On May 24, 2024, Governor Walz signed into law the Minnesota Consumer Data Privacy Act (MNCDPA). This landmark law is the first set of comprehensive consumer privacy standards specific to Minnesota residents. The law will take effect on July 31, 2025, for most covered entities.

Who Must comply with the MNCDPA?

The law applies to entities that control or process personal data from a significant number of Minnesota residents, or that derive a significant amount of their gross revenue from the sale of personal data. Specifically, it applies to entities that (1) control or process personal data of at least 100,000 Minnesota residents during a year or, (2) derive over 25% of their gross revenue from selling personal data and process or control personal data of at least 25,000 Minnesota residents. These threshold limits are similar to those in many of the other states that have enacted comprehensive consumer data privacy laws.

The MNCDPA also contains several exclusions. For example, small businesses, as defined by the U.S. Small Business Administration, are largely exempt from the MNCDPA, but they must still obtain prior consent before selling any individual’s sensitive data. Certain categories of entities are also excluded from the law’s scope, such as government entities, federally recognized American Indian tribes, state or federally chartered banks, and airlines. In addition, the law also includes the usual data-level exemptions for data processed under certain federal laws, such as protected health information under HIPAA and personal data processed pursuant to the Gramm-Leach-Bliley Act.

What is required by the MNCDPA?

Minnesota provides an expansive list of individual consumer privacy rights and additional requirements that must be enacted by impacted businesses. Like many states, the MNCDPA gives individuals the right to personal data access, correction, deletion, and data portability. Individuals can also opt-out of the sale of their personal data and the processing of their personal data for targeted advertising. Companies that have already complied with existing omnibus state privacy laws like the CCPA will recognize many of these rights.

However, in a first for a comprehensive state privacy law, the MNCDPA not only grants individuals the right to opt-out of profiling used to make decisions that have legal or similar significant impact on consumers, but also grants a variety of additional rights. This includes the right to contest the results of any profiling, as well as the right to know which actions they could have taken to secure a different outcome. There is also a right to review the personal data used in the profiling, to correct any inaccurate data, and then to get the decision reevaluated. This is a unique requirement that could have a significant impact on businesses using artificial intelligence or non-AI algorithms to make automated decisions that impact individuals, such housing determinations, educational enrollment, and access to essential goods and services.

The MNCDPA introduces several unique privacy program requirements, definitions, and documentation. For example, data privacy and protection assessments (DPPAs) must be conducted for high-risk processing activities, including targeted advertising, selling personal data, processing sensitive data, and any processing with heightened risk of harm. Unlike other states, Minnesota’s DPPAs must detail the type of data, its sensitivity, and the context of processing, alongside describing necessary policies and procedures. The law also prohibits discrimination against consumers based on various personal data attributes in areas such as housing, employment, and public accommodations. Notably, the MNCDPA also takes a unique approach to location data, and defines “specific geolocation data” using precise latitude and longitude measurements rather than the more typical approach a radius in feet, setting it apart from other states and possibly requiring businesses to revisit their approach to geolocation data.

Finally and unsurprisingly, the MNCDPA requires covered entities to have a “reasonably accessible, clear, and meaningful privacy notice.”  The privacy notice must include, among other things, the purposes for which consumer data is processed, a description of retention policies for personal data, and the categories of data and third parties to whom that data is sold or shared. Fortunately, the MNCDPA does not require an independent Minnesota-specific privacy section, so long as the privacy policy itself meets the content requirements of the law.

How will the MNCDPA be enforced?

The Minnesota Attorney General’s Office will exclusively enforce the MNCDPA, with civil penalties available up to $7,500 per violation. Before January 31, 2026, enforcement must begin with an attorney general warning letter and a 30-day cure period, but any later violations will not be afforded the same opportunity to cure any alleged violations.

Given the complexities of the MNCDPA, we anticipate many organizations will have questions about the Act’s applicability, how to comply, and what steps can be implemented now to stay ahead of the July 31, 2025, effective date. For questions about the MNCPDA and how it may apply or affect your business, reach out to Lisa Ellingson, co-chair of our Data Privacy team.

Following last year’s significant changes to Minnesota’s lobbyist regulations, Governor Tim Walz has signed two bills that further amend these provisions. The Elections Omnibus bill, H.F. 4772 (MN Session Laws 2024, Chapter 112), was passed first and sought to provide some clarifications, while an additional provision was added to the Omnibus Tax and Supplemental Budget bill, H.F. 5247 (MN Session Laws 2024, Chapter 127), in the waning hours of session to address certain individuals who provide professional expertise but may be newly classified as lobbyists. Below is a brief summary of the latest round of changes.

New Registration Requirements Stayed Until June 2025

Prior to passage of last year’s lobbyist registration changes, those who lobbied metropolitan governmental units were already subject to registration and reporting requirements. Those requirements remain in place at this time. However, individuals who are newly subject to lobbyist registration and reporting due to the expansion of regulations to all political subdivisions do not have to register until June 1, 2025.

Study of Lobbyist Laws Authorized

The Campaign Finance and Public Disclosure Board (CFB) has been tasked to “study and make recommendations to the legislature on the definitions of ‘lobbyist,’ ‘local official,’ ‘public official,’ and ‘official action of a political subdivision’ for purposes” of lobbying registration and reporting requirements. The study must be completed and submitted to the Legislature by January 15, 2025, allowing the legislature time to act on the recommendations prior to the registration requirements taking effect on June 1, 2025.

Are Professional Experts, including CEOs, Lobbyists?

One topic most in need of clarity following the 2023 changes was the role of professional experts who offer information to elected officials at the request of a lobbyist. Both the House and Senate included a provision that excluded individuals providing such expertise from the definition of a lobbyist, but that provision was removed at the last minute. The removal followed a discussion among members of the conference committee regarding the issue, including whether CEOs would fall under this exclusion. The conferees were conflicted about excluding CEOs and expressed a desire to have the CFB examine the issue during the study.

Lobbyists and Contingent Fees

Minnesota law has long prohibited lobbyists from being paid on a contingent fee basis, in other words, only getting paid if they have legislative success. However, one of the concerns with the expanded local lobbying regulations is that certain individuals who have long been paid on a contingent fee basis and have never been considered lobbyists, may now be classified as lobbyists under the 2023 changes. While the legislature examines this predicament over the next several months, a provision was included in H.F. 5247 that states:

Not withstanding any law to the contrary, an attorney or financial advisor participating in conduit financing through a local unit of government may be paid on a contingent fee basis.

This section expires on June 1, 2025, presumably following further clarification in law.

It is clear that the Legislature will again revisit the issue of local lobbyist registration and reporting requirements in 2025. In the meantime, please let us know if you have any questions.

Important Reminder

Lobbyist reports are due on Monday, June 17, covering the period from January 1, 2024 – May 31, 2024. As a reminder, these reports will contain different information than was required on previous reports. Once the new forms are available, please let us know if you have any questions.

Time’s Almost Up

As the House and Senate work towards the May 20 adjournment date, the Legislature is rapidly running out of time. With the conclusion of the House and Senate floor sessions on Thursday, May 9, only five legislative days remain to complete their work. It is unusual at this time of year for the Legislature to have more calendar days remaining to complete their work, 10, than legislative days, 5. It’s also worth a reminder that the Legislature cannot pass bills on the final day of session. Total days available, including the last day of session, are 11 (calendar) and 6 (legislative). Most anticipate that the Legislature will use all the calendar and legislative days available.

Capital Investment Bill Marches Forward

The House Capital Investment Bill, H.F. 5220, passed the Ways and Means Committee on Wednesday on a party-line vote. The bill contains $898 million in general obligation bonds for projects primarily related to asset preservation for higher education, natural resources, transportation, and public safety along with other state capital needs. Since capital investment bills must originate in the House, the Senate capital investment bill, S.F. 5251, was heard and laid over in the Senate Capital Investment Committee last week. Both bills contain a placeholder for approximately $300 million that will be allocated to local projects prior to the bill’s passage.

Republicans Vow to Vote Against Capital Investment Bill

Because the Minnesota Constitution requires capital investment bills to be passed by three-fifths of all elected members, 81 House members are needed to pass the bill. With a 70-64 partisan split in the House, the majority DFLer’s need 11 Republicans to vote for a bonding bill. In Ways and Means, Representative Pat Garofalo (R-Lakeville) announced that all House Republicans would vote against the bill. Presumably, Republicans are withholding their votes on capital investment to gain leverage on other issues. As one long-time capitol insider said this week, “Republicans will say they won’t vote for a bonding bill…until they do.”

Odds on Sports Betting

One of the most-hyped bills heading into the legislative session is still limping towards the finish line. A bill to authorize and regulate sports wagering, H.F. 2000/S.F. 1949, is waiting to be heard in the House Ways and Means Committee and the Senate Finance Committee. House Speaker Melissa Hortman (DFL-Brooklyn Park) said on Thursday that she felt that a sports betting bill had a 60 percent chance of passing in the last week of session. Senate passage remains much murkier as the body continues to be bogged down in partisanship surrounding Senator Nicole Mitchell (DFL-Woodbury).

Turning Up the Heat

While temperatures have been rising outside (and Minnesotans have been universally loving it!), temperatures also continue to rise in the Minnesota Senate. Earlier this week, the Senate Rules and Administration Subcommittee on Ethical Conduct met to discuss a complaint that had been filed against Sen. Nicole Mitchell following her arrest and charging of first-degree burglary (video/audio available here: Subcommittee on Ethical Conduct, 5.7.24) The committee consists of two Republican and two DFL members. Following a significant discussion, including the presentation of various information that has been provided to the public regarding the situation, Sen. Mitchell’s attorney pleaded the fifth on behalf of his client in answer to almost every question posed. After several deadlocked votes, the committee members went into executive session, eventually returning and agreeing to meet again on June 12, two days after Sen. Mitchell’s next court date.

Uncertainty Remains at Capitol

The Senate avoided the passage of controversial bills again this week in the wake of the arrest of DFL Senator Nicole Mitchell on first degree burglary charges. After being absent last week, Senator Mitchell returned to the Senate Floor this week for the first time since her arrest. In response, Senate Republicans attempted various motions designed to prevent her from voting. With Senator Mitchell voting, the DFL Majority rejected these motions on a party-line 34-33 vote, citing Mitchell’s right to due process in the Senate Ethics Committee. The Senate Ethics Committee will hear an ethics complaint against Mitchell on May 7.

Late Senator David Tomassoni Honored

The House and Senate passed a bill this week renaming a portion of Highway 169 in honor of the late Senator David Tomassoni, who served the Iron Range in the state legislature for nearly two decades until his passing in 2022. Governor Walz signed the bill into law on Wednesday with Senator Tomassoni’s family present.

House Passes Transportation, Labor, and Housing Bill

The House made progress on passing supplemental budget bills this week. H.F. 5242, which contains the supplemental budget bills for transportation, labor and housing, passed the House by a 69-60 vote. The Senate is expected to address the bill next week.

House Debates Gun Legislation

The House devoted a significant amount of floor time this week to gun legislation. On party-line votes, with DFLers voting in favor and Republicans voting no, the House passed bills to: 1) require lost or stolen guns to be reported to law enforcement; and 2) to expand firearm storage requirements. These bills face an uncertain future in the Senate.

Home Stretch

The 2024 Legislative Session is entering the home stretch, with just two full weeks remaining until the mandated adjournment date of May 20. With just 9 official legislative days remaining (and only 8 when bills can be passed) and numerous supplemental budget bills still needing to pass both bodies, it is expected that the House and Senate will be spending some long days on their respective floors in the next two weeks.

Does the Trifecta Still Exist?

In the wee hours of Monday morning, freshman Senator Nicole Mitchell (DFL-Woodbury) was arrested for first-degree burglary. As details have trickled out throughout the week, providing a constant stream of gossip and speculation, the key question is whether she will ever return to the legislature. The Senate met twice this week, but Sen. Mitchell was not present, either in person or virtually. The Senate DFL Party has had a tenuous 34-33 majority, and without Sen. Mitchell’s vote, the Senate is currently at a stand still to pass anything but non-controversial motions. At this time, not only is it unclear how the legislative session will end, but it is unclear whether the Democrats still have a Senate majority.

Time is Running Short

Only three weeks remain before the May 20th Legislative adjournment date. The Senate had planned to pass about a half dozen bills off the floor this week, but those plans were dashed due to Sen. Mitchell’s absence. While the House is continuing to advance legislation as planned, both the House and Senate were down to a tight time schedule to pass, conferee and repass more than a dozen omnibus bills. With the loss of any real action in the Senate this week, that timeline is quickly shrinking.

Legislative Days are Running Even Shorter

Typically, a solution to the short three-week timeframe would be to simply meet over the weekend. However, as we had mentioned earlier in the legislative session, last year the Legislature used up far more legislative days (any day either the House or Senate meets on the floor) than normal. After today, only 14 legislative days remain.

Number One Priority Yet to Come

In addition to the various omnibus bills that are queued up, the Legislature’s stated number one priority for the session—a capital investment bill—is still in the works. The House has announced that it will release its list of proposed projects on Sunday, and that it intends to pass the bill out of committee by mid-week. The Senate has yet to release its recommendations. Requiring a super-majority to pass off the floor, the capital investment bill was expected to be the crowning achievement of this session, but its fate remains as uncertain as everything else.

Impact on 2024 Elections

As legislative leaders continue discussions for how to end this session, what will be left unsaid is the expected impact on the 2024 election cycle, which could be substantial. The entire Minnesota House of Representatives will be up for election, and many Republicans have been feeling upbeat about their prospects of taking over the majority. Additionally, Senator Kelly Morrison (DFL-Deephaven) is expected to win an open Congressional seat, leaving her seat open in a likely special election. Add the possibility of an election to replace Senator Mitchell, and there are suddenly a lot of opportunities for Republicans to end the current DFL trifecta over state government.

Over a year after it proposed a rule banning virtually all non-compete agreements, the Federal Trade Commission (“FTC”) voted to issue its long-awaited final rule.  The final rule is substantially the same as the proposed rule, with a new exception for “senior executive” agreements that were in place before the final rule’s effective date.  The rule’s effective date could be delayed by the lawsuits just filed by the United States Chamber of Commerce and other trade groups, which challenge the authority of the FTC to regulate issues of such vast economic and political significance.

Employers currently using non-compete agreements should consider making a plan for compliance if the final rule goes into effect.  These questions and answers below are applicable to entities subject to the FTC Act (the FTC Act does not apply to many nonprofit corporations[1], banks, savings and loan institutions, federal credit unions, or common carriers, among others).

What are the key elements of the final rule?

• The final rule bans new post-employment non-competes with all workers (including independent contractors) after the final rule’s effective date.  Specifically, the final rule provides that it is an unfair method of competition—and therefore a violation of the FTC Act—for employers to enter into non-competes with workers after the effective date.
• Existing post-employment non-competes with workers other than senior executives are not enforceable after the effective date of the final rule. The final rule makes it an unfair method of competition to enforce or attempt to enforce a non-compete clause, or to represent that a worker (except for a senior executive) is subject to a non-compete clause after the effective date.
• For senior executives, existing non-competes can remain in force.
• Before the effective date, employers must give notice to current and former employees that existing non-competes are no longer enforceable.
• There is a limited exception allowing new non-competes in certain “sale-of-business” agreements.

When does the final rule go into effect?

The final rule goes into effect 120 days from the date of publication in the Federal Register.  The current expected effective day is late August or early September, 2024, subject to any delays caused by litigation.

What is considered a “non-compete clause”?

Prohibited non-compete clauses are any term or condition of employment (including contracts and employer policies or handbooks, whether written or oral) that prohibit a worker from, penalize a worker for, or function to prevent a worker from seeking or accepting other work after the conclusion of employment.  Also prohibited are clauses that would prohibit, penalize, or function to prevent a worker from starting their own business after they leave employment.

Importantly, the rule does not prohibit employers from limiting employees from competing during employment.  The final rule also does not apply to non-competes if they restrict only work outside the U.S. or starting a business outside the U.S.

The FTC declined to carve out an exception for “forfeiture-for-competition” clauses, which are often a component of deferred compensation arrangements for executives.  These types of clauses will likely be considered prohibited non-compete clauses under the final rule.

What about confidentiality or non-solicitation agreements?

Well-drafted confidentiality, non-disclosure, and non-solicitation agreements are permissible under the final rule as long as they are not so broad that they would functionally prevent a worker from working for another employer in the same field. Under the FTC’s explanation, an agreement in which the worker agrees not to disclose certain confidential information to a competitor would not prevent a worker from seeking work with a competitor or accepting such work after a worker leaves their job.

Similarly, a non-solicitation agreement that restricts who a worker may contact after leaving a job, but does not prevent a worker from seeking or accepting other work or starting a business is not a prohibited non-compete clause.  Whether a non-solicitation agreement rises to the level of a non-compete, however, is a fact-specific inquiry.

Who is considered a “senior executive”?

In general, the term “senior executives” refers to workers earning at least $151,164 per year AND who are in a “policy-making position.”  A “policy-making position” is defined as:

• An entity’s president, chief executive officer or the equivalent.  These positions are automatically considered “senior executives” if they meet the compensation threshold.  Employers do not need to consider the further element of “policy-making authority”;
• Any other “officer” of a business who has “policy-making authority”;
  • “Officer” includes a vice president, secretary, treasurer, or principal financial officer, comptroller or principal accounting officer and other person routinely performing corresponding functions.
  • “Policy-making authority” means final authority to make policy decisions that control significant aspects of a business entity or common enterprise.

The FTC believes fewer than 1% of workers are estimated to be senior executives under the final rule’s definition, which the FTC meant to include only workers likely to have “bespoke, negotiated agreements—those with the highest level of authority over the organization.”

In its explanation of the final rule, the FTC noted that “C-suite” executives will likely be senior executives.  The FTC also explained that partners in a business, such as physician partners of an independent physician practice, would also generally qualify as senior executives under the duties prong, and would also likely fall under the sale of business exception if the partner leaves the practice and sells their shares of the practice.

Important to note is that having final authority to make policy decisions for only a subsidiary of or affiliate of a common enterprise is not considered “policy-making authority.”  The FTC gave the example of a business operating in several states with its operations in each state organized as their own corporation. Assuming these businesses and the parent company are considered a common enterprise, the head of each state corporation would not be a “senior executive.” Rather, only the senior executives of the parent company (or whichever company is making policy decisions for the common enterprise) would qualify.

Are there any other exceptions?

Yes, non-competes entered into by a person pursuant to a bona fide sale of a business entity, of the person’s ownership interest in a business entity, or of all or substantially all of a business entity’s operating assets are not considered unfair competition. The proposed rule required the seller to hold at least a 25% ownership interest in the business entity, but this was not incorporated into the final rule.

The final rule only applies to non-competes between businesses and workers. Although the FTC sought comment on franchisor/franchisee relationships, the final rule does not apply to non-competes in franchisor/franchisee contracts (however, these are still subject to other antitrust laws).

Notably, causes of action that accrued prior to the effective date are excepted from the final rule. The FTC’s guidance states that it adopted this exception “to be clear that the final rule does not render any existing non-competes unenforceable or invalid from the date of their origin. Instead, it is an unfair method of competition to enforce certain non-competes beginning on the effective date.” Thus, if the final rule goes into effect, non-competes may still be enforced where the cause of action accrued prior to the rule’s effective date.

Finally, it is not an unfair method of competition to enforce or attempt to enforce a non-compete clause or to make representations about a non-compete clause where a person has a good-faith basis to believe that the ban is inapplicable.

What type of notice do employers need to provide under the rule?

Prior to the effective date of the final rule, employers will need to provide notice to each worker who is subject to a non-compete in violation of the rule. The notice must identify the person who entered into the non-compete clause with the worker and be provided via mail, hand delivery, email or text message to the worker. The FTC has issued a model form of notice in various languages.  If an employer has no record of a street address, email address, or mobile telephone number for a worker, the employer is exempt from the required notice provision for that worker.

What about state non-compete laws?

State laws are not preempted if they do not conflict with the final rule, and states may continue to enforce laws that restrict non-competes if the scope of the state restrictions is narrower than the final rule.

What should employers do now?

Do not immediately send out notices to workers that their non-competes are unenforceable.  There is a strong chance that the final rule’s implementation will be enjoined by a court before its scheduled effective date, so keep abreast of the status of litigation challenging the final rule. However, it may be wise to prepare to send notices in case the rule goes into effect. This includes determining which past and current workers are subject to a non-compete that would be in violation of the final rule, and determining whether the business maintains contact information for these workers. Some businesses may also determine that it has “senior executives” not subject to a non-compete that should be before the final rule goes into effect.

Winthrop & Weinstine continues to monitor the situation and we will update you on this topic as the litigation unfolds.  Employers should keep in mind that narrowly-tailored agreements that protect legitimate business interests are more likely to be enforceable under the current framework of state and federal law. For more information about employment agreements, including non-competition, non-disclosure, and non-solicitation provisions, please feel free to reach out to any member of our Employment team.

[1] Not all entities claiming tax-exempt status as nonprofits fall outside the FTC’s jurisdiction. To be exempted from the FTC’s jurisdiction, a corporation must be organized for and actually engaged in business only for charitable purposes, and the corporation’s income must go toward public interests, rather than allowing the corporation or its members to derive a profit.

Legislature Reaches Third Deadline

The Legislature has reached another important deadline this week; Friday, April 19, is the final date upon which committees can act favorably on major appropriation and finance bills. Called the Third Deadline, the House and Senate Finance Committees are required to pass supplemental budget bills to the House Ways and Means Committee or the Senate Finance Committee before the end of the day. While the Senate Finance Committee will begin hearing supplemental budget bills on Friday, April 19, most supplemental finance bills will be heard after the Passover Recess next week.

What’s Next

The Minnesota House and Senate will be in recess for Passover on Monday, April 22, and Tuesday, April 23. Legislative activities resume on Wednesday, April 24, at 12:00 noon. This is the last formal recess of the 2024 Session, so expect both bodies to push hard to complete their work by the May 20th deadline.

House Releases Tax Bill

Representative Aisha Gomez (DFL- Minneapolis) released the House Tax Bill, H.F. 5247, this past week. Because 2024 is a supplemental budget year, H.F. 5247 carries a small price tag of $53 million for FY 24-25 and an even smaller cost of $5 million in FY 26-27. The largest item in the bill is the expansion of the child tax credit at $32 million, which was recommended by the Governor. H.F. 5247 also requires the Department of Revenue to release corporate tax return information for corporations with over $250 million in domestic sales. This corporate tax disclosure requirement is strongly opposed by the Minnesota Business Partnership and the Minnesota Chamber of Commerce. The Senate Tax Bill, S.F. 5234, is expected to be unveiled next week.

Running Aces Sues Mille Lacs and the Prairie Island Tribal Communities

The Running Aces Harness Track has filed a federal RICO lawsuit against the Mille Lacs Band of Ojibwe’s two casinos and the Prairie Island Indian Community’s lone casino. Running Aces has alleged that these casinos are operating card games in violation of state and federal gambling laws. The lawsuit comes as the House and Senate are considering major changes in gaming law. Both bodies are moving bills that would legalize sports betting and give the tribes exclusive rights. The House is also moving a bill that would ban gambling on historic horse racing after 500 machines for such purpose were recently approved by the Minnesota Racing Commission.

Endorsement Season

In addition to keeping busy with legislative work, legislators have also been busy looking toward the fall elections and heading home for campaign-related events. Communities across the state have been holding endorsing conventions for candidates to the Minnesota House of Representatives, of which all will be on the ballot in November.

Minnesota Revenues Continue to Grow

Minnesota Management and Budget (MMB) reported this week that Minnesota’s revenue collections for February and March are $241 million more than was forecasted in the February 2024 Budget and Economic Forecast. MMB also reported that the State’s macroeconomic consultant now expects a slightly improved economic outlook in the “near term”. Annual GDP is expected to be 2.5 percent this year, compared to the 2.4 percent predicted in their February forecast.

Lobbyist Registration Requirements Get Another Look

Both the Minnesota House of Representatives and the Senate have created an omnibus elections policy bill, H.F. 4772 (Rep. Mike Freiberg, DFL-Golden Valley) / S.F. 4729 (Sen. J. Carlson, DFL-Eagan). While the bills contain several different issues, both have provisions that further address the significant changes that were made to lobbyist registration requirements last year. Provisions related to the following issues are included in at least on the bills:

• A study on lobbyist registration requirements, to determine if further changes should be made;
• A deferral on new registration requirements based on last year’s changes, to provide additional time for Administrative Rules to take effect and to better alert lobbyists and potential lobbyists to the changes;
• Clarification of provision of professional services versus lobbying to entities.

While the House has passed its bill, the Senate is expected to pass its version sometime next week. The bills will go to conference committee where the differences will be reconciled.

Recycling Issues Take Center Stage at Legislature

Two major recycling bills are moving through the legislature. H.F. 3566 (Rep. A. Hollins, DFL-St. Paul) / S.F. 3940 (Sen. R. Kupec, DFL-Moorhead) would expand Minnesota’s electronic waste law, which currently covers appliances and computers, to all electronics and impose a 3.2% retail fee. Another bill, H.F. 3577 (Rep. S. Jordan, DFL-Minneapolis) / S.F. 3561 (Sen. K. Morrison, DFL-Deephaven) would create an Extended Producer Responsibility (ERP) program organized and funded by producers of packaging and papers products to collect, recycle and reuse packaging and paper products. Both bills are facing significant opposition but are close to being heard on the Senate and House Floors.

Set-Aside

As the legislature begins putting together omnibus finance bills, it has already become apparent that several issues are not making the cut this year. One of the key issues that had been discussed over the interim that is being set aside for the year is an expansion of child care subsidies with a price tag of $500 million (H.F. 3681 – Rep. Carlie Kotyza-Witthuhn, DFL-Eden Prairie). With limited budget targets, high dollar provisions like this will not be passed this year.

Uber/Lyft Saga Continues to Make Headlines

This week the Minneapolis City Council unanimously voted to delay the start of an ordinance requiring minimum pay for Uber and Lyft drivers in the city. Passed earlier this year and set to take effect on May 1, the ride sharing companies threatened to pull out of the city when the ordinance goes into effect. The new effective date is now set for July 1, and is intended to provide additional time to further negotiate with Uber and Lyft and provide additional time for other ride sharing companies to establish operations in the city.

Omnibus Policy Bills on the Move

Prior to the March 22^nd legislative deadline for policy bills, most committees created omnibus policy bills. Starting this week, both the House of Representatives and the Senate engaged in lengthy floor sessions as they passed many of these bills. It is expected that both the House and Senate will finish passing these bills prior to the legislative deadline for finance bills, which is quickly approaching on April 19.

Agency Finance Bills Appearing

This week also saw the appearance of most of the bills containing recommendations from Governor Tim Walz’s supplemental budget proposal. While just introduced, many of these bills are already scheduled for hearings next week. Most will be heard and then laid over for future action, eventually becoming the basis for committees’ omnibus finance bills.

House and Senate Consider Bills to Apply Prevailing Wage to TIF and LIHTC

The House and Senate are hearing H.F. 4994 (Rep. Nathan Coulter, DFL-Bloomington) /S.F. 5157 (Sen. Grant Hauschild, DFL-Hermantown), bills that would apply a prevailing wage requirement to tax increment financing (TIF) funding on multifamily rentals who have either 25 or more units or $100,000 of financial assistance. It would also apply that requirement to low income housing tax credits (LIHTC) development when credits are used for projects with more than 10 units. The proposal would be effective on projects who receive financial assistance after August 1, 2024.

The bill was heard in the House Tax Committee on Thursday, April 4^th, and will likely be heard in the Senate Labor Committee next week.

Constitutional Referendum on Full-Time Legislature and Redistricting Clears Second Committee

Representative Jamie Long’s (DFL-Minneapolis) constitutional referendum bill, H.F. 4598, passed the House State and Local Government Finance and Policy Committee on Thursday, April 4^th. The next stop for the bill is the House Rules Committee, and the bill appears to be on a trajectory to pass the House.

H.F. 4598 wraps three questions into one constitutional amendment, and it is the goal of Representative Long to get this language on the November 2024 Ballot. The amendment would state:

“Shall the Minnesota Constitution be amended to require an independent redistricting commission to adopt boundaries for congressional and legislative districts following a decennial census; to prohibit members of the legislature from serving as lobbyists while in office and for a period of one year after leaving office; and to amend requirements related to the timing and process for convening regular legislative sessions?”

While the bill passed on a party-line vote, most of the contentious debate occurred on the language related to the timing of legislative sessions. Republican members claimed this would create a year-round legislature while DFLer’s denied this claim.

Consumer Data Privacy Bill Expected to Pass as Part of Commerce Omnibus Bill

According to bill author Rep. Steve Elkins (DFL-Bloomington), the Consumer Data Privacy legislation (H.F. 2309 / S.F. 2915) that he has been working on for several years, is expected to be added to a yet-to-be-created omnibus commerce finance bill sometime in the next couple of weeks. The bill has a relatively small cost associated with it, which is also anticipated to be carried in the Commerce budget.

Joint Budget Targets

Late last Friday, Governor Tim Walz, along with leaders of the Minnesota House and Senate, agreed to modest joint budget targets for supplemental budget bills. The targets would allow for spending $477.5 million in the current 2024/25 budget, and $62.7 million in future years. Starting with a $3.7 billion projected budget surplus in fiscal years 2024/25, the agreed to targets will leave an anticipated $3.2 billion on the bottom line heading in to next year’s budgeting session. With the policy deadline behind us, committees are already getting to work hearing limited spending bills.

State of the State

On March 26, Governor Tim Walz gave the annual State of the State address from the newly-constructed Owatonna High School. Generally speaking, his comments were considered typical fare for the Democratic Governor heading into an election season, with a focus on education, reproductive rights, and gun violence prevention, along with capital investment projects, affordable housing, and labor issues. (Note: Governor Walz won’t be on the ballot this year, but the entire Minnesota House of Representatives will be.)

State of the Session

Beginning at 5:00 p.m. on Wednesday, March 27, the legislature began the first of three short breaks scheduled for this year. Official legislative activity will be paused until noon on Tuesday, April 2, when both the House and Senate will meet in floor session. The legislature will also take short breaks from 5:00 p.m. on Tuesday, April 9, until noon on Thursday, April 11 (Eid), and from Monday, April 22, until activity resumes at noon on Wednesday, April 24 (Passover).

Cannabis Changes Advance

The new Office of Cannabis Management (OCM) released the first agency recommendations (H.F. 4757 – Rep. Zack Stephenson, DFL-Coon Rapids / S.F. 4782 – Sen. Lindsey Port, DFL-Burnsville) to the new adult use cannabis law passed in the 2023 legislative session. Among key components of the recommendations are unifying the medical and adult use supply chains and moving from a point-based merit licensing system to a vetted lottery system. The agency bill has become a cannabis omnibus bill, and has several committee stops, and likely many language iterations, yet to come.

House and Senate Move Worker Misclassification Bill

Representative Emma Greenman (DFL-Minneapolis) and Senator Clare Oumou Verbeten (DFL-St. Paul) have authored H.F. 4444/S.F. 4483, a bill that would amend labor, construction, and licensing statutes to strengthen worker misclassification laws. H.F. 4444/S.F. 4483 will be heard in the Senate and House Tax Committees after the Easter legislative break, and the bill seems to be on a trajectory to pass into law before the legislative session adjourns in May.