Minnesota Enacts Paid Family and Medical Leave Legislation

The 2023 Minnesota legislative session was a busy one.  From the elimination of non-competes, to changes to the Minnesota Drugs and Alcohol in the Workplace Act, to statewide paid sick and safe leave, there has been no shortage of change that Minnesota employers have had to digest.  Minnesota-based employers, though, have been relatively slow to grapple with one of the most fundamental changes—paid family and medical leave (“PFML”).

This is perhaps because employers are not yet feeling the repercussions of the new PFML law.  Although Governor Waltz signed the PFML bill into law in May 2023 and parts of it took effect on May 26 and July 1, 2023, employers will not have to start paying into the PFML fund until 2026, which is the same time that employees can begin taking PFML.  But since PFML will have a significant economic impact, and reporting obligations begin in 2024, now is as good a time as any for employers of Minnesota employees to get up to speed on the basics.

What Is PFML?

PFML is a public insurance program administered by the Minnesota Department of Economic Development (“DEED”).  With few exceptions, Minnesota employees who earn more than $3,500 in wages in the State of Minnesota will be eligible for PFML, and virtually all employers with employees in the State must participate in the program.

As of January 1, 2026, a Minnesota employee will be entitled to take up to 12 weeks of paid leave due to:

• the employee’s inability to work because of a serious health condition;
• the serious health condition of a family member, which is broadly defined to include: spouses and domestic partners; biological, adopted and foster children, stepchildren, those with whom the employee stands in loco parentis, and those for whom the employee is a legal guardian or de facto parent; the employee’s or the employee’s spouse’s biological, adoptive, de facto or foster parents, stepparents, legal guardians or those who stood in loco parentis to the employee or employee’s spouse when a child; siblings; grandchildren; grandparents and spouse’s grandparents; sons- and daughters-in-law; and individuals in a relationship with the employee that creates an expectation of reliance;
• bonding with a new baby or child, in the event of birth, adoption or foster care placement;
• certain needs arising out of a military family member’s active duty service or notice of a call to active duty; and
• certain needs relating to the employee or a family member having experienced domestic abuse, sexual assault or stalking.

If an employee experiences more than one qualifying event in a year, the employee could be entitled to up to 20 weeks of combined PFML.

Contributions from employers will fund PFML.  Employers will generally have to pay a premium totaling .7 percent of each eligible employee’s taxable wages, although there are certain modifications for employers with fewer than 30 employees and exceptions for employers with alternative private plans approved by the State, as examples.  For small and mid-size employers, this is not an insignificant sum and will add up over time.  To help alleviate this burden, employers may charge up to half of the premium amount (.35 percent) back to the employee through a wage deduction.  

To obtain PFML, employees experiencing qualifying events will have to apply to DEED’s PFML program and provide supporting documentation.  DEED will determine eligibility for paid leave, and the State of Minnesota will pay out the leave benefit.

Employee Protections under PFML

The new PFML law contains numerous provisions to protect employees who seek to take PFML.  As a few examples, the law provides that:

• an employer must restore an employee taking protected leave to either the same position or one that is equivalent in terms of pay, benefits and other terms and conditions of employment;
• an employer may not retaliate or discriminate against an employee for requesting or obtaining leave benefits; and
• an employer may not obstruct or impede the exercise of PFML rights or an application for benefits.

Employers should also note that, unlike some leave statutes, the PFML law does not allow employers to compel employees to exhaust accumulated sick time, vacation time or PTO before or while taking PFML.  Therefore, employers should avoid policies that require PFML to be taken after or concurrently with other available leaves.

Next Steps for Minnesota Employers

Although 2026 might seem like a long way off, there are upcoming statutory obligations of which employers must be mindful.  

• Minnesota employers will be required to submit to DEED quarterly wage detail reports from July 1, 2024.  Those reports must include the names of employees, the total wages paid to each, and the total number of paid hours worked for each, among other things.
• Starting November 1, 2025, employers will have to post notices in a form prepared by the State relating to available PFML benefits.  Additionally, employers will be obligated to issue a notice to new employees at hire, and at 30 days before premium collection begins for others who did not receive the notice on hire, containing information that includes, among other things, an explanation of rights and the amount of premium deductions made by the employer.
• Beginning January 1, 2026, employers must begin submitting premium payments.  Those payments must then be submitted to the State through an employer account system.
• Beginning in January 2026, employers must include on employee earning statements the amount paid by the employer and the amount deducted from the employee’s wages, if applicable, for PFML.

Employers are also well-advised to start preparing for the economic realities of PFML.  It is not too early, for example, to begin thinking about whether to charge part of the PFML premium back to employees, and in what amount.  It may also be time to think about whether PFML will create administrative issues that can be obviated through workflow planning, adding employees, working with vendors and so forth.    

Finally, in addition to staying on top of the above deadlines, employers should be thinking about their current policies.  In addition to updating policies to include PFML, it is likely that other leave policies will need to be adjusted to reflect it.