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Updated Oct. 8, 2024
Get answers to frequently asked questions (FAQs) about the Minnesota Paid Leave law, also known as the Minnesota Paid Family and Medical Leave law.
A new Minnesota law will create a state-administered mandatory paid family and medical leave insurance program beginning Jan. 1, 2026.
- The program will provide a maximum of 20 weeks of partial wage replacement per benefit year for family and medical leave funded through a payroll tax applied to all employers. For each program leave type (broadly categorized as family/caregiving leave and medical leave) an employee can take 12 weeks of leave, up to a combined total of 20 weeks under the program. For more information on the types of leave the law provides for see Q3).
- The program will be administered by the Minnesota Department of Employment and Economic Development (DEED).
The following frequently asked questions (FAQs) aim to provide information to cities on the new law. The League will update this information as necessary.
Get answers to FAQs regarding the new Minnesota Paid Leave law
Q1. Are all cities covered by this new law and when does it become effective? (Updated Oct. 8, 2024)
Q2. Which employees are covered by this new law and which are exempted? (Updated Oct. 8, 2024)
Q3. What paid leave benefits will employees receive under this new state plan? (Updated Oct. 8, 2024)
Q4. What job protections does this law provide to employees?
Q5. How much will this new program cost and how is it funded? (Updated Oct. 8, 2024)
Q6. Will there be annual cost increases? (Updated Oct. 8, 2024)
Q8. What is the role of the city in administering this program? (Updated Oct. 8, 2024)
Q9. How will we find out if an employee has applied for this benefit and been approved?
Q10. How does intermittent leave work? (Updated Oct. 8, 2024)
Q11. Can the employer require proof of the need for the leave?
Q12. Does this run concurrently with federal and state family and medical leave programs?
Q13. How does this new law interact with the new law on earned sick and safe time?
Q14. How can the city apply for an exemption from this program — i.e., establish a “private plan?” (Updated Oct. 8, 2024)
Q15. Does the city have to allow the use of paid leave to supplement the program? (Updated Oct. 8, 2024)
Q16. Can the city require the employee to use city leave first before accessing this program?
Q17. How will this impact collective bargaining agreements (CBAs)? (Updated Oct. 8, 2024)
Q18. What if the employee is using workers’ compensation benefits; can they use this leave in addition to that? (Updated Oct. 8, 2024)
Q20. How does this program impact short-term disability and long-term disability benefits we currently provide to employees? (Updated Oct. 8, 2024)
Q21. What if we allow the employee to supplement the benefit by taking paid leave in addition to the leave under this program; can the employee exceed their normal wages? (Updated Oct. 8, 2024)
Q22. What should our city do to prepare for this new law, now and over the next two years? (Updated Oct. 8, 2024)
Q23. Will the state paid leave/wages that employees receive under the new family and medical leave state program administered by DEED be subject to PERA withholding? (Added June 8, 2023)
Q1. Are all cities covered by this new law and when does it become effective?
A1. Yes, all cities are covered, including joint powers entities, however premiums will vary depending on city size. The majority of the program will not go into effect until Jan. 1, 2026; however, there are some actions employers should take now to prepare (see Q8).
Q2. Which employees are covered by this new law and which are exempted?
A2. Self-employed individuals and contractors are not covered by the law but in 2025 they can opt into coverage for paid leave benefits beginning on Jan. 1, 2026. All other city employees are likely to be covered.
There is no specific exemption for part-time employees, paid on-call firefighters, or elected officials. However, the city should consult with their city attorney to decide whether these paid on-call firefighters or elected official positions would be considered “employees” of the city for the purpose of this law.
Applicants are ineligible for Minnesota Paid Leave benefits for any portion of a typical workweek for which they are incarcerated or are receiving or have received unemployment insurance benefits.
There is also an exemption for “seasonal employees” and DEED has indicated it will provide more guidance on this closer to implementation, so stay tuned.
Covered employment may exclude work outside Minnesota if it is greater than 50% of the employee’s hours worked.
To receive benefits under this new law, the employee must have wage credits of at least 5.3% of the state’s average annual wage (SAAW). For example, as of Oct. 1, 2024, that number would be $3,700. For reference:
- $1,372 * 52 = $71,344
- $71,344 * .053 = $3,781.23; rounded down to the next lower $100 = $3,700
Q3. What paid leave benefits will employees receive under this new state plan?
A3. The law provides paid family and medical leave to employees who apply for the benefits and meet eligibility requirements.
The types of leave that qualify under the law are similar to the federal Family and Medical Leave Act:
- Bonding after birth, adoption, or foster parenting.
- A “qualifying exigency,” such as a need associated with a military member’s active-duty service.
- Safety leave, which is leave from work because of domestic abuse, sexual assault, or stalking when the leave is associated with seeking medical, victim services, psychological, or legal assistance, as well as relocation due to the event.
- A serious health condition of self or family member.
A family member is defined as:
- A spouse or domestic partner.
- A child, including a biological, adopted, or foster child, a stepchild, a child of a domestic partner (new addition from the 2024 legislative session), or a child to whom the applicant stands in loco parentis, is a legal guardian, or is a de facto custodian.
- A parent or legal guardian of the applicant.
- A sibling.
- A grandchild.
- A grandparent or spouse’s grandparent.
- A son-in-law or daughter-in-law.
- An individual who has a personal relationship with the applicant that creates an expectation and reliance that the applicant care for the individual without compensation, whether or not the applicant and the individual reside together.
Except for benefits for bonding leave, the law will limit the paid family and medical leave benefits to those with a single qualifying event of at least seven days duration, which must be consecutive unless the leave is intermittent (see Q10 for more information on intermittent leave). This seven-day waiting period is not an unpaid period for Minnesota Paid Leave for leaves due to family care, medical care related to pregnancy, serious health condition, qualifying exigency, or safety leave. For intermittent leave, the initial paid week means seven consecutive, nonconsecutive, or a combination of consecutive and nonconsecutive calendar days from the effective date of leave to be paid retroactively after the applicant has met the seven-day qualifying event in the first benefits payment to the applicant.
Generally, bonding leave must end within 12 months of the birth, adoption, or placement of a foster child. The new law sets out circumstances that allow for exceptions to this rule.
The benefit amount of paid leave is progressive and will vary based on an employee’s weekly wages, such that lower-income employees will receive a higher percentage of income with a sliding scale of lower percentages as employees earn more. Generally, employees will receive:
- 90% of the portion of their weekly wages that is less than or equal to 50% of the state’s average weekly wage, plus:
- 66% of the portion of their weekly wages that is more than 50% of the state average weekly wage but not 100% weekly wage, plus:
- 55% of the portion of their weekly wages that exceed 100% of the state average weekly wage.
Benefits will be capped at 100% of the state average weekly wage. DEED reports will include a benefits calculator on its Minnesota Paid Leave webpage so applicants can better estimate their benefits. If the Internal Revenue Service (IRS) finds benefits under the program to be taxable under federal law, and the applicant elects to have those federal taxes withheld, DEED must withhold the tax.
Benefits will begin the Sunday of the calendar week in which a benefit application is filed.
The total number of weeks that an employee may take benefits in a single benefit year for a serious health condition is the lesser of 12, or 12 weeks minus the number of weeks that the employee received benefits for bonding, safety leave, family care, and qualifying exigency within the same benefit year, for a maximum of 20 weeks.
Q4. What job protections does this law provide to employees?
A4. An employer cannot retaliate against an employee for requesting or obtaining Minnesota Paid Leave, nor can it obstruct or interfere with an employee applying for the paid leave. An employee must be returned to the same position they held when the leave started, with equivalent benefits, pay, and other terms and conditions of employment.
Q5. How much will this new program cost and how is it funded?
A5. The program is funded in large part by employer premiums and, in some cases, employee contributions. DEED will collect quarterly electronic premium payments, in the form of a percentage of payroll taxes, from Minnesota employers.
Beginning January 2026, employers will contribute a minimum of 50% of the total premium, though they may choose to pay up to 100% of the premium. Employers may, in some cases, deduct the remainder from employees’ pay, up to a maximum 50% of the premium (refer to Q17). There is a cap of 1.2% of taxable wages on the premium rate in the pad leave law.
For reference, initially, Minnesota Paid Leave provided for a 0.7% payroll tax for premiums. On May 13, 2024, an actuarial and consulting firm, Milliman, presented to the state the rate may need to be increased to 0.88% to sufficiently fund the paid leave program. In 2024, law amendments allow the DEED commissioner to adjust the annual premium rates prior to Jan. 1, 2026.
To date, the premium rate for the Minnesota Paid Leave program in 2026 has not been established. Premium rate adjustments will be made by July 31, 2026, and then by July 31 each year thereafter for the following calendar year based on program historical experience and sound actuarial principles so the projected fund balance as a percentage of total program expenditure does not fall below 25%. DEED will contract with a qualified independent actuarial consultant to conduct an actuarial study for this purpose every year.
For cities beginning to work on 2026 budgets, without the benefit of having the finalized 2026 premium rate from DEED, a conservative approach may be to include the 1.2% of taxable wages paid to each employee as a place holder in draft budgets, and then watch for updates on the 2026 rate from DEED. Pursuant to Q17, there may be a cost sharing option on premiums with employees, but such cost sharing may require negotiation for represented employees.
There are some reductions in cost for employers with fewer than 30 employees.
Small employers
Effective Jan. 1, 2026, a reduced premium rate will be available for small employers with 30 or fewer employees and the city’s employees’ average employee wage falls under 150% of the statewide average annual wage (SAAW) for the basis period. For reference, as of Oct. 1, 2024, that amount is $71,344 ($1,372 * 52 = $71,344).
Employers meeting the criteria for the small employer rate will pay a minimum of 25% of the total premium rate (employers cannot deduct any part of the employer’s responsibility of the premium) and employees may pay the remaining 50% of the premium (or the employer can choose to pay the full 75% of the small city Minnesota Paid Leave premium). Thus, the reduction for small employers is up to 25% of the total premium, compared to the minimum contribution of 50% of the total premium larger-sized employers will pay.
Q6. Will there be annual cost increases?
A6. The premium plan rate will be calculated annually for the following calendar year based on program historical experience and sound actuarial principles so the projected fund balance as a percentage of total program expenditure does not fall below 25%. DEED will contract with a qualified independent actuarial consultant to conduct an actuarial study for this purpose every year. As outlined in Q5, cities beginning to work on 2026 budgets in early 2025, without the benefit of having the finalized 2026 premium rate from DEED, may want to take a conservative approach to include 1.2% of taxable wages paid to each employee as a place holder in draft budgets and watch for updates from DEED. Pursuant to Q17, there may be a cost sharing option on premiums with employees, but such cost sharing may require negotiation for represented employees.
Q7. Is there a “reimbursement employer” public sector option available, similar to unemployment compensation?
A7. There is no option to become a “reimbursement employer” as is the case with unemployment compensation. All city employers are covered by this new law unless they apply for an exemption by administering their own “private plan” (see Q14).
Q8. What is the role of the city in administering this program?
A8. Employers will have essentially three categories of responsibilities under the Minnesota Paid Leave program: (1) notification requirements, including educating and informing employees (2) reporting wages and paying premiums to fund the program and (3) coordinating benefits and leaves during an absence.
- Notification requirements, including educating and informing employees. The city must provide written information about the Paid Leave program 30 days before premium collection begins and to newly hired employees. The information must include an explanation of the available benefits provided under the new law, instructions on how to file a claim, and other specified information. Presumably, DEED will provide a template for employers to use. Cities will want to ensure they have an employee’s written or electronic acknowledgement of receipt of the information. In cases where an employee refuses to acknowledgement receipt, an employer must be able to demonstrate the way the employee had been notified. If five or more employees speak a different language as their primary language, notices must be provided in that language if it is made available by DEED.
- Reporting wages and paying premiums to fund the program. Much like unemployment compensation, employers are required to submit quarterly wage detail reports, including the total wages paid to an employee and the total number of paid hours worked. While the first premiums are not due until 2026, wage detail reporting is already underway with the first report due Oct. 31, 2024. When cities submit their typical wage detail for July through September 2024 in October 2024, the city will be meeting BOTH their unemployment insurance (UI) and Minnesota Paid Leave wage reporting requirements for many positions. Employees whom cities do not report for UI, like elected officials or election judges, will need to be kept separate from those that are covered by UI, but submitted by establishing a “Paid Leave Only” account through another process as outlined on the Minnesota UI webpage. There are fees associated with late reporting, but DEED can cancel the fee if the report is submitted within 30 calendar days after DEED issues notice. There are also fees for reports with missing or erroneous information. DEED will provide an electronic reporting format.
- Coordinating benefits and leaves during an absence. The 2024 legislative session classified Minnesota Paid Leave data as private, pursuant to some exceptions for exchanging information with certain state and federal agencies, employers and health care providers. Thus, cities will want to begin thinking through processes to ensure reports and submittals are retained in a secured manner.
Q9. How will we find out if an employee has applied for this benefit and been approved?
A9. DEED is required to notify all employers from which the applicant is taking leave, either in writing or electronically, not more than five business days after a claim for benefits has been filed by the employee or former employee.
Q10. How does intermittent leave work?
A10. Generally, any leave under the law is eligible for intermittent. All intermittent leaves will result in a prorated benefit. Intermittent leave counts toward the maximum leave allowed by the law.
An employee taking leave on an intermittent schedule must provide the employer with a schedule of the needed workdays off as soon as practicable, taking into account all circumstances.
Employees can use intermittent leave in increments the city allows for other forms of leave, as long as the city’s policy permits a minimum increment of at most one calendar day. An applicant may not apply for payment of intermittent Minnesota Paid Leave until the applicant has accumulated eight hours of leave, unless more than 30 calendar days have passed since the initial taking of leave.
DEED will provide more guidance on intermittent leave closer to the 2026 implementation, so stay tuned to learn more.
Q11. Can the employer require proof of the need for the leave?
A11. The employer can require an employee to provide a copy of the certification required by DEED to apply for the benefits. The certification required depends upon the type of leave requested but generally will substantiate the need for the leave and where applicable, the duration and timing of the leave.
Q12. Does this run concurrently with federal and state family and medical leave programs?
A12. Yes. The law specifically states an employer may require this leave to run concurrently with the federal Family and Medical Leave Act or the leave required under Minnesota Statutes, section 181.941. Cities must follow both laws when both apply to the employment situation; they must ensure the employee is receiving the highest level of benefits available to him or her under both laws when both apply.
Q13. How does this new law interact with the new law on earned sick and safe time?
A13. In general, earned sick and safe time is meant to cover employees in situations such as a brief illness, when they have sick children who cannot attend daycare, etc. There is no requirement to get approval from DEED or, in many cases, a medical professional.
The Minnesota Paid Leave program, in contrast, is for long-term extended leave, and requires DEED approval based on necessity and eligibility. It is intended to cover more extreme accidents or illnesses, maternity/paternity leave, qualified exigency leave, safety leave, or care for a family member.
Q14. How can the city apply for an exemption from this program — i.e., establish a “private plan?”
A14. Employers may apply for approval to be exempted from the state plan by providing a “private plan,” which offers the same rights, protections, and benefits as employees are entitled to receive under the state plan. Employers can apply to be exempted from the medical benefit program only, or the family benefit program only, or both. Employers with an approved private plan are not subject to the program premium cost (see Q5).
All employees must be covered by the plan, eligibility for the plan cannot be more restrictive than the state plan, the weekly benefits to employees must be at least as high as the state plan, and the total number of weeks available to employees must be at least as much as the state plan.
There are additional requirements listed in the law, including an oversight fee and DEED anticipates guidance on the private plan process by the end of calendar year 2024.
Q15. Does the city have to allow the use of paid leave to supplement the program?
A15. The new law allows, but does not require, the city to supplement the payments available under this program by allowing the employee to use paid leave in addition to the paid benefits available under the new program. However, the city should consult with the city attorney to determine if there are other policies, collective bargaining agreements, or state or federal laws that might require or prohibit this. Also see Q17.
If an employer provides an employee wage replacement during an absence, and the total of Minnesota Paid Leave benefits and any supplemental benefits exceed the employee’s usual salary, the employee must refund the excess to either the employer or DEED. If an employer provides wage replacement benefits to an employee for a week that should have been paid by DEED, then DEED may reimburse the employer directly.
Q16. Can the city require the employee to use city leave first before accessing this program?
A16. The city cannot require the employee to use paid leave first before applying for benefits under this new program. However, an employee can choose to use vacation, sick, or paid time off, or disability insurance payments in lieu of the state paid leave program. During the period of time they are using those paid leaves instead of the Minnesota Paid Leave program, they are entitled to the employment protections of the law.
Q17. How will this impact collective bargaining agreements (CBAs)?
A17. The law does not preclude employers from bargaining with unions with respect to leave benefits and related procedures and employee protections, as long as they meet or exceed, and do not otherwise conflict with, the minimum standards and requirements in the law. At least some labor experts suggest there is a negotiation obligation to establish a 50% employer / 50% employee premium split for represented employees.
Q18. What if the employee is using workers’ compensation benefits or receiving severance benefits; can they use this leave in addition to that?
A18. It depends; an applicant is not eligible to receive benefits for any portion of a week in which the applicant is receiving or has received compensation for loss of wages equal to or in excess of the applicant’s weekly family or medical leave benefit amount under:
- The Minnesota workers’ compensation law.
- The workers’ compensation law of any other state or similar federal law.
Generally, if the amount of workers’ compensation for any week is less than the applicant’s weekly family or medical leave benefit amount, benefits requested for that week are reduced by the amount of that compensation payment.
Q19. Does the city have to continue its contribution to health insurance while an employee is on this leave?
A19. Yes. Like the federal Family and Medical Leave Act, this law requires the employer to maintain health insurance coverage as if the employee was not on leave. The employee must continue to pay their share of the cost.
Q20. How does this program impact short-term disability and long-term disability benefits we currently provide to employees?
A20. An employee may receive disability insurance payments in addition to Minnesota Paid Leave benefits, provided the employee is eligible for both benefits at the same time. Disability insurance benefits may be offset by family and medical leave benefits paid to the employee pursuant to the terms of a disability insurance policy.
Some experts anticipate the Minnesota Paid Leave law may have a negative impact on participation levels in group short-term disability benefits. Employees may see the new law as providing sufficient protection and be unwilling to pay premiums for both the state program and the disability insurance.
Public Employees Retirement Association (PERA) employers will apply the existing rules for short-term disability and long-term disability. Learn more in the PERA Employer Manual, Chapter 5, page 5-12 (pdf)
Q21. What if we allow the employee to supplement the benefit by taking paid leave in addition to the leave under this program; can the employee exceed their normal wages?
A21. No, an employee cannot make more not working than they would actively working. Employers may designate certain benefits as a supplemental benefit, including but not limited to salary continuation, vacation leave, sick leave, or other paid-time off. Payments designated as “supplemental benefits” can make up the difference between partial and full wage replacement. Even if supplemental benefits are offered, the choice to receive supplemental benefits lies with the employee. However, Minnesota Paid Leave law specifically prohibits a situation where a supplemental benefit payment combined with any leave benefit under this program exceeds the regular wage or salary of the employee.
Q22. What should our city do to prepare for this new law, now and over the next two years?
A22. Action areas cities may want to begin considering in preparation for the new law include:
- Budget impact in fiscal year 2025 for the premiums beginning on Jan. 1, 2026.
- Bargaining with unions with multiple year contracts, especially for employee cost sharing of premiums, and if the city wishes to establish a private plan or come to agreement on how to handle other aspects of the law.
- Check with the city’s long-term and short-term disability insurance providers on the likely impact of the law.
- Begin working on personnel policy updates for nonunion employees regarding paid leave policies and other aspects of this program.
- Begin thinking through processes to ensure your communication and reporting for Minnesota Paid Leave is stored and handled as private data.
- Consult with providers and prepare payroll and other computer systems for any additional tracking required to report to DEED under the new law.
Prepare to implement wage theft notification requirement changes, effective Jan. 1, 2026, by beginning to follow the new requirements added for keeping statements for three years and preparing to include payroll systems for reporting premium employee deductions and contributions by the employer on wage statements.
Q23. Will the state paid leave/wages that employees receive under the new family and medical leave state program administered by DEED be subject to PERA withholding?
A23: Per PERA, state paid family and medical leave program payments are not eligible salary for PERA contributions or service credit. Further, employer-paid leave, including sick and vacation, used to supplement paid family and medical leave is not eligible salary for PERA contributions unless the employee is on medical leave and the employer-paid leave represents at least 50% of the average earnings that would have been received if the person was not on leave. PERA members may purchase salary and service credit lost during a period of authorized leave. Keep in mind, cities are required to complete an annual leave report listing authorized leaves taken during the prior year that resulted in any unpaid time.
