Minnesota Passes Sweeping Legislation Mandating Paid Family Leave, Non-Compete Ban

Minnesota became the twelfth state to create a paid family leave program while also fully banning non-compete agreements among a slew of other major labor and employment policy changes that Governor Tim Walz (DFL) is expected to sign. The sweeping changes underscore that key labor and employment policy battles are largely taking place in the states in absence of federal action. 

Sweeping changes: In a pair of major laws passed this week narrowly along party lines, Minnesota lawmakers, among other changes:

• Created a paid family leave program (HF 2); 
• Banned non-compete agreements (SF 3035);
• Banned no-poach agreements (SF 3035); 
• Banned “captive audience” meetings (SF 3035);
• Restricted warehouse productivity quotas (SF 3035); and
• Mandated up to six days of paid sick leave. 

The laws passed largely along party lines, and represent a breathtaking amount of labor and employment law and policy changes packed into just two bills. 

The paid family and medical leave program would be administered by the state and funded through a payroll tax shared between employers and employees. Employees would be entitled to up to 20 weeks of family and medical leave per year at partial pay. 

The non-compete ban only provides exceptions for specific business sale or dissolution scenarios, similar to the FTC’s Proposed Rule. The ban will not be retroactive. 

The captive audience meeting ban would specifically prohibit employers from requiring workers to attend meetings “if the meeting or communication is to communicate the opinion about religious or political matters.” Most importantly, “political matters” is defined to include discussions on unions. It is likely that this provision will meet legal challenge on the basis of preemption; a similar law passed in Connecticut is currently tied up in litigation for that very reason.

Outlook: In only one pair of laws, Minnesota added to the growing patchwork of state laws on a number of key labor and employment law issues. Paid family leave, non-compete agreements, captive audience meetings, and others have become flashpoints on the state level in the absence of federal action, and in one fell swoop, Minnesota is now at the forefront. Other states with Democrat-controlled legislatures may soon follow suit.