This is the first article in a three-part Employer Advisory Series on understanding employer obligations under the Minnesota Paid Family and Medical Leave Act.
In this article, we provide an overview for employers regarding the new Minnesota Paid Family and Medical Leave law (Paid Leave) and its impact on their staff and business. Starting January 1, 2026, the new Paid Leave law will allow employees to take state-funded time off for qualifying personal or family care reasons, as approved by the Minnesota Department of Employment and Economic Development (DEED).
Now is the perfect time for all Minnesota employers to educate themselves and proactively adjust their payroll systems and leave policies to ensure a smooth transition.
Five Key Takeaway Points
- Premium cost overview – The Premiums for Paid Leave in 2026 are set at 0.88% of taxable wages. However, employers can collect up to half of the premium from employees through payroll deductions. Additionally, qualifying employers with fewer than 30 employees may be eligible for reduced-rate payments.
- 2025 births may trigger 2026 leave – Based on the bonding leave 12-month lookback period, any parent who had a baby, adoption, or some other bonding time with a child in 2025 may be eligible for additional leave under Minnesota’s PFML in 2026—plan your staffing accordingly.
- Leave policies need a rewrite – Employees should make sure all their protected leave policies run concurrently when possible.
- The benefit year isn’t what you think – It starts when an employee first takes leave, not on January 1st, making tracking more complex across your workforce.
- Employers must provide individual notice to employees by December 1, 2025 – To initiate withholding on January 1, 2026, employers must provide each employee with notice of the Paid Leave benefits and the portion of the premium for which the employee will be responsible.
Key Preparation Milestones
Employers began submitting quarterly wage reports to the state starting October 31, 2024. The payroll reports will be used to determine employee eligibility for benefits, calculate premium payments for both employers and employees, and administer the Paid Leave program. The payroll data collected from employees will be integrated into the existing Unemployment Insurance system. This integration simplifies the process for many employers by allowing them to submit both wage detail reports in a single quarterly report.
Prepping Payroll for January 1, 2026
The Paid Leave premium rate is set at 0.88% of paid taxable wages, calculated on earnings up to $176,000. Companies with fewer than 30 employees and qualifying salary rates may be eligible for reduced premium payments. Employers can collect up to half of this contribution from employees through payroll withholdings. Withholdings begin January 1, 2026. Employers make their first premium payments to DEED on April 30, 2026.
Employers can choose to meet their Paid Leave responsibilities by providing employees an equivalent plan that meets or exceeds the coverage offered by the state. Equivalent plans can be purchased from a private insurance carrier, or an employer can self-insure and provide coverage directly to its employees. Employers must have their equivalent plans approved by DEED. DEED is recommending that plans be submitted for approval by November 10 to be implemented by January 1, 2026. Employers approved for an equivalent plan still have obligations under the law, including submitting quarterly payroll information. Employers cannot charge employees more than they would pay under the state plan (0.44% of wages in 2026) to fund an equivalent plan.
Who Qualifies and What They Can Take
Minnesota Paid Leave is available to almost all employees in Minnesota, and many self-employed and contract workers can choose to participate in the program. To qualify, employees must have worked at least 50% of their hours from a Minnesota location and earned a minimum of $3,700 in the past year.
Eligible employees can take up to 12 weeks of Medical Leave for their own serious health condition, including pregnancy and childbirth. Similarly, they can take up to 12 weeks of Family Leave to bond with a new child (the bonding benefit has a lookback period of 12 months), care for a loved one with a serious health condition, support military family members, or address personal safety issues such as domestic violence. The total combined maximum leave is 20 weeks per benefit year, starting from the first time the employee takes leave, rather than from the calendar year. Employers preparing for staff taking time away under Paid Leave should be aware that, based on the bonding leave 12-month lookback period, any parent who had a baby, adoption, or some other bonding time with a child in 2025 may be eligible for additional leave under Minnesota’s Paid Family and Medical Leave in 2026.
Paid Leave benefits will provide partial wage replacement, generally ranging from 55% to 90% of the employee’s weekly wages. Importantly, employers cannot require employees to use their accrued Paid Time Off, Vacation, or Earned Sick and Safe Time before or during their Paid Leave. However, employees have the option to supplement their Paid Leave benefits with any available Paid Time Off, Vacation, Earned Sick and Safe Time, or, in certain qualifying cases, short-term disability to achieve their full wage.
Employee Notice Requirements and Job Protections
Employees must provide 30 days’ written notice for foreseeable leave, or as soon as practicable for unexpected situations. Applications are processed through DEED’s online portal or by phone. For employees who have been with an employer at least 90 days, employers must provide job restoration to their original or equivalent position upon return, continue funding their healthcare insurance premiums during leave (though employees remain responsible for their portion), and strictly avoid any retaliation or interference with their Paid Leave rights. Employees using Paid Leave that qualifies under additional protected leave benefits may have additional job protections available to them.
Updating Company Leave Policies
As employers revise their employee handbooks and leave policies, they should consider how Paid Leave will interact with their existing benefits. Employees can voluntarily supplement the wages of employees taking paid leave up to the amount they would otherwise earn. Many employers are converting their existing paid parenting leave benefits to supplement the new Paid Leave Law.
Additionally, employers are advised to ensure that their other protected leave programs (e.g., FMLA, Pregnancy and Parental Leave) run concurrently with the new Paid Leave time. Harmonizing a company’s leave policies now will prevent confusion when employees start taking leave in 2026.
Next Steps
Minnesota employers should take steps now to understand their obligations, update their policies, and provide employees with notice. The January 2026 launch date provides a clear target for preparation. Taking strategic action now will help businesses integrate Paid Leave. In addition to the compliance poster, Employers will need to post in employee breakrooms, employers must provide individual notice to employees by December 1, 2025. Employers should get individual acknowledgments from each employee. A copy of DEED’s sample notice letter for individual notice to employees is available HERE.
If you have any questions related to compliance with Minnesota’s Paid Leave, please contact Mary Ellen Reihsen at mreihsen@hjlawfirm.com or 952-460-9275.
