Continuous Chain of Improvement

The 2023 legislative session ended in May of last year, but Minnesota business owners are still grappling with its implications for how they do business.

Due to the Democratic-Farmer-Labor (DFL) Party’s single-party control of the legislature, the session moved at a brisk pace and brought about several policy, spending and taxing measures that will continue to go into effect over the next two years.

Each year, Enterprise Minnesota conducts and publishes their State of Manufacturing survey, which highlights the trends, conditions and outlooks shared by manufacturing leaders across the state. Results from the 2023 survey showed that many leaders were feeling anxious about what some of the new measures would mean for their organizations and the industry as a whole.

Some of the top concerns include the newly-mandated sick and safe time policy, legalization of cannabis products for recreational use and the upcoming paid family leave policy (which goes into effect in January of 2026).

The State of Manufacturing survey found that 77% of participants were worried about the lack of small business exemption for paid leave, with 56% citing that they are “very worried.”

Others also shared concerns about new payroll taxes necessitated by the new paid family and medical leave program and the ban on non-competes. Despite the challenges, there are a variety of resources available to manufacturing leaders trying to make sure they’re ahead of the curve with compliance.

When will these new policies affect you and your business?

Some of the implications of the recent session are already in effect, and some are still on the horizon. But just because they don’t have current implications doesn’t mean you shouldn’t be preparing for the future, says Mckenzie St. Claire, HR Manager and Consultant at Vision One.

Here is a timeline with the highlights of when new policies will go into effect (or, when they did) according the Minnesota Chamber of Commerce:

As of July 1, 2023:

• Noncompete agreements banned
• New and increased OSHA penalties went into effect

As of Aug. 1, 2023:

• Recreational use of marijuana legalized

As of Jan. 1, 2024:

• Sick and safe time mandated
• Ban established on asking about pay history

As of Jan. 1, 2025:

• Minnesota Secure Choice Plan (retirement savings program) launches
• Beginning of PFAS ban in 11 products

As of Jan. 1, 2026:

• Paid Family and Medical Leave mandate goes into effect
• New reporting requirements for all PFAS products

Mounting frustrations

While much of the recent legislation is aimed at positive outcomes for the community (namely, supporting new parents and families), it can be hard to see those same outcomes from a business owner’s perspective, said Michelle Beck- Howard, a Client Success Manager at G&A Partners.

G&A Partners, a PEO (professional employer organization), provides HR consulting services to their clients, many of whom are manufacturers. Beck-Howard said that in over three decades of living and working in Minnesota, this is one of the busiest legislative sessions she’s seen.

Vision One also provides consulting services to many manufacturing clients. St. Claire said she’s been hearing similar concerns in her conversations with industry leaders.

“In many past laws, you had to have a certain number of people who worked for you in order for them to apply,” said St. Claire. “A lot of the new legislation applies to every business regardless of size, which I think just adds a layer of nerves.”

Mandated paid sick and safe time is not new for businesses with a home base in Minneapolis. But for those who are smaller or located outside the Twin Cities, the idea of another expense is worrisome, especially as labor shortages in the industry continue. Plus, Beck-Howard added, while new tax implications are not necessarily large, they are just one more tax for employers to keep track of.

Now, employers are grappling with how to implement attendance policies and incentivize their employees to come to work, St. Claire said.

“There are a lot of regulations on what you can and can’t ask, and I think that makes a lot of employers uneasy,” said St. Claire.

On top of the day-to-day demands of leading a manufacturing business, ensuring compliance with all of the new regulations poses a significant administrative burden, Beck-Howard said.

“It is nice that the state is going to be administering the paid family and medical leave, but of course there are concerns about bureaucracy and things getting lost in the process,” said Beck-Howard.

Still, the benefits of being as compliant as possible outweigh any potential drawbacks — not only are employers avoiding potential lawsuits by updating their policies as thoroughly as possible, but they could also be improving employee satisfaction, recruitment and retention.

Take paid family leave specifically — although filling long-term gaps created by employees on leave is a valid concern, a 2016 Deloitte study found that 77% of workers with access to benefits said that paid parental leave impacted their decisions to go with one employer or another.

“Statistics show that if you have an environment that appropriately supports your employees, they’re going to be more productive in the work that they do,” said St. Claire.