sarah has been with the company for three years and has accrued 120 hours of PTO. In February 2025, she fell ill with a severe case of flu and was away from work for seven consecutive days (56 hours).

  • Day 1-3: Sarah notifies her supervisor of her illness and uses 24 hours of her PTO.
  • Day 4: As per company policy, HR requests a doctor’s note for the extended absence.
  • Day 5-7: Sarah provides the doctor’s note and uses an additional 32 hours of PTO.

Outcome:

  • Sarah’s entire absence is covered under the ESST law, even though it exceeds the 48-hour minimum.
  • The company cannot penalize Sarah for this absence as it’s protected under ESST.
  • Sarah is left with 64 hours of PTO, which she can use for vacation or future illnesses.
  • The company must ensure that Sarah’s remaining PTO adheres to ESST requirements when used for qualifying reasons.

This scenario highlights the importance of clear communication between employees and HR, as well as the need for comprehensive, well-documented policies that comply with the new ESST law.

So, how do you move forward in 2025?

Whether you choose to bundle PTO and sick leave or keep them separate, it’s crucial to thoroughly understand the new ESST law in Minnesota and its implications for your organization.

As HR professionals, we must ensure our policies comply with the law and support employees’ well-being and our company’s objectives so we can continue building a strong and healthy business.

If you need help running through some scenarios and structuring your benefits to your employees, reach out to our team for a conversation about how we can help simplify that process for you.