SF4822

Purpose

This bill updates rules around paid leave coverage for Minnesota workers. It reshapes who counts as a “covered employee,” creates new categories (part-year employment and substitute employees), and clarifies how retirees who return to work for substitute roles interact with their annuities. It also allows some employers or entities that are currently excluded from paid leave coverage to opt in to coverage under a process set by the state commissioner.

Key terms and scope

• Covered employment: the worker’s total employment in a year used to determine eligibility for paid leave, with specific rules about where and how work is performed and who is excluded.
• Employee: a person who performs services for an employer, with certain exclusions (e.g., U.S. government employees, self-employed individuals, independent contractors, seasonal workers, substitute workers, and those covered in a different statute).
• Part-year employment: new category for fixed-term work under 12 months with payoff structure defined in a specific way.
• Substitute employee: new category for temporary workers who replace a specific regular employee during an absence and do not gain permanent status.
• Opt-in coverage: entities that are currently excluded from coverage may choose to opt in, subject to commissioner-defined criteria.
• Reemployment (retiree): rules about retirees returning to work as substitute employees and how that interacts with retirement annuities.

Main provisions

• Redefinition of Covered Employment (268B.01, subdivision 15)

  • Covered employment means the entirety of an employee’s yearly work, with a focus on where the work is performed and where the employee lives, including:
  • If 50% or more of the work is done in Minnesota, or
  • If 50% or more of the work is not done in Minnesota or in any single state/territory, but some work is in Minnesota and the employee lives in Minnesota for at least 50% of the year.
  • Exclusions from covered employment:
  • Self-employed individuals
  • Independent contractors
  • Seasonal employees (defined elsewhere)
  • Substitute employees (defined below)
  • Employees covered under section 356B.015
  • Some excluded entities may opt in to coverage following a process determined by the commissioner.
  • The commissioner may adopt rules to further define how this applies.
  • Part-year employment and certain other categories have special rules about eligibility for accrued paid leave (see Part-year and related notes below).

• Employee Definition (268B.01, subdivision 17, amended)

  • An employee is someone who performs services for an employer but does not include:
  • U.S. government employees
  • Self-employed individuals
  • Independent contractors
  • Seasonal employees
  • Substitute employees
  • Employees covered under section 356B.015

• New Subdivision: Partyear Employment (268B.01, subdivision 32a)

  • Partyear employment means a fixed-term contract less than 12 months, with annual pay arranged in 12 equal monthly installments, regardless of how many months or days are actually worked.

• New Subdivision: Substitute Employee (268B.01, subdivision 40a)

  • Substitute employee is a temporary worker hired to replace a specific regular employee during a defined absence and does not gain permanent status.

• Reemployment of Retirees (356B.015 Relating to REEMPLOYMENT)

  • Subdivision 1 Return to employment: A member of a retirement plan who has separated and is receiving an annuity or has applied for one may return to work if the job is to serve as a substitute employee under the 268B.01 framework.
  • Subdivision 2 Effect on annuity: Returning to work as described does not affect ongoing annuity payments or the amount of the annuity during reemployment.

Changes to existing law and impact

• Clarifies and narrows who is considered covered for paid leave purposes, with explicit exclusions and an opt-in pathway for some previously excluded entities.
• Introduces two new employment categories (part-year and substitute) that influence whether a worker is eligible for accrued paid leave and how they are treated under the paid leave program.
• Adjusts who is considered an employee for paid leave purposes, further excluding certain groups from coverage.
• Creates specific definitions and rules around retirees returning to work as substitute employees and confirms that doing so won’t affect their annuity payments while they are reemployed.

Practical implications

• For workers: Some individuals may no longer count as covered employees, potentially limiting access to paid leave benefits unless their employer or their entity opts in. The new substitute employee and part-year categories could create situations where paid leave eligibility depends on the exact nature and duration of the job.
• For employers: New definitions and opt-in mechanics could require changes to payroll, leave tracking, and reporting. Employers should review whether they are currently excluded and, if so, whether opting in would be advantageous.
• For retirees: Retirees who return as substitute workers can do so without losing their annuity or having payments reduced, at least for the period of reemployment.

Summary of notable additions

• Partyear employment definition
• Substitute employee definition
• Opt-in coverage for previously excluded entities
• Revised covered employment criteria based on location, residence, and percentage of Minnesota work
• Reemployment rules for retirees working as substitutes without affecting annuity

Relevant Terms covered employment; employee; partyear employment; substitute employee; opt-in; accrued paid leave benefits; Minnesota Statutes 2024 268B.01; subdivision 15; subdivision 17; partyear; 356B.015; reemployment; annuity; retirement plan; return to employment; commissioner; rules.