The Minnesota Legislature passed a paid family and medical leave bill last week that is expected to be signed by Governor Walz within the next few days. The new law creates a state-administered, mandatory paid family and medical benefit insurance program funded by a payroll tax. The law becomes effective in stages, with the first round of requirements regarding employer recordkeeping on July 1, 2024.

The law provides up to 12 weeks of leave, with partial wage replacement per benefit year, for an employee’s own serious health condition;  to care for a family member with a serious health condition or other qualifying exigency; for qualifying safety reasons; or for pregnancy, recovery from pregnancy, and bonding time for the birth, adoption, or placement of a foster child. But leave doesn’t max out at 12 weeks—in some circumstances, employees may take up to 20 weeks of leave.

The program, which is similar to Minnesota’s unemployment insurance benefits program, would be administered by the Minnesota Department of Employment and Economic Development (DEED) – Family and Medical Benefits Division. Under the program, an employee would apply through DEED, and DEED would determine the employee applicant’s eligibility for benefits and their weekly and maximum benefit amounts available.

Employers with and without existing paid medical and family leave policies should evaluate the requirements imposed by the new law well before the benefits and premium cost portions become fully effective on January 1, 2026.

Key components of Minnesota’s paid family and medical leave law are:

• Maximum length of benefits. The total number of weeks an employee may take for medical leave or family leave is the lesser of 12 weeks, or 12 weeks minus the number of weeks within the same benefit year that the employee received benefits for the other category of leave – plus eight weeks. In other words, the maximum amount of leave time an employee may take within the same benefit year under the law is 20 weeks.

For example, an employee who takes 11 weeks of paid medical leave for their own serious health condition would be eligible to take nine weeks of paid family leave in that same benefit year.

• Covered Employees.  Only seasonal employees are removed from program coverage (and independent contractors as non-employees). A seasonal employee means the individual is employed for no more than 150 days during any consecutive 52-week period.
• Family Member.  The definition of “family member” is expanded to include “an individual who has a relationship with the applicant that creates an expectation and reliance that the applicant care for the individual, whether or not the applicant and the individual reside together.”
• Reinstatement.  Upon return from medical or family leave, an employee is entitled to be returned to the same position they held when their leave commenced, or to an equivalent position with equivalent benefits, pay, and other terms and conditions of employment. An employee’s right to reinstatement is subject to some limitations similar to those imposed under the FMLA.
• Partial Wage Replacement.  The program replaces wages on a progressive scale at 55% – 90% (average of 66%) of an employee’s regular pay, depending on the employee’s average typical workweek and weekly wage as calculated against the state’s average weekly wage.
• Premiums.  Except for employers with an approved private plan, family and medical leave premiums are paid quarterly on the taxable wages paid to each employee in covered employment. Beginning January 1, 2026, the employer premium rate for employers participating in both the family and medical benefit programs is 0.7%. Premium rates are reduced for employers participating in one of the two mandatory programs, so long as the employer as an approved private plan for the other benefit program, as follows:
  • Medical benefit program only: 0.4%
  • Family benefit program only: 0.3%

Similar to the “experience rating” concept utilized by the state unemployment insurance program, annual rates would be recalculated each subsequent year by a formula detailed by statute.

• Employee Charge Back.  Employers must pay a minimum of 50% of the annual premiums paid. Employees, through payroll deduction, must pay the remaining portion subject to all applicable wage and hour laws. Deductions for any given employee must be in equal proportion to the premiums paid based on the wages of that employee.
• Employee Notice Requirements.
  • Timing.  Under the statute, if the need for leave is foreseeable, an employee must provide at least 30 days’ advance notice before leave is to begin. If 30 days’ notice not practicable, notice must be given as soon as practicable. Under the statute, employees may file an application for benefits up to 60 days before leave is taken. Relatedly, the timing and notice requirements are effective November 1, 2025.
  • Form of Notice.  Employees must provide at least oral, telephone, or text message notice sufficient to make the employer aware of their need for leave and the anticipated timing and duration of leave. Employers may require employees to comply with their usual and customary notice and procedural requirements for requesting leave, including attendance or call-out policies and procedures, as well as a designated contact or phone number, absent unusual circumstances or other circumstances caused by the reason for the employee’s need for leave. Employers cannot delay or deny leave where their usual and customary notice or procedural requirements require notice be given sooner than provided by law.

• Poster and Written Notice to Employees.  Employers must post in a conspicuous place on each of its premises a workplace notice – to be prepared by the commissioner – providing notice of benefits available under the statute.

In addition to posting the required notice in English, employers must post the notice in any other language that is the primary language of five or more employees or independent contractors of the workplace, if such notice is available from DEED. Employers must also issue written notice – to be provided by the department – to each employee within 30 days from their first day of employment, or 30 days before premium collection begins, whichever is later. This requirement begins November 1, 2025.

• Wage Statement Requirements.  Employee wage statements must include any amount deducted by the employer as the employee-paid portion of the premium, and the amount paid by the employer. This requirement begins January 1, 2026.
• Recordkeeping Requirements.  Employers must keep accurate employee records for a period of not less than four years in addition to the current calendar year. This requirement is effective July 1, 2024.
• Relationship to Other Leave.  An employer may require leave taken under this statute to run concurrently with leave taken for the same purpose under Minnesota Statute section 181.941 (Pregnancy and Parenting Leave) or the FMLA.

In addition, employees may use vacation pay, sick pay, or other paid time off in lieu of family or medical leave program benefits, provided the employee is concurrently eligible. However, employers cannot compel an employee to exhaust accumulated sick, vacation, or personal time before or while taking leave under this statute. An employee who elects to use such paid leave generally remains entitled to the employment protections under the statute for those workdays during which this option is exercised.

• Supplemental Benefit Payments.  Employers may offer supplemental benefit payments, as defined by the statute, to an employee taking family or medical leave. The choice to receive supplemental benefits lies with the employee.
• Employer Private Plans.  Employers’ obligations under the law may be satisfied by the substitution of a private plan that provides paid family, paid medical, or paid family and medical benefits. To do so, employers would be required to apply through DEED and the application would be reviewed to ensure the private plan confers all the same rights, protections, and benefits provided to employees under the statute via the state-administered program, or exceeds said benefits. An employer-substituted plan’s “benefit year” can be the calendar year or any other fixed 12-month period. Employees covered by a private plan retain all applicable rights and remedies provided by law.

Employers with existing medical and family leave policies plans should prepare to evaluate their current policies and consider any necessary changes if they intend on substituting a private plan before applications are made available. Notably, this subsection of the statute becomes effective July 1, 2025.

• Small Business Assistance.  Employers with 30 or fewer employees and less than 3 million dollars in gross annual revenues may be eligible for a small business assistance grant. Employers who fall under this category may also qualify for a small business wage exclusion reducing the amount premiums paid.