2025 Minnesota workplace regulations, insights
By Leah Davis
January 23, 2025
Employers in Minnesota have experienced an unprecedented volume of employment-related regulatory changes in the past few years, leaving many leaders (especially those responsible for HR) feeling overwhelmed and less than confident about compliance.
The ever-shifting landscape of employment law presents significant challenges for Minnesota employers, making staying informed and leaning on available resources crucial for keeping up and avoiding costly legal repercussions. The following aims to equip leaders to tackle the ongoing and upcoming Minnesota changes.
Minnesota Earned Sick and Safe Time (ESST): Clarification and uncertainty
One of the most impactful changes for 2025 was the passage of legislation in 2024 that clarified, amended and expanded portions of the Minnesota Earned Sick and Safe Time (ESST) law that was originally passed in 2023, effective Jan. 1, 2024. These updates, applicable for all Minnesota employers, clarified the details related to rate of pay, increments of hours used, definition of “employee” and added bereavement as an eligible time-off event.
Most significantly — and still awaiting final clarification — is the statutory language, which suggests that all employer-provided paid leave used for personal illness or injury may be subject to ESST regulations (i.e., eligibility, documentation limitations, anti-retaliation, etc.). This means that existing policies for sick leave, vacation time, personal time and other forms of paid absence may need to be reevaluated and potentially overhauled.
Should the legislation be applied exactly as written, employers may be required to treat all forms of paid leave consistently with ESST, including:
- Use eligibility: Policies related to when and how employees can use other types of paid leave may need to align with, often broader, ESST guidelines.
- Documentation requirements: Employers may need to standardize documentation requirements for all forms of paid leave, potentially eliminating more restrictive policies for other types of non-ESST leave.
- Retaliation protections: Employees may be protected from retaliation for using any form of paid leave for illness or injury, regardless of the specific leave type.
To be prepared, employers should take the following actions:
- Closely monitor DLI guidance: The Minnesota Department of Labor and Industry (DLI) will provide crucial clarification on the scope and implementation of these changes and employers should stay abreast of DLI updates over the coming months.
- Conduct a thorough policy review: Analyze all existing paid leave policies to proactively assess their compliance with a potential ESST expansion. This may require legal counsel to ensure accurate interpretation and application of the law.
- Develop a plan for policy adjustments: Based on the final DLI guidance and legal counsel’s recommendations, develop a plan to revise existing policies to comply with potential expanded ESST requirements.
Federal FLSA salary requirements: Back to where we began
During 2024, employers nationwide prepared to implement measures to comply with the federal Department of Labor’s increased salary threshold for the “white-collar” overtime exemptions under the Fair Labor Standards Act (FLSA), which was set to increase on July 1, 2024, and again Jan. 1, 2025. These scheduled increases would have raised the minimum salary requirement for any employee classified as exempt from overtime to nearly 65% above the existing rate of $684 per week ($35,568 per year).
However, on Nov. 15, 2024, the U.S. District Court for the Eastern District of Texas vacated the DOL’s new regulation, striking down the required increases on a national level. For Minnesota employers, this means that, for 2025, the minimum weekly salary for an exempt white-collar worker will remain at the pre-2024 level ($684 per week) and any scheduled increases aimed at complying with the DOL’s prior rule can be suspended if the employer chooses not to move forward.
Minnesota Paid Family and Medical Leave (PFML) Act: Preparing for 2026
The Minnesota Paid Family and Medical Leave (PFML) Act, while not fully implemented until 2026, has significant implications for employers in 2025.
- Wage reporting commences: Employers are now required to begin submitting wage detail reports to the DLI, via the Minnesota Unemployment reporting process even though paid leave benefits won’t begin until 2026.
- Preparing for program implementation: Employers should proactively plan for the implementation of the PFML program in 2026, including training managers and leaders about the likely implications and costs of the program.
Action steps:
- Familiarize yourself with the PFML program: Understand employee eligibility, leave benefits, employer obligations and the program funding/reporting mechanism.
- Review and update existing leave policies: Evaluate how the PFML program will interact with existing policies for sick leave, vacation time and other forms of leave. Many employers will likely need to evaluate if existing short-term disability insurance or extended sick leave benefits are even necessary after PFML is effective (because they will overlap).
- Communicate with employees: By December 2025, inform employees about the PFML program and their eligibility for benefits, including distributing all required employee notices that will be provided by Minnesota Paid Leave later in 2025.
- Consider the impact on operations: Assess how the PFML program may impact staffing needs, operational continuity and overall organizational planning.
Pay transparency laws: New requirements for job postings
Effective Jan. 1, 2025, Minnesota employers with 30 or more employees now are required to include a salary range, not just starting pay rate, in all job postings, including internal and third-party postings. While initial compliance with this regulation seems straightforward, the longer-term implications for employers will likely be very broad so leaders should be prepared for implementation and thoughtful about the following likely implications:
- Increased transparency: This legislation aims to increase transparency in the job market and workplaces and to help close gender and racial pay gaps. It will also provide employees with access to internal pay ranges, at all levels, that have not historically been shared.
- Impact on hiring: Employers may need to adjust their hiring strategy and processes to accommodate the new requirements as well as be prepared for better informed job applicants and offer negotiations.
- Tough conversations: Publishing salary ranges, both internally and externally, for open positions will likely spur compensation conversations — and related frustrations — that many managers have not been faced with before.
To be prepared, employers should take the following actions:
- Review and revise all job posting templates to include salary ranges, as well as developing a consistent approach to establishing and communicating salary ranges, both internally and externally.
- Train hiring managers and recruiters on the new pay transparency requirements and how to handle tough employee compensation questions when they come up.
- Proactively identify and address equity issues in current pay structures to avoid difficult — and likely risky — conversations with employees later on.
Take simple, manageable steps
While keeping up with the ever-changing landscape of employment law is often daunting, it’s critical leaders avoid the temptation to throw in the towel and, instead, stay focused on taking the following simple and manageable steps:
- Leverage resources: Use resources such as webinars, industry publications and legal consultations to stay informed about the latest employment law developments.
- Develop a compliance plan: Create a comprehensive plan to address employment law requirements, including regular reviews, policy updates and employee training.
- Seek expert guidance: Consult with HR professionals or legal counsel to ensure you understand your obligations and react with compliance solutions that make sense in your workplace.
You’re used to a changing employment landscape as HR professionals. Take time to address these ongoing and new changes thoroughly to better serve your organization and employees for a successful 2025 and beyond.
Leah Davis, CPA is a partner with Abdo and leads the firm’s HR and payroll advisory practice. She spends her time helping employers find creative ways to capture opportunities and overcome their most pressing HR and payroll challenges. As an active CPA and after owning and operating an outsourced HR and payroll consulting business for nearly a decade, Leah has worked with employers across all industries
Disclaimer: This article provides general information and is not intended as legal or financial advice.
