Minnesota Adopts Final ESST Rules

On June 29, 2026, the Minnesota Department of Labor and Industry (DLI) adopted final rules clarifying how employers must administer Minnesota’s Earned Sick and Safe Time (ESST) law. The rules took effect July 6, 2026, and provide guidance on accrual years, employee eligibility, variable-length shifts, payroll administration, documentation, suspected misuse, and frontloading practices.

The rules clarify existing requirements that have been in effect since January 1, 2024, and provide additional direction for employer compliance and leave administration.

The guidance affects employers with employees expected to work at least 80 hours in Minnesota during a year. Employers should also evaluate whether local ordinances, including those in Minneapolis and St. Paul, provide greater employee protections than state law.

What Employers Should Do

Legal Requirements

• Clearly identify the employer’s ESST accrual year in the ESST notice provided to employees at the start of employment. If no accrual year is communicated, the accrual year defaults from January 1 through December 31.
• Timely credit accrued ESST, restore qualifying leave balances for employees rehired within 180 days (subject to the applicable reinstatement limits), and provide advance notice before changing the ESST accrual year.
• Provide written notice and wait until the beginning of the next accrual year before changing between accrual and frontloading methods.

Practical Considerations

• Review leave policies, employee notices, payroll systems, and HRIS settings to ensure ESST eligibility determinations, accrual practices, and leave administration procedures align with the final rules, including requirements for employees who may reach the 80-hour Minnesota work threshold.
• Train supervisors and managers on ESST documentation requirements, misuse investigations, attendance incentives, and employee leave rights.
• Consider engaging a Professional Employer Organization (PEO) or Administrative Services Organization (ASO) to assist with payroll administration, policy implementation, manager training, and multijurisdictional sick leave compliance efforts.

Overview

Accrual Year Defaults to the Calendar Year: Employers may designate any regular 12-month ESST accrual year, but if no accrual year is clearly communicated, the default is January 1 through December 31. Employers may change their accrual year with advance written notice, provided the change does not reduce employees’ ability to accrue ESST.

Good-Faith 80-Hour Eligibility Determinations: The rules require employers to make a good-faith determination about whether an employee is expected to work at least 80 hours in Minnesota during a year. At a minimum, employers should consider the employee’s anticipated schedule, work location, and other relevant employment information.

Employees who were not initially expected to meet the threshold may still become eligible if they work 80 hours in Minnesota.

Guidance for Indeterminate-Length Shifts: The rules provide long-awaited guidance for positions with shifts that do not have a predetermined end time. When an employee uses ESST during an indeterminate-length shift, the deduction may be calculated using hours worked by:

1. The replacement employee.
2. The employee during a recent similar shift.
3. Hours worked by a similarly situated employee who worked the shift.

If an employee worked part of the shift before leaving, those hours must be subtracted before calculating the ESST deduction.

Payroll Administration and Accrual Processing: For employers using an accrual method, ESST must be credited by the regular payday following the pay period in which it was earned. Employers are not required to credit fractional hours and may carry forward partial accruals until a full hour is earned. ESST is considered accrued when credited to the employee.

Rehired Employees: Employees rehired by the same employer within 180 days of separation are entitled to reinstatement of previously accrued but unused Earned Sick and Safe Time (ESST). The rules provide that employers are required to restore no more than 80 hours of unused ESST unless a statute, regulation, ordinance, contract, policy, or other legal authority requires a greater amount.

Frontloading and Advanced ESST: Employers that advance ESST based on projected work hours must provide leave at least as generously as the statutory accrual rate. While employers are not required to advance more than 48 hours, additional leave must be credited within 15 calendar days if actual hours worked exceed the projections used in the original calculation.

Employee Control Over ESST Usage: Employees have the right to decide whether to use ESST, and employers may not require its use. An absence may not receive ESST protection if an employee chooses not to use available ESST.

Documentation and Suspected Misuse: Employers must clearly communicate documentation requirements and provide employees with a reasonable opportunity to comply. Documentation may also be requested when there is suspected ESST misuse. While employers may discipline employees for proven misuse, they may not deny future legitimate ESST requests based solely on prior misuse.

Attendance Incentives and Bonuses: Employers may deny attendance, productivity, or hours-worked incentives if the employee fails to meet the relevant benchmark because of ESST use, provided employees using other forms of leave are treated the same way.

More Generous PTO Policies: Employers offering leave benefits exceeding ESST minimum requirements do not automatically have to apply every ESST rule to all PTO usage. ESST protections apply when leave is used for an ESST-qualifying reason and the Minnesota Paid Leave benefits are considered a form of salary continuation benefit for purposes of these provisions.

Why This Matters

The final rules provide clearer standards for administering ESST and may require employers to review leave policies, payroll practices, and manager training. Employers that fail to align their practices with the clarified requirements could face compliance risks related to leave administration, employee eligibility determinations, and documentation procedures.

Key Risks for Employers

• Failing to clearly communicate an accrual year may result in the accrual year defaulting to the calendar year.
• Incorrect eligibility determinations may result in employees being excluded from ESST coverage.
• Payroll delays in crediting accrued ESST may create compliance concerns under the rules.
• Inconsistent handling of documentation requests, suspected misuse investigations, or attendance incentives may increase legal risk.
• Employers with employees in Minneapolis or St. Paul may face additional exposure if local leave requirements providing greater employee protections are not properly considered.

Source References

• Minnesota – Rulemaking docket for Minnesota Rules, chapter 5200 (ESST)
• Minnesota – ESST FAQs
• Minnesota ESST Adopted Rules (Effective July 6, 2026)
• Minnesota Department of Labor and Industry, Adopted Permanent Rules Relating to Earned Sick and Safe Time, Minnesota State Register, Vol. 50, No. 52 (June 29, 2026)

Resources

• Minnesota – Earned sick and safe time (ESST) Resources
• Minnesota New Hire ESST Notice

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