Minnesota Paid Leave For Employers

Minnesota’s Paid Leave program represents a significant shift in Minnesota’s workplace labor laws and employer responsibility. Understanding the requirements and preparing early will help you navigate this transition smoothly while positioning your business for success.

Beginning January 1, 2026, Paid Leave will provide eligible employees with partial wage replacement and job protection during medical or family leave for up to 20 weeks. This guide provides an overview of Paid Leave, including its funding, coverage, and steps employers can take.

What is Paid Leave?

Minnesota Paid Family and Medical Leave (PFML) is a state-administered insurance program that provides employees with paid job-protected leave for major life events. Medical leave covers events like serious illnesses, injuries, and childbirth. Family leave covers bonding with a new child, caring for a sick family member, supporting a family member on active military duty, and addressing personal safety issues. Most employers will be required to offer employees 12 weeks of medical leave and/or 12 weeks of family leave per benefit year, not exceeding 20 weeks. To qualify, the condition must last more than 7 days and require certification from a healthcare provider.

Additionally to time off, the law will also provide direct payments to employees with a portion of their wages from the state. How much they receive is determined by the wage amount. Employees earning lower wages will receive a higher percentage of their wages (up to 90%), while those with higher wages will receive a smaller percentage (not below 55%). Employee weekly payments are capped at the state average weekly wage which is $1,423.

How It is Funded

Minnesota Paid Leave is funded by both the employer and employee through a 0.88% payroll tax. Businesses can choose to cover all or partial cost for employees, but must contribute at least half of the tax premium. So, employers will contribute at least 0.44%, and max 0.44% will be deducted from employees’ payroll. Premiums for employers are due April 30, 2026, but employee deductions can begin January 1, 2026.

Small employers with fewer than 30 workers and an average wage less than 150% of the statewide average qualify for a reduced tax at 0.66%. Employer contribution will then be 0.22%, though employee contributions remain the same at 0.44%.

Additionally, employers can apply for grants to help cover costs when an employee is on leave. This can help cover costs of hiring temporary workers, training, and overtime paid during absences. Small employers can access up to $3,000 per leave or $6,000 per employer. It should be noted that funding is covered for costs already incurred but not guaranteed.

Who is Covered

Understanding who qualifies for Minnesota Paid Leave helps you plan for potential absences and ensure compliance. The program covers most workers, including full-time, part-time, seasonal, and temporary employees. Those who are self-employed or independent contractors can choose to opt-in.

To receive Paid Leave benefits, employees must earn $3,700 minimum over the last year and work 50% or more of the year in the state. If they don’t meet these requirements in any single state, then coverage applies to those who live in Minnesota.

Employee rights are covered under Paid Leave. They can start using Paid Leave immediately in January 2026 after approval from the state. Their leave cannot be denied, delayed, or interfered with in any way by the employer. Employees who have worked at least 90 days have the right to job protection. This means they must return to their same job or similar with same pay, benefits, and work conditions.

Action Items

Preparing for Minnesota Paid Leave requires several specific actions. Starting early ensures smooth implementation and helps avoid potential penalties.

1. Account Setup

Confirm your unemployment insurance account is current, as you’ll use the same system for wage reporting and premium payments. Designate at least one Paid Leave Administrator within your organization. This person will serve as your primary contact with the program, review employee applications, coordinate benefits, and manage your compliance obligations.

2. Plan Selection

By November 10, 2025, you must decide whether to participate in the state plan or obtain an equivalent private plan. Equivalent plans must meet or exceed state benefits and receive approval from the Department of Commerce.

Private plans can cover family leave, medical leave, or both. Even with an equivalent plan, you must still report wages and notify employees about their coverage, so consider the administrative requirements when making your decision.

3. Employee Notification Requirements

By December 1, 2025, employers must notify all employees about their Paid Leave rights and benefits. This means employee handbooks and policies will need to be updated to ensure compliance. Notice must be given within 30 days of hire for new employees. Also, the DEED workplace poster must be posted in English and any language spoken by 5 or more employees. The state will provide standard forms and translations to simplify this process. Proof of employee acknowledgment or documentation of employee notice is also required.

4. Policy Updates

Review and update your employee handbook and leave policies to address how Minnesota Paid Leave coordinates with existing benefits like FMLA, ESST, and vacation. Clear policies help prevent confusion and ensure consistent application. It is important to note that Paid Leave does not replace existing benefits, but is in addition to.

Consider your approach to supplemental benefits—whether you’ll allow employees to use vacation or sick time to “top off” their Paid Leave payments. Also establish procedures for how employees should request leave, who they should notify, and what documentation you require.

Your Next Steps Forward

Minnesota Paid Leave represents a significant change, but with proper preparation, it can become a valuable tool for supporting your employees and strengthening your business. The key is starting early and approaching implementation systematically.

Consider the operational impact of potential absences and develop strategies for coverage. This might include cross-training employees, building relationships with temporary staffing agencies, or adjusting project timelines to account for possible leaves.

Award Staffing is here to support your hiring needs and offer industry expertise to help you through this new legislative update. Visit our services to prepare your workforce before January 1st.