Accounting Considerations of Minnesota Earned Sick and Safe Time (ESST)
Effective starting January 1, 2024, Minnesota now requires employers to provide eligible employees with time off for those who work in the state of Minnesota. This only applies to employers who have existing sick time policies which do not meet or exceed the new requirements. The paid leave can be used for specified reasons such as when an employee is sick, to care for a sick family member, and for other reasons as listed on the department of labor website (see link below).
An employee is eligible for ESST if they work at least 80 hours in a year for a Minnesota employer and are not an independent contractor. Temporary and part-time employees are also eligible.
Due to the new legislation, here are a few accounting treatment items to consider:
- Determine what your Company policy will be and then consider the required accrual depending on the option chosen as follows:
- Option 1) Accrual and carryover
- Accrual Consideration: Accrue at a rate of 1 ESST hour for every 30 hours worked up to a maximum of 48 hours each year
- Option 2) Front loading with pay out and no carryover
- Accrual Consideration: Accrue 48 hours of ESST time per eligible employee as of the start of each year
- Other: If payout is occurring after the end of the year, ensure accrual is properly recorded at year end. ESST is paid at the employee’s normal hourly rate.
- Option 3) Front loading with no pay out and no carryover
- Accrual Consideration: Accrue 80 hours of ESST time per eligible employee as of the start of each year
- Option 1) Accrual and carryover
The Minnesota Department of Labor website contains a lot of valuable information as well as a frequently asked questions section which may be helpful as you are growing your understanding of the new law.
Here is the link: https://dli.mn.gov/sick-leave?gad_source=1&gclid=EAIaIQobChMI0KzM6_yHhAMV3UlHAR17NQtkEAAYASAAEgIo4_D_BwE
Please contact your current Copeland Buhl representative if you have questions.