Legislature Passes Statewide Paid Family and Medical Leave Beginning January 1, 2026

Last week, the Minnesota House and Senate passed the Minnesota Paid Family and Medical Leave Bill (“MN-PFML”), which establishes a state-run insurance program to provide Minnesota workers with partial wage replacement benefits for up to 20 weeks per year.  The program is funded via a .7% payroll tax (up to the social security maximum), but employers can deduct half of that amount from employee’s wages.  Both the taxes and benefits begin on January 1, 2026.

MN-PFML still needs to be signed by Governor Walz, but he has already committed to sign it.  Thus, employers should begin planning to implement MN-PFML and consider changes to their current suite of benefits, including short-term disability policies, given the new state benefit program.

MN-PFML Applies to All Employers and Most Workers

Importantly, MN-PFML applies to all Minnesota employers, regardless of size.  This includes out-of-state employers with Minnesota employees.  It also includes non-profits, state and local government agencies, faith-based organizations, and other typically tax-exempt associations.

The only exceptions to MN-PFML coverage are for: (1) “independent contractors,” (2) “self-employed individuals,” (3) “federal government employees,” and (4) “seasonal employees.”

“Seasonal employees” are defined as “an individual who is employed for no more than 150 days during any consecutive 52-week period in hospitality by an employer whose average receipts during any six months of the preceding calendar year were not more than 33 percent of its average receipts for the other six months of such year.”

Types of Leave Available

There are six types of leave available under the MN-PFML:

    1. “Serious Health Condition” Leave
    2. “Pregnancy” Leave
    3. “Family Care” Leave
    4. “Bonding” Leave
    5. “Safety” Leave
    6. “Qualifying Exigencies” Leave

Employers must provide leave to employees after 90 calendar days of employment and employees are entitled to continued health insurance and reinstatement after the conclusion of their leave.

Paid Leave Benefits

The maximum length of benefits is 20 weeks per year.  An employee can receive a maximum of 12 weeks of paid leave for a “serious health condition,” which includes “medical care related to pregnancy,” or 12 weeks of paid leave for any of the other types of leave (family care, bonding, safety, and qualifying exigencies), but the benefits max out at 20 weeks per year.

Payment of leave benefits will be administered by the Family and Medical Benefits Division of DEED.  Employees will apply for benefits directly from the state.  The application process is modeled after the unemployment statute.  Benefits are paid weekly and there is a formula for calculating the weekly benefit amount under the program.  Currently, weekly benefits are capped at a maximum of the state’s average weekly wage (i.e., $1,287 for 2023).

An applicant cannot receive benefits for any portion of a week they are receiving vacation, sick, or personal leave.  But, this prohibition does not apply to “supplemental benefit payments,” which an employer provides as salary continuation or as paid time off to supplement MN-PFML benefits.  An applicant is ineligible for benefits for any portion of a week the applicant is receiving workers compensation benefits or separation, severance, or bonus payments.

Protection Against Discrimination, Retaliation, and Interference

The MN-PFMLA statute includes protections against discrimination, retaliation, and interference.  Penalties range from $1,000 to $10,000 per violation and employees can pursue court actions with remedies including double damages plus attorneys’ fees.  The statute also expressly authorizes class actions under state law.

Private Insurance Plans

The MN-PFML allows employers to substitute a “private plan” that has been approved by the commissioner of DEED.  The plan must provide the same or better benefits to employees and the cost of the benefits to employees would need to be the same.

Coordination with Other Leave Benefits

One of the trickiest aspects of the new law will be coordinating the law with existing leave protections.  Employers currently subject to federal FMLA would need to ensure that they are properly tracking and coordinating MN-PFMLA with federal FMLA.

It is possible that an employee could use 20 weeks of paid leave under the MN-PFMLA and then still be eligible for an additional 12 weeks of leave under the federal FMLA.  For example, after 90 days, a new employee would be eligible for up to 20 weeks of paid leave under the MN-PFMLA.  That same employee, in theory, could be eligible for 12 weeks of federal FMLA leave once they reach 1 year of service and 1,250 hours of service (since the earlier leave did not qualify as federal FMLA leave).

Bottom Line

There is much to digest with the new MN-PFMLA.  We are still reviewing the legislation and will follow up with posts and information for employers.  It is helpful that the benefits do not go into effect until January 1, 2026 because there are many unknowns regarding the program and employers will need time to plan and adjust their current suite of benefits.

We will continue to monitor this situation as it develops.