Starting January 1, 2026, employers that employ Minnesota workers will start paying premiums to the State of Minnesota for its new Paid Family and Medical Leave Insurance program. This program will be run out of a new division of the Minnesota Department of Employment and Economic Development (“MN DEED”). In creating this program, Minnesota will become the 12th state, plus the District of Columbia, to have some form of paid family and medical leave.
While employers do not start paying the premiums until January 1, 2026, employers will be required to submit certain documentation to MN DEED starting in 2024 and will be responsible for notifying their employees of the program in 2025. The state-run insurance program will function similarly to existing unemployment insurance.
How Much Will Premiums Cost?
The new law will require payments of 0.7% of an employee’s taxable wages as premiums. Employers have the option to charge employees a maximum of half this premium, or 0.35%, through a wage deduction.
The details of how payments will be made and monitored are not fully developed yet, but the state is in the process of creating an online account system for employers.
Which Employers are Covered, and Which Employees are Eligible?
The new law requires participation by all employers that have Minnesota employees, regardless of the employer’s size. However, not all employees are covered. In order to receive benefits, an employee must have earned at least 5.3% of the state average annual wage (which currently amounts to $3,500) in the most recent four completed calendar quarters. There are certain exceptions to eligibility under the law that may apply if an organization employs seasonal workers.
Independent contractors and self-employed individuals are excluded from eligibility, but they may separately elect to purchase coverage. Importantly, covered employers may elect to provide a private paid plan rather than participate in the state plan. Employers that choose this alternative option must provide benefits and protections that are equivalent or better than the benefits and protections provided by the state plan, and the employer will need to seek approval of their plan through the new division of MN DEED. While an employer providing a private plan will not need to pay the premiums to the state, the employer will need to pay a plan approval and oversight fee.
When Can Employees Take Paid Leave, and For How Long?
Eligible employees may apply for benefits under the new paid leave program beginning in January 2026, provided that they have a qualifying reason for needing time off. Reasons that qualify for coverage under the new paid leave program include: (i) a need to address the employee’s own serious medical condition; and (ii) a need for certain other types of eligible leave that include the following:
- Family Care Leave: Leave taken to care for a family member suffering from a serious medical condition.
- Bonding Leave: Leave taken to bond with a new child, whether biological, adoptive, or fostered.
- Safety Leave: Leave taken due to domestic abuse, sexual assault, and stalking, which includes seeking medical attention, victim services, counseling, relocation, and legal advice.
- Qualifying Exigency Leave: Leave taken due to active-duty service or a notice of active duty for the employee or the employee’s family member.
In most cases, a claim for benefits must be based on a single qualifying event that requires the employee to be away from work for at least seven calendar days.
An employee will be able to take up to 12 weeks of paid leave for their own serious health condition and up to 12 weeks for Family Care Leave, Bonding Leave, Safety Leave, or Qualifying Exigency Leave, but they may not exceed 20 weeks in one year. Leave may be consecutive or intermittent, although there are additional requirements if the employee seeks to take leave intermittently.
How Much Will Employees Be Paid While on Leave?
Benefit payments will function similarly to unemployment insurance. As with unemployment insurance, an employee will be paid via state funds while on leave and not directly by the employer. Furthermore, the employee will need to file an application for benefits with a new division of MN DEED to obtain benefits. This new division will determine whether an employee is eligible to receive benefits.
Employees will not be paid 100% of their wages while on leave. Again, as with unemployment insurance, the state will determine and apply a maximum weekly benefit amount. The state will provide a progressive wage replacement to the employee ranging from 55% replacement to 90% replacement, depending on certain factors.
What Steps Do I Need to Take Now?
For now, employers should closely monitor updates from MN DEED regarding the new program, as more details will be revealed in the coming year. In the meantime, employers may want to consider whether current privately-funded paid leave plans will be sufficient under the new law to avoid paying the premiums and, if not, whether it is prudent to participate in the state-run program starting in 2026 or bring their privately-funded plans into compliance. Additionally, employers should start considering whether they may need to make any other changes to their existing policies and procedures in order to ensure compliance prior to January 2026. As just one example, employers may need to revise the employee notice and request procedures in their family and medical leave policies to ensure they align with the new requirements in addition to other applicable federal, state, and/or local laws.
Employers are encouraged to consult with an employment lawyer about policy and procedure revisions, and implementation of the state-run insurance program and online account system will likely lead to additional developments between now and January 2026. FMJ’s HR & Employment Law Practice Group would be glad to review and audit your current setup, and they can help work through strategies and training options for the future. If you are interested in connecting with the team to discuss paid Family and Medical Leave in Minnesota, or any other HR and Employment law matters, please contact Shannon McDonough, Natolie Hochhausen, and Jamie Briones.
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