As paid leave laws continue to be passed in states, counties and cities across the U.S., employers may wonder how these statutes intersect with workers’ compensation benefits.

Paid leave legislation generally includes several requirements of employers, often accompanied with guidance from government agencies to help businesses remain compliant.

Of SFM’s core states, only Minnesota has passed paid leave laws — both paid sick leave and paid family and medical leave. However, similar legislation has been introduced elsewhere in recent years, including:

• Wisconsin
• Nebraska (ballot initiative being pushed)
• Kansas
• Iowa

Still, the tide of new paid leave is growing. Tennessee, for example, passed a law regarding paid parental leave for public school teachers and staff.

It’s up to employers to understand these laws and the potential implications with workers’ compensation.

Minnesota paid leave and work comp

Minnesota’s Earned Sick and Safe Time (ESST) law went into effect at the outset of 2024.

SFM Corporate Counsel Kate Daly provides a rundown of the legislation and its impact on workers’ compensation.

An employee can use ESST for a work-related injury.

But what if an employee receives both ESST and workers’ compensation benefits?

The wage-coordination provisions in the workers’ compensation laws are intended to avoid duplication of wage-loss benefits so that an employee does not receive a double recovery. Minnesota’s ESST law, however, is silent on the implications of an employee receiving both ESST and workers’ compensation benefits for the same time period.

The ESST law provides that an employer’s PTO program may satisfy ESST. If an employee uses ESST/PTO to cover hours subsequently covered by workers’ compensation, the employee’s ESST/PTO could be repaid. This could be done in one of two ways:

1. If the employee is back to work, the employer could add ESST/PTO hours back to the employee’s ESST/PTO account to offset hours paid by workers’ compensation benefits
2. If the employee is not back to work, or their imminent return to work is unlikely, then the employer may need to assert in a pleading its claim for reimbursement. The claim for payment could be by way of offset, credit, or reimbursement

Employers should carefully monitor when an employee uses ESST or PTO time for a work-related injury. Employers should also be mindful that ESST does not replace workers’ compensation benefits owed.

If an employee uses ESST and then receives workers’ compensation benefits, the employer should make sure that any ESST time used is credited back to the employee’s ESST account. On the other hand, if an employee receives both ESST and workers’ compensation benefits simultaneously, the employer may have the opportunity to assert a claim for reimbursement of those payments by way of offset or credit. Employers should discuss with their claims representative or defense attorney when ESST or PTRO are used during periods also covered by workers’ compensation benefits to ensure proper coordination.

Conclusion

The complexities of Minnesota’s law and the intersection with work comp illustrates the challenges employers face as new statutes continue to go into effect across the U.S.