According to the U.S. Bureau of Labor Statistics, only 27% of private industry employees nationwide had access to paid family leave as of 2023. A lack of paid leave not only makes it more challenging to maintain work-life balance but can also lead to financial hardship, increased stress, poor health outcomes, and decreased performance.
Recognizing the importance of providing workers with paid time off to care for themselves and their loved ones, the Minnesota legislature passed a paid family and medical leave (PFML) law on May 25, 2023, with provisions set to go into effect on January 1, 2026.
Here’s what employers need to know about how this law will affect their workforce and their organization as a whole.
How Will Minnesota’s Paid Leave Program Work?
Starting January 1, 2026, Minnesota will require employers to begin offering two types of paid leave:
- Medical Leave: Up to 12 weeks for the employee’s own serious health condition, including evaluation, treatment, and recovery
- Family Leave: Up to 12 weeks to care for a loved one, bond with a new child, manage military leave, or deal with certain personal safety issues
Similar to the rules governing the federal Family and Medical Leave Act (FMLA), employees can either take the leave all at once or intermittently as they need it. The law sets a limit of 20 weeks combined for those who qualify for both medical and family leave.
Minnesota’s paid leave laws also come with job and healthcare coverage protections. If the employee has been working for at least 90 days, they must be restored to their job or an equivalent position once they return, and their health plan must continue while they are on leave.
Employees will receive a portion of their normal pay while on leave, which is typically between 55% and 90% of their regular wages, with a maximum equivalent to Minnesota’s average weekly wage. To receive payments, an employee must have made at least $3,900 in the last year.
What Employers Need to Know About PFML
Minnesota’s PFML program covers organizations of any size across all industries, including out-of-state businesses with employees who live in Minnesota or work there at least half the time.
This state program is separate from FMLA and from existing Minnesota statutes that provide for pregnancy and parental leave and that govern earned sick and safe time. It does not cancel out the benefits of these laws.
An employer may not interfere with an employee’s application for paid leave or retaliate against those who use this benefit. Most employees are covered, including full-time, part-time, and temporary workers, as well as seasonal workers who are not in designated seasonal hospitality roles.
However, there are two groups to whom these benefits don’t always apply:
- Independent contractors, the self-employed, and Tribal Nations workers are not automatically included but may opt in to the program
- Federal, railroad, and postal workers are not included and cannot opt in to the program
Employee wage taxes of 0.88% will pay for Minnesota’s PFML program. This amount will be adjusted annually and can be split between the employee and employer. The employer can also choose to cover the full premium.
Small businesses may be eligible for reduced premiums. Some employers can use their own plan instead if it provides the same or greater benefits.
Preparing for Minnesota’s Paid Leave Changes
Do the following in preparation for the launch of Minnesota’s PFML program:
- Talk with your financial team to ensure you have budgeted accordingly
- Create an employer account with the state and use the online system to report wage details, which will be due quarterly starting in April 2026
- Confirm compliance with federal and state regulations, including minimum wage requirements and paycheck deduction disclosures
- Designate one or more paid leave administrators to act as the main points of contact for the program
- Display the required paid leave poster and notify employees of the change in their primary language, ensuring that they acknowledge receipt in writing
- Make sure all new employees are notified within 30 days of hire
These actions will help you remain in compliance and avoid potential penalties.
Stay Proactive About Your Labor Law Compliance
Minnesota’s new PFML program will bring many changes for employers’ budgets and workforce management strategies. By preparing for these changes, you’ll create a seamless experience for your employees, stay in compliance with the law, and keep operations running smoothly.