Minnesota Employers Should Prepare Now for Paid Family & Medical Leave Program

Despite an effort in the state legislature to push it back a year, Minnesota's new Paid Family & Medical Leave ("PFML") benefit program will go into effect Jan. 1, 2026—and employers should take steps now to ensure they are prepared.

The state-run program provides eligible employees with up to 12 weeks of family leave benefits and up to 12 weeks of medical leave benefits, subject to an annual limit of 20 weeks of combined leave.

How Should Employers Prepare for the PFML Program?

Most Minnesota employers already submit to the state Department of Employment and Economic Development ("DEED") quarterly wage detail reports on employees specifying wages received and hours worked, which is used for unemployment insurance, and now for the new PFML. Employers who are not required to provide unemployment insurance will need to create a paid leave account with DEED.

Employers will next be required to:

• By Dec. 1, 2025: Provide individual notice of legal rights and benefits under the PFML program to employees (DEED is working on this language), and post the mandatory workplace poster, located here: Minnesota Paid Leave.
• Beginning Jan. 1, 2026: Employers may start deducting premiums from employee paychecks. This is also the date employees can begin taking qualified leave.
• By April 30, 2026: Employers must submit their first premium payments to the state, based on wage details reported between Jan. 1 and March 31, 2026.

How Are Premiums Calculated and Paid?

The premium rate for 2026 will be 0.88% of employees' wages; up to 50% can be paid through employee deductions, and employers must pay the rest. Premium deductions cannot result in an employee making less than minimum wage so there may be situations where an employer must pay more than 50% of the premium. Employers with existing paid leave policies for the same usage purposes of PFML may see a reduction in costs if they decide to revise their existing policies to coordinate with PFML. Premiums will not increase based on employees' use of the program.

Small employers pay a reduced premium rate under PFML if they employ 30 or fewer people and the average employee wage is less than 150% of the statewide average weekly wage ("SAWW"). Eligibility for the small employer rate will be determined by DEED after the Oct. 31, 2025, wage detail report is submitted.

Employers may elect to provide an "equivalent" private insurance plan instead of the state program or to self-insure; businesses are encouraged to look into private plans now and compare costs. Requests for an equivalent plan approval should be submitted to DEED by Nov. 10, 2025. An employer approved for an equivalent plan will not pay premiums to the state, but will continue to submit quarterly wage reports to the state.

Which Employers Are Required to Participate?

The program covers most employers in Minnesota with one or more employees (including part-time employees), with exceptions for employees of the federal government or tribal nations. It covers employers outside Minnesota who have Minnesota employees or employees who cross the border to work in Minnesota and meet eligibility requirements. Nonprofits, religious organizations, and agricultural employers are all required to participate.

Self-employed individuals and independent contractors are not required to participate, but may choose to opt in. Seasonal employees employed for less than 150 days are not covered under the program.

Remote workers are covered if they physically work at least 50% of their time in Minnesota. If an employee did not physically work 50% of their time in any state (such as if their time was equally split between Minnesota, Wisconsin, and Iowa), but they are a resident of Minnesota, the employee is covered. However, remote workers are not covered if they physically work more than 50% of their time in a different state. Employers are responsible to apply this "localization test" and make the eligibility determination.

What Kind of Leave Is Covered?

Employees may apply for leave if they have a "qualifying life event," such as:

• a serious health condition;
• a new baby;
• need to care for a family member;
• need to manage a family member's active military duty;
• safety concerns, including domestic violence, sexual assault, or stalking.

The law defines who qualifies as a "family member" broadly.

How Much Will Employees Be Paid?

Payments to employees will not equal an eligible employee's full wages; instead, eligible employees will receive payments based on their average weekly wage:

• 90% of the portion of their weekly wages that is between $0 and $711.50;
• 66% of the portion of their weekly wages that is between $711.50 and $1,423;
• 55% of the portion of their weekly wages that is above $1,423.

The maximum weekly benefit any employee can receive cannot exceed the SAWW, which will be $1,423 per week effective Oct. 1, 2025. Eligibility requires employees to have earned a specific percentage of the SAWW in the prior year. For 2026 benefits, the employee must have earned at least 5.3% of the state's average annual wage (approximately $3,900) in 2025.

Eligible employees are also entitled to continued employee health insurance benefits during leave. And unless the employer can show an employee would not otherwise have been employed at the time the employee returns from leave, an employee who worked at least 90 days for the employer before leave is entitled to reinstatement to the same or an equivalent position.

What Are the Notification and Documentation Requirements?

Employees applying for PFML must notify their employer of their need for the leave as soon as practicable. Employees will submit benefit applications to DEED, which will determine eligibility and benefit amount, and pay out the financial benefits on a weekly basis with pro-ration for intermittent leave, any hours worked for wages, worker's compensation payments, and the use of other paid time off that is not considered a supplemental benefit.

All leaves will require certification from a health care professional or service provider that the leave is necessary.

Will PFML Run Concurrent with Other Leaves?

Employers will need to review their existing policies to determine how the varying federal and state leaves will interact and impact company policies. Employers may require that leave taken under PFML run concurrent with other leaves, such as the federal Family and Medical Leave Act and Minnesota’s Pregnancy and Parental Leave Act. PFML is separate and distinct from earned sick and safe time.

We Can Help

Maslon's Labor & Employment attorneys are ready to answer your questions and assist in ensuring your company is prepared for this new program.