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Updated Nov. 20, 2025
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. Minnesota will be the 13th state to launch a statewide paid leave program.
- The program will provide job protections and partial wage replacement per benefit year up to a maximum of 20 weeks for family and medical leave funded in large part by employer premiums and in some cases, employee contributions (see Q6). 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 Q5.
- 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. 6, 2025)
Q2. How does Minnesota Paid Leave (MNPL) define employee and covered employment? (Updated Oct. 6, 2025)
Q3. What is the difference between eligibility for premium deductions and benefits under the MNPL program? (Added Oct. 6, 2025)
Q4. What paid leave benefits will employees receive under the MNPL program? (Updated Oct. 6, 2025)
Q5. What job protections does this law provide to employees? (Updated Oct. 6, 2025)
Q6. How much will this program cost and how is it funded? (Updated Nov. 18, 2025)
Q7. Will there be annual cost increases? (Updated Oct. 6, 2025)
Q8. Is there a “reimbursement employer” public sector option available, similar to unemployment compensation? (Updated Oct. 6, 2025)
Q9. What is the role of the city in administering this program? (Updated Oct. 6, 2025)
Q10. How will we find out if an employee has applied for this benefit and been approved? (Updated Oct. 6, 2025)
Q11. While an MNPL application is being processed by DEED, will employers be asked to provide information? (Updated Oct. 27, 2025)
Q12. How does intermittent leave work? (Updated Oct. 6, 2025)
Q13. Can the employer require proof of the need for the leave? (Updated Nov. 12, 2025)
Q14. Does this run concurrently with other federal and state family and medical leave programs? (Updated Oct. 6, 2025)
Q15. How does MNPL interact with earned sick and safe time (ESST)? (Updated Oct. 6, 2025)
Q16. How can the city apply for an exemption from this program — i.e., establish a “private plan?” (Updated Oct. 6, 2025)
Q17. Can the city require employees to use other paid leave to supplement the Minnesota Paid Leave program benefits? (Updated Oct. 6, 2025)
Q18. Can the city require the employee to use city leave first before accessing this program? (Updated Oct. 6, 2025)
Q19. How will this impact collective bargaining agreements (CBAs)? (Updated Oct. 6, 2025)
Q20. What if the employee is using workers’ compensation benefits or receiving severance benefits; can they use this leave in addition to that? (Updated Oct. 6, 2025)
Q21. Does the city have to continue its contribution to health insurance while an employee is on this leave? (Updated Oct. 6, 2025)
Q22. How does this program impact short-term disability and long-term disability benefits we currently provide to employees? (Updated Oct. 6, 2025)
Q23. What if we allow the employee to supplement the benefit by “topping off” accrued city paid leave in addition to the leave under this program; can the employee exceed their normal wages? (Updated Oct. 6, 2025)
Q24. What should our city do to prepare for this new law ahead of Jan. 1, 2026? (Updated Oct. 6, 2025)
Q25. Are Minnesota Paid Leave benefits and any elected “topping off” payments from the employer subject to PERA withholding? (Updated Oct. 6, 2025)
Q26. How will premiums be treated on an employee’s W-2? (Updated Nov. 20, 2025)
Q27. How will the state’s minimum wage impact employee cost sharing for Minnesota Paid Leave premiums beginning in 2026? (Updated Oct. 6, 2025)
Q1. Are all cities covered by this new law and when does it become effective?
A1. Yes, all cities, including joint powers entities, are covered. However, premiums will vary based on city size. Minnesota paid leave benefits, along with associated premiums begin on Jan. 1, 2026. Employers have the option to participate in the state’s plan through DEED or apply to offer employees an approved equivalent plan that meets or exceeds the state’s plan coverage. Without any action, Minnesota employers will be automatically be enrolled in the state’s leave plan. To prepare for the program launch on Jan. 1 2026, there are actions employers need to take now (see Q9 and Q24).
Q2. How does Minnesota Paid Leave (MNPL) define employee and covered employment?
A2. Minnesota Paid Leave (MNPL) law broadly defines “employee” as “an individual who performs services of whatever nature for an employer.” However, the following are not “employees” for purposes of MNPL:
- Self-employed individuals.
- Independent contractors.
- Employees of the United States
- Seasonal employees meeting the narrow definition in Minnesota Statutes, section 268B.01, subdivision 35.
Only employees working in “covered employment” for the city are covered by MNPL, meaning they are subject to quarterly wage detail reporting, pay premiums, and may apply for MNPL benefits. Under the Minnesota Paid Leave law, “covered employment” includes either:
- Employees who worked 50% or more of the prior year in Minnesota.
- Employees who performed some work in Minnesota but did not work 50% or more of the year in Minnesota or any one state. Coverage applies if they live in Minnesota during 50% or more of the calendar year.
As a result, Minnesota employers with remote or out-of-state workers should evaluate where the work is physically performed. For example, if a remote worker’s duties are considered “localized” in Minnesota — meaning the employee physically works in Minnesota at least 50% of the time — then all wages paid to that employee by the employer are subject to the Minnesota Paid Leave program.
As the definitions reflect, there is no specific exemption for part-time employees, paid on-call firefighters, election judges, 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.
In 2024, the Legislature added a very narrowly defined seasonal employee exception to the paid leave program. Essentially, under Minnesota Statutes, section 268B.01, subdivision 35, there is a three-part test for a seasonal employee exemption from MNPL, including:
- Is the business seasonal? Meaning two-thirds of the average gross receipts are earned within six months of the year.
- Is the employee’s primary line of work considered to be in hospitality? See Minnesota Administrative Rules 3317.3000, subpart 2, and “hospitality” definitions in Minnesota Statutes, section 157.15, subdivisions 4-9 and 11-14.
- If the answers to the first two questions are yes, does the employee work fewer than 150 days in any 52-week period for the employer?
If all three conditions are “yes,” an employer may then request an employee’s exclusion from the program.
DEED has stated the seasonal exception generally will not apply to public sector employers. So, full time, part time, temporary, and seasonal workers are covered under Minnesota Paid Leave.
Q3. What is the difference between eligibility for premium deductions and benefits under the MNPL program?
A3. It’s important to distinguish between eligibility for premium deductions and eligibility for benefits under the Minnesota Paid Leave program.
MNPL premium deductions. There is no minimum earnings requirement for an employee to be subject to Minnesota Paid Leave premium deductions. All wages earned while working in “covered employment” are subject to the premium, regardless of the employee’s earnings level (see Minnesota Statues, section 268B.01).
MNPL benefits. Eligibility for partial wage replacement program benefits, however, is determined separately by DEED — if the city participates in the state-administered plan. To receive benefits under the program, the applicant must meet all eligibility requirements outlined in Minnesota Statutes, section 268B.03. One key requirement is that applicants must meet an earnings threshold: wage credits in the past year must total at least 5.3% of the State’s Average Annual Wage (SAAW), rounded down to the nearest $100. For 2025, this threshold is $3,900. (See Minnesota Statues, section 268B.03.)
An applicant can meet the $3,900 earning requirement through wages from one or more employers during the base period, which consists of the four completed calendar quarters immediately preceding the claim (see Minnesota Statues, section 268B.01).
For more information on how other types of income — such as unemployment insurance or workers’ compensation — affect eligibility for MNPL benefits, see Q20 in the DEED guidance.
In summary: All wages earned while working in “covered employment” are subject to MNPL premiums (no earnings threshold).
Benefit eligibility is subject to meeting the $3,900 wage threshold and other criteria under Minnesota Statues, section 268B.03.
Q4. What paid leave benefits will employees receive under the MNPL program?
A4. The law provides job protections and partial wage replacement for qualifying family and medical leaves for employees who apply for the benefits and meet eligibility requirements.
The following types of medical and family leave qualifying under MNPL law are similar to, but not an exact match, to the federal Family and Medical Leave Act (FMLA). Refer to Q13 and Q14.
There are two types of covered leave that fall under Minnesota Paid Leave: medical leave and family leave.
Medical leave: Up to 12 weeks in a single benefit year for an employee’s own serious health condition.
Family Leave: Up to 12 weeks in a single benefit year for any of the following:
- Bonding after birth, adoption, or foster parenting. Generally, bonding leave must be taken within 12 months of the birth, adoption, or placement of a foster child except when the child must remain in the hospital longer than the mother — then bonding leave must end within 12 months after the child leaves the hospital.
- A “qualifying exigency,” such as a need associated with a military member’s active-duty service or has been notified of an impending call or order to active duty in the Armed Forces.
- Safety leave, which is leave from work because of domestic abuse, sexual assault, or stalking when the leave is associated with seeking medical care, victim services, psychological or legal assistance, as well as relocation due to the event.
- Care for a family member with a serious health condition.
A maximum of 20 weeks may be taken in a benefit year if an employee qualifies for both medical and family leaves. A benefit year under Minnesota Statues, section 268B.01, subdivision 8, begins the first day of absence and rolls forward 52 weeks.
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, 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 cares for the individual without compensation, whether or not the applicant and the individual reside together.
Except for bonding leave, each type of leave must meet the following conditions:
- The seven-day qualifying period is not an unpaid waiting period.
- For intermittent leave, the first paid week is defined as seven calendar days —which may be consecutive, nonconsecutive, or a combination of both — starting from the effective date of leave. Once an applicant meets this seven-day threshold, the first week is paid retroactively as part of the initial benefit payment.
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 the following amounts, subject to the maximum weekly benefit amount as noted in Minnesota Statues, section 268B.04, subdivision 3:
- Up to 90% of the portion of their weekly wages, that is less than or equal to 50% of the state’s average weekly wage. (The state’s average weekly wage is calculated annually and will be posted by DEED each year). That amount is $1,423 per week for the start of Minnesota Paid Leave:
- 66% of the portion of their weekly wages, that is more than 50% of the state average weekly wage but not 100% weekly wage:
- 55% of the portion of their weekly wages, that exceed 100% of the state average weekly wage.
In accordance with statute, an employee’s wage replacement payment is calculated based on their highest-earning quarter within the four most recently completed calendar quarters. This benefit is capped at 100% of the state’s average weekly wage, which is $1,423 per week when the program starts, and then adjusted annually thereafter.
As clarified by DEED Minnesota Paid Leave Contact Center staff in September 2025, for an approved application in January 2026, the state will review the four completed quarters immediately preceding the application date to determine eligibility and benefit amounts. As a result, benefit payments and maximum benefit amounts will be based on the highest-earning quarter from 2025. As another example, if a qualified applicant begins receiving MNPL benefits later in the year — such as in October 2026 — the benefit calculation will reflect more recent quarters. This may include at least two quarters of 2026 wages, potentially resulting in a higher benefit, subject to the cap. The state offers a paid leave payment calculator to estimate benefits based on an employee’s wages. Benefits will begin on the Sunday of the calendar week in which a benefit application is submitted.
Q5. What job protections does this law provide to employees?
A5. Employers are prohibited from retaliating against employees who request or obtain Minnesota Paid Leave. Additionally, employers cannot obstruct or interfere with an employee’s application for such leave. Employees must be returned to the same or equivalent position they held prior to the leave, with equivalent benefits, pay, and other terms and conditions of employment. The job protections under Minnesota Paid Leave apply to both large and small employers; job restoration rights apply to employees after 90 calendar days of hire.
Cities should be mindful that employees may still have job protection under other leave laws including, but not limited to, Minnesota’s WESA Pregnancy and Parental Leave and the federal Family and Medical Leave Act (FMLA). For example, Minnesota’s WESA Pregnancy and Parental Leave provides job protections and benefit eligibility regardless of an employee’s length of service with an employer.
Q6. How much will this program cost and how is it funded?
A6. The program is funded in large part by employer premiums and, in some cases, employee contributions. DEED will collect quarterly electronic premium payments.
Beginning in January 2026, employers must contribute at least 50% of the total premium for Minnesota Paid Leave. However, they may choose to cover up to 100% of the premium for some or all employees. In some cases, employers may deduct the remaining portion — up to 50% of the premium — from employees’ wages. For represented employees, any cost sharing will likely need to be negotiated (refer to Q19).
Payroll deductions begin on Jan. 1, 2026, and premiums are due to DEED by April 30, 2026, based on wage detail reports covering the period from Jan. 1, 2026, and March 31, 2026.
For reference, Minnesota Paid Leave initially set a payroll tax rate of 0.7% to fund family and medical leave premiums. However, on May 13, 2024, the actuarial and consulting firm Milliman advised the state that the rate needed to be increased to 0.88% to ensure the program is adequately funded. On Feb. 21, 2025, DEED announced on its website that the premium rate for the state program in 2026 was set at 0.88%. Premiums are capped at the Old-Age, Survivors, and Disability Insurance (OASDI) limit — $176,000 for 2025 —the same cap used by the Social Security program.
DEED provides a premium calculator on its Minnesota Paid Leave webpage to help applicants and employers estimate their premiums costs. For more information on related taxes, please refer to Q26. See Q7 regarding future premium adjustments.
Small employers
There are some reductions in cost for employers with 30 or fewer employees.
Effective Jan. 1, 2026, a reduced premium rate of 75% of the annual calculated premium will be available for small employers with both:
- 30 or fewer Minnesota employees.
- The city’s employees’ average employee wage falls under 150% of the statewide average annual wage (SAAW) for the basis period ($107,016 in 2025). This wage calculation will be made on an annual basis each October (covering September through September).
Minnesota Unemployment Insurance (UI) will notify small employers by mail in December 2025 if they qualify for this reduced rate. The small employer rate will be equivalent to .22% of payroll for 2025, compared to the typical large employer minimum rate of .44%.
Employee premiums remain the same for both large and small employers; up to 50% of the full premium (equivalent up to .44% for 2026).
As noted in Q3, it’s important to distinguish between eligibility for benefits and eligibility for premium deductions. There is no minimum earnings requirement for an employee to be subject to Minnesota Paid Leave premium deductions. Benefits eligibility, however, is determined separately by DEED — if the city participates in the state-administered plan. As noted, one part of that determination includes meeting the $3,900 earnings threshold, among other criteria.
Q7. Will there be annual cost increases?
A7. The premium plan rate will be calculated annually for the upcoming calendar year, based on the program’s historical data and sound actuarial principles. This ensures that the projected fund balance does not fall below 25% of total program expenditures. DEED will contract with a qualified, independent actuarial consultant to conduct this annual analysis. As outlined in Q6, cities budgeting for the state’s plan in 2026 should include .88%, or 0.44% if cost sharing, of each employee’s taxable wages based on DEED’s published premium rates. As noted in Q6 and Q19, employers may share premiums costs with employees. However, cost-sharing arrangements will likely require negotiation for represented employees.
Effective Aug. 1, 2025, the premium rate under the Minnesota Paid Leave law is capped at 1.1% of taxable wages. This cap was previously set at 1.2% but was reduced to 1.1% in the 2025 special legislative session.
Q8. Is there a “reimbursement employer” public sector option available, similar to unemployment compensation?
A8. Unlike unemployment compensation, there is no option to become a “reimbursement employer” under this law. All city employers are covered by this new law unless they apply for an exemption by demonstrating — through an application process — that they have offered employees an equivalent plan that meets or exceeds the coverage provided by the state. (See Q16).
Q9. What is the role of the city in administering this program?
A9. Employers will have three primary categories of responsibilities under the Minnesota Paid Leave program:
- Notification requirements, including educating and informing employees.
- Wage reporting and premium submissions.
- Coordinating benefits and leaves during an absence. See Q24 for additional details for employers to prepare for the paid leave program launch on Jan. 1, 2026.
Notification requirements, including educating and informing employees. Cities must display a DEED-issued workforce poster in a conspicuous place and provide written notice to employees about the MNPL program. See Q24.
Reporting wages and in 2026 and submitting paid leave premiums. Similar to unemployment insurance (UI), employers are required to submit quarterly wage detail reports, including total wages paid and paid hours worked for each employee.
Although premium payments do not begin until 2026, wage reporting began in 2024. Cities met their dual reporting obligations (for both UI and Minnesota Paid Leave) when they submitted wage detail for July–September 2024 by Oct. 31, 2024.
Positions not covered by UI — such as elected officials or election judges — must be reported separately through a “Paid Leave Only” account, established through a process outlined on the Minnesota UI webpage.
The first premium payments for MNPL are due on April 30, 2026. The first premiums will be based on wage details reported between Jan. 1, 2026, and March 31, 2026.
Employers will submit quarterly MNPL premium payments through their UI/Minnesota Paid Leave account, using the same system currently used for submitting wage detail reports. DEED will generate a bill based on wage data, which will appear in the Minnesota Paid Leave administrator portal. Late reporting fees may apply but can be waived if reports are submitted within 30 calendar days after DEED issues a notice. Additional penalties may apply for missing or incorrect information.
Review data privacy laws and procedures. Minnesota Paid Leave data is classified as private under state law, with limited exceptions for sharing data with authorized state and federal agencies, employers, and health care providers. Cities should begin developing secure processes for collecting, storing, and transmitting Minnesota Paid Leave data to ensure compliance with data privacy laws.
Q10. How will we find out if an employee has applied for this benefit and been approved?
A10. DEED’s guidance shares that employees must notify their employer before applying for Minnesota Paid Leave. By statute, DEED is required to notify all employers from whom the applicant is taking leave — either in writing or electronically — within five business days of the employee or former employee filing a claim for benefits.
Q11. While an MNPL application is being processed by DEED, will employers be asked to provide information?
A11. Yes. Under Minnesota Administrative Rules 3317.4150, employers are required to respond to DEED within seven calendar days of receiving a request for information through the MNPL administrator portal. Cities may choose to respond sooner. In fact, the city’s paid leave administrator can typically review a submitted application through DEED within about 10 minutes of the employee submitting it to the state. Due to the time-sensitive nature of Minnesota Paid Leave requests, many cities may opt to designate more than one Minnesota Paid Leave administrator. Refer to Q24 for more information.
Q12. How does intermittent leave work?
A12. Generally, any leave under the law is eligible to be taken intermittently with all intermittent leave resulting 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 their employer with a schedule of the needed days off as soon as practicable, considering all relevant circumstances. When applying for intermittent leave, applicants must apply for the full anticipated leave period and submit a schedule of expected absences. Payment for intermittent Minnesota Paid Leave cannot be requested until applicants have accumulated at least eight hours of leave, unless more than 30 calendar days have passed since the initial leave was taken.
Applicants are required to report estimated weekly absences in advance and must submit a weekly report for DEED to process payments. Employers will receive absence reports and payment notifications two business days before DEED makes payment.
Employees may use intermittent leave in increments consistent with those allowed by city policies for other types of leave, provided the city’s policy permits a minimum increment of no more than one calendar day. It’s important to note that depending on the city and policy, the minimum increment allowed under the MNPL law may differ from the requirements under federal FMLA. Under FMLA, the minimum increment for leave cannot exceed one hour, even if other leave types use larger increments. As always, we recommend consulting with your legal counsel to determine how best to tailor your own city’s MNPL policy to ensure compliance with both state and federal requirements.
Employers must allow a minimum of 480 hours of intermittent leave within a benefit year for qualifying leave. While not required, employers can choose to offer the full amount of leave available under Minnesota Paid Leave as intermittent leave. If a qualified employee requires more than 480 hours of intermittent leave during a benefit year, the employer has the discretion to require any additional MNPL to be taken as one continuous block of time rather than intermittently. In other words, if an employer limits MNPL intermittent leave to 480 hours, the employee is still entitled to use any remaining leave continuously, as long as the total leave does not exceed the statutory maximum of 20 weeks in a single benefit year. As a recommended best practice, we encourage cities to clearly state this in their personnel policies to ensure clarity for both employees and supervisors.
Q13. Can the employer require proof of the need for the leave?
A13. Employers may require employees to provide a copy of the certification submitted to DEED when applying for Minnesota Paid Leave benefits. However, MNPL administrators will have access to much of the application information — including completed certifications — submitted by employees to DEED. The required certification depends on the type of leave requested but generally must substantiate the need for the leave and, when applicable, specify the expected duration and timing.
DEED recommends using Minnesota Paid Leave forms but may accept employer-developed forms on a case-by-case basis, provided the forms include all required information. Access DEED’s certification forms.
The following are examples of documentation employees may be required to submit to DEED:
- Medical leave: A health care provider must complete a certification form indicating that the employee has a serious health care condition that prevents them from performing their regular job duties, along with the estimated duration of leave needed.
- Caring leave: When an employee is requesting leave to care for a family member, the family member’s health care provider must complete a certification form confirming that the employee’s care is medically necessary, and specifying the anticipated duration.
- Bonding leave: The employee must provide documentation from a health care provider, adoption agency, or foster care agency confirming that a child has been born or placed in the employee’s home.
- Military family leave: The employee must submit a copy of active-duty orders or other official military documents showing that their family member is about to be deployed.
- Safety leave: The employee must provide documentation supporting the need for safety leave. This may include a letter from a qualified professional (e.g., a domestic violence advocate, counselor, or attorney), a police report, restraining order, or other court order. The documentation does not need to include specific details of the incident, only confirmation that safety leave is necessary.
Q14. Does this run concurrently with other federal and state family and medical leave programs?
A14. Yes. The law explicitly allows employers to adopt policies that require Minnesota Paid Leave to run concurrently with the federal Family and Medical Leave Act or Minnesota WESA Pregnancy and Parental Leave, when the leave is taken for the same purpose. FMLA is a federal law that provides up to 12 weeks of unpaid, job protected leave per year. For additional information on FMLA refer to the FMLA Toolkit.
Due to differences between FMLA and Minnesota Paid Leave, an employee may qualify for paid leave under the state program but may not qualify for FMLA. In that situation, the Minnesota Paid Leave will not run concurrently with FMLA. Minnesota WESA Pregnancy and Parental Leave provides up to 12 weeks of unpaid, job-protected leave for pregnancy, birth, or adoption. Access more information on Minnesota WESA Pregnancy and Parental Leave.
Cities must comply with both state and federal laws when both apply and should consult with legal counsel to determine which laws apply in any given situation. In most cases, employers are responsible for ensuring the employee receives the highest level of benefits available under the laws.
DEED has indicated that if an employer can show an employee has already taken job-protected or paid leave for a reason that would also qualify under Minnesota Paid Leave, the amount of leave available to that employee under the MNPL program may be reduced. According to unofficial guidance the League received from DEED in fall 2024, if an employee first takes an unpaid FMLA leave for a qualifying condition and then later applies for Minnesota Paid Leave for the same reason, the employer may designate the FMLA time as qualifying leave under Minnesota Statutes, section 268B.
While the final determination of benefit eligibility rests with DEED upon application, this designation could reduce the amount of leave available through the Minnesota Paid Leave program. DEED is expected to provide further clarification on this issue in the future.
Q15. How does MNPL interact with earned sick and safe time (ESST)?
A15. In general, ESST is intended to cover short-term situations such as a brief illness or when an employee needs to care for a sick child who cannot attend daycare, etc. ESST is administered by the employer and does not require DEED approval or, in many cases, a medical professional — particularly for absences less than two consecutive scheduled business days. Employees may use ESST in place of, or in addition to, Minnesota Paid Leave, depending on the circumstances.
In contrast, the Minnesota Paid Leave program is designed for longer-term or extended absences and requires approval from DEED based on eligibility and necessity. It is intended to cover more serious situations such as major illnesses or injuries, maternity/paternity leave, qualified exigency leave, safety leave, or care of a family member.
Q16. How can the city apply for an exemption from this program — i.e., establish a “private plan?”
A16. Employers may apply for an exemption from the state’s plan by offering a “private plan” that provides equal or greater rights, protections, and benefits than those offered under the state-administered plan. Employers can choose to meet this requirement either by purchasing a plan through a licensed, private insurance carrier or by establishing a self-insured plan.
The Minnesota Department of Commerce certifies plans offered by approved insurance carriers, so employers who purchase one of these plans can be assured it meets Minnesota Paid Leave requirements. A list of approved carriers is available on DEED’s website. Employers may apply for an exemption from the medical benefits portion of the program, the family benefits portion, or both.
Employers with an approved private plan — whether self-insured or purchased — are not required to pay the state program premiums to the state. However, in the case of self-insured plans, they will pay an oversight fee and will be required to post a surety bond equal to the amount of premiums that would have been paid to the state.
Importantly, employers with an approved private equivalent plan cannot charge employees more than they would pay under the state plan to fund the private equivalent plan. For 2026, the employee share is capped at 0.44% of wages.
Even with an approved private plan, employers remain subject to statutory obligations under the law, including submitting quarterly wage detail reports, providing required employee notifications, and upholding all job protections outlined in statute.
- Learn more about the State’s application for equivalent plans.
- View the Minnesota Department of Commerce equivalent medical leave plan checklist.
While employers may switch from the state plan to a private plan, any such change takes effect the quarter following the approval of the application.
According to Minnesota Statues, section 268B.10, subdivision 9, an employer may withdraw from a private plan within 30 days of either:
- The effective date of any law that increases benefit amounts.
- The date of any change to the premium rate.
Additionally, DEED requires a three-week adjudication period for any outstanding claims. Therefore, employers considering a switch from a private plan back to the state plan should anticipate an application process of at least two months to accommodate necessary processing and review times.
For example, if an employer applies in February 2027 to transition from the state plan to a private plan, and the application is approved, the change would take effect in April 2027.
Employers should also be aware that switching from a private (equivalent) plan back to the state plan triggers a three-year lock-in period under Minnesota Statues, section 268B.10, subdivision 21. This means the employer must remain in the state plan for at least three years.
Q17. Can the city require employees to use other paid leave to supplement the Minnesota Paid Leave program benefits?
A17. No. The law explicitly states that employers cannot require employees to use their accrued paid time off to supplement benefits received through the Minnesota Paid Leave program. However, employers — including cities — are permitted, but not required, to allow employees to use accrued city leave (such as sick/ESST leave, vacation, PTO, or short-term disability) to supplement their MNPL benefits. As noted in Q4, the Minnesota Paid Leave benefit provides a progressive wage replacement based on an employee’s weekly wages. By allowing employees to “top off” their Minnesota Paid Leave payments with accrued leave, a city can help employees maintain their full regular earnings during leave, which also reduces the city’s accrued leave liabilities. That said, the combined total of MNPL benefits, and any supplemental payments may not exceed the employee’s regular earnings. DEED staff have stated that the approval letter issued to employees will include their weekly MNPL benefit amount. For more on short-term disability/long-term disability impacts, see Q22.
The city should consult with legal counsel to determine whether any existing policies, collective bargaining agreements, or state or federal laws may affect the use of supplemental benefits (see also Q18). In situations where an employer provides wage replacement during an absence and the total amount of earnings during the leave — combined with Minnesota Paid Leave benefits — exceeds the employee’s usual wages, the employee may be required to repay the excess to either the employer or DEED. If an employer provides wage replacement benefits during a period that DEED should have covered, DEED may reimburse the employer directly.
Q18. Can the city require the employee to use city leave first before accessing this program?
A18. No. The city cannot require an employee to use accrued city leave before applying for benefits under the Minnesota Paid Leave program. However, employees may choose to use vacation, sick, paid time off, or disability insurance payments instead of, or in addition to, state paid leave benefits. While using city paid leave in place of Minnesota Paid Leave, employees are entitled to the employment protections under the law, provided they meet the length of service requirements (refer to Minnesota Statues, section 268B.06, subdivision 5(a) and Q5).
Cities must take care not to interfere with or retaliate against employees for exercising their rights under the Minnesota Paid Leave law.
Q19. How will this impact collective bargaining agreements (CBAs)?
A19. The law does not prevent employers from bargaining with unions regarding leave benefits, related procedures, and employee protections, provided that any agreements meet or exceed — and do not conflict with — the minimum standards and requirements set forth by the law. Many labor experts note that there is a negotiation obligation to establish a 50% employer-50% employee premium split for represented employees.
Q20. What if the employee is using workers’ compensation benefits or receiving severance benefits; can they use this leave in addition to that?
A20. It depends on the type of benefits the individual is receiving. Pursuant to Minnesota Statues, section 268B.06, 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:
- Minnesota workers’ compensation law.
- 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. DEED will verify information through multiple sources during the application process to prevent any overlap or “double dipping” of benefits.
Q21. Does the city have to continue its contribution to health insurance while an employee is on this leave?
A21. Yes. Similar to the federal Family and Medical Leave Act (FMLA), Minnesota Paid Leave requires employers to maintain an employee’s health insurance coverage during leave as if the employee were actively working. The employee must continue to pay their share of the premium.
Employers may use various methods to collect the employee portion of the premium including, but not limited to, having employees mail a check while on leave, deducting the amount from supplemental “top off” payments, or arranging for employees to prepay their share before going out on leave. For more information, see the League’s model personnel policy template on Maintaining Health Coverage During Leave.
Under the federal FMLA, employers may recoup their share of health plan premiums paid while an employee is out on FMLA if the employee fails to return to work after their FMLA entitlement ends and the failure to return is due to circumstances beyond the employee’s control regarding their own or a family member’s serious health condition. A member city inquired whether a similar recoupment option is available under Minnesota Paid Leave. According to unofficial DEED guidance, there is currently no provision in the MNPL law that states that an employer may recoup the employee’s share of premiums after having paid them. The League recommends cities consult with legal counsel for advice on how to reconcile differences between FMLA and Minnesota Paid Leave.
Q22. How does this program impact short-term disability and long-term disability benefits we currently provide to employees?
A22. An employee may receive disability insurance payments in addition to Minnesota Paid Leave benefits, provided they are eligible for both at the same time. Disability insurance benefits may be offset by Minnesota Paid Leave benefits paid to the employee under the terms of the disability policy. In most cases, Minnesota Paid Leave will be the primary benefit, meaning short-term disability claims may be reduced by Minnesota Paid Leave benefits received.
Cities should consult with their short-term disability carrier to understand how their plans will interact with Minnesota Paid Leave in 2026. Some carriers note that short-term disability plans may be particularly valuable for higher wage earners, due to the progressive structure of Minnesota Paid Leave, which provides greater benefits to lower wage earners (refer to Q4).
Q23. What if we allow the employee to supplement the benefit by “topping off” accrued city paid leave in addition to the leave under this program; can the employee exceed their normal wages?
A23: No, Minnesota Paid Leave law does not allow employees to make more than their regular earnings while receiving Minnesota Paid Leave benefits. Employers may designate certain benefits — such as salary continuation, vacation leave, sick leave, or other paid time off — as “supplemental benefits” to be paid in addition to Minnesota Paid Leave benefits. These supplemental benefits can help make up the difference between partial and full wage replacement, but cannot result in the employee receiving more than their regular earnings.
However, even if supplemental benefits are offered, the employee has the choice whether to receive them.
If an employer does not allow employees to use employer-paid leave benefits as supplemental benefits, and an employee uses accrued city leave during an absence, that leave is likely considered taken in lieu of MNPL, meaning the employee receives payment from the city instead of the state.
During the MNPL application process, DEED will ask both the employee and employer about any payments the employee is receiving. Employers will be asked to confirm whether supplemental payments are provided and must ensure these payments do not exceed the legal limit.
Q24. What should our city do to prepare for this new law ahead of Jan. 1, 2026?
A24: Action areas cities may want to begin preparing for 2026 include:
Ensuring the city has its Minnesota Paid Leave accounts established. Cities must ensure they have two separate accounts established with DEED for the MNPL program.
- Employer account. This account is likely already in place, as it is the same one used for the state’s Unemployment Insurance (UI) system to report and submit unemployment payments. DEED has transitioned existing UI employer accounts into joint UI/MNPL accounts. This means that when cities complete their regular UI wage detail reporting, that information will also fulfill MNPL reporting requirements. For cities with positions not covered under the UI program — such as certain elected officials or election judges — but still subject to the MNPL program, a separate “Minnesota Paid Leave Only” account must be created.
- Paid leave administrator account. According to DEED, all employers must designate a MNPL administrator using the UI system, before Jan. 1, 2026. This designated administrator will be the city’s primary point of contact for the MNPL program and will be responsible for:
- Requesting an equivalent plan substitution (if applicable).
- Managing the city’s MNPL account.
- Reviewing applications submitted by employees.
- Coordinating paid leave with other city benefits.
Due to the time-sensitive nature of state requests for information, many cities may choose to designate more than one MNPL administrator (refer to Q11).
Employee notifications. Minnesota Paid Leave includes two notifications requirements for employers (refer to Q9):
- Displaying a required workforce poster. Employers must display a DEED-issued poster (pdf) outlining employee rights under the state plan. The poster must be placed in a conspicuous location in the workplace. The poster must be displayed in English and any language spoken by five or more employees or independent contractors. A separate version of the poster will be made available by DEED for employers using an equivalent plan.
- Individual employee notification. Employers must also notify each employee directly, in their primary language, about the Minnesota Paid Leave program. This notice must be provided either:
- Within 30 days of hire.
- At least 30 days before premium collection begins (for 2026, this would be by Dec. 1, 2025). DEED has provided sample notices to help employers comply. These notifications must be documented and retained. Employers need to be able to demonstrate, upon request, that each employee has received the required notice. Acceptable documentation methods include:
- Signed PDF forms.
- Inclusion in onboarding paperwork with a signed acknowledgment.
- An acknowledgment via timesheet or electronic payroll system that the employee reviewed the employer written notice.
The key requirement is that the employer has a verifiable system in place to confirm employees were properly informed of their rights under Minnesota Paid Leave and, if applicable, the deduction of premiums. Refer to Q9.
Strategic considerations for cities preparing for Minnesota Paid Leave in 2026.
- Determine plan type. Decide whether the city will participate in the state plan or pursue approval for an equivalent private plan in 2026.
- Evaluate cost sharing strategy. Determine if the city will share premium costs with employees under the Minnesota Paid Leave program. Consider budget impacts in fiscal year 2025 as premiums collection begin on Jan. 1, 2026. If the city intends to share premium costs with union-represented employees, begin preparing for collective bargaining negotiations ahead of the 2026 implementation. Decide whether the city will cover exactly 50% of the premium (the required minimum) or a greater share. (Refer to Q6 and Q19.)
If a city plans to share premium costs with employees, begin preparing the “Individual Employee Notification.” This notice also satisfies the Minnesota Wage Theft Prevention Act requirements related to this payroll deduction. Notifications must be distributed to employees at least 30 days before premium collections begin on Jan. 1, 2026, and must be retained for recordkeeping purposes under the law.
- Review coordination with other city leave benefits. Examine how the city’s existing leave programs (e.g., vacation, sick, PTO) will interact with the Minnesota Paid Leave program.
- Cities may choose to allow employees to use supplemental benefits to “top off” their MNPL payments, helping employees receive full wage replacement during their leave. In consultation with legal counsel, cities may decide to offer this option to all employees or limit it to specific employee groups. See Q17 and Q23.
- DEED will provide Minnesota Paid Leave administrators with information about the maximum supplemental amount cities may provide without exceeding the employee’s regular wages.
- If a city does not offer supplemental payments, employees may still choose to use accrued city leave (e.g., vacation or sick time), but doing so will likely be in lieu of receiving MNPL benefits for that period. In those cases, the city — not the state — will be responsible for wage replacement.
- Coordinate with short-term disability plans.
- Short-term disability benefits are handled differently under the law:
- The Minnesota Paid Leave program is the primary payor when an employee is eligible for both programs.
- MNPL benefits from the state may offset the amount paid by the short-term disability carrier depending on the terms of the specific short-term disability policy.
- Personnel policy updates. Begin updating personnel policies to reflect the new Minnesota Paid Leave program. As you go through this process, consider the following strategic planning questions. Cities may also find it helpful to reference the League’s Personnel Policy Template (doc).
- Leave notification procedures. Review and update your time and attendance policies. Cities may require employees to follow usual and customary notification procedures for requesting leave, but those notifications cannot be more restrictive than what the law requires and must be outlined in policy. Under Minnesota Paid Leave, employees must provide at least a 30-day notice before their leave begins when practicable. If a 30-day notice is not possible, they must notify the city as soon as practicable. In all cases employees must notify their employer prior to applying for MNPL benefits through DEED.
- Supplemental benefits (“topping off”). If your city is allowing city paid leave to be used as supplemental benefits with Minnesota Paid Leave benefits, include language in your policies indicating which city-paid leave may be used as a supplemental payment. See Q17 and Q23.
- Minimum leave increments. Determine the smallest increment of time that employees may take leave in (e.g., 15 minutes, 30 minutes, one hour, a half day, or full day). This should be clearly outlined in your policy. Keep in mind, although Minnesota Paid Leave allows employers to set minimum leave increments up to one full day, the federal FMLA still only allows minimum leave increments up to one hour for FMLA-eligible leave. Refer to Q14.
- Intermittent leave limits. As outlined in Q12, employers can choose to offer the full amount of leave available under Minnesota Paid Leave as intermittent leave. If a qualified employee requires more than 480 hours of intermittent leave during a benefit year, the employer has the discretion to require any additional leave to be taken as one continuous block of time rather than intermittently. In other words, if an employer limits intermittent leave to 480 hours, the employee is still entitled to use any remaining leave continuously, as long as the total leave does not exceed the statutory maximum of 20 weeks in a single benefit year. Employers electing to limit the amount of intermittent leave under Minnesota Paid Leave should clearly outline this decision in policy.
- Post leave considerations. Be familiar with the Americans with Disabilities Act (ADA)and the Minnesota Human Rights Act (MHRA) requirements, as reasonable accommodations may still apply after an employee’s Minnesota Paid leave ends. Cities can reach out to the League to learn more.
- Payroll system preparation. Consult with payroll providers and Human Resources Information System (HRIS) vendors to ensure systems are ready to:
- Begin collecting premiums on Jan. 1, 2026, (as applicable) and tracking employee and employer premium contributions on wage statements in preparation of Form W-2 reporting.
- Track and report required information to DEED under the new program. Accurately manage leave balances, supplemental pay, and compliance reporting.
Q25. Are Minnesota Paid Leave benefits and any elected “topping off” payments from the employer subject to PERA withholding?
A25: According to the Public Employees Retirement Association (PERA), payments received from the state’s MNPL program are not eligible salary for PERA contributions or service credit.
However, employer-paid leave, such as sick/ESST, PTO, or vacation time used to supplement MNPL payments may qualify as PERA eligible salary if:
- The employee is on medical leave for their own serious health condition.
- And the supplemental pay provided by the employer represents at least 50% of the average earnings the employee received during the six months immediately preceding the medical leave.
If the employer-paid supplemental leave falls below 50% of the employee’s average earnings over the previous six months, then the pay is not PERA-eligible and should not be reported to PERA for contribution or service credit purposes.
PERA has advised employers with the state plan to follow this two-part test when determining whether PERA contributions should be withheld from employer-paid supplemental pay used to “top off” Minnesota Paid Leave benefits.
- Is the employee receiving any MNPL for their own medical condition?
- Yes: Withhold PERA if supplemental pay equals 50% or more of regular salary.
- No: Do not withhold PERA from the supplemental pay.
For cities with an approved self-funded paid leave program, the city will want to submit a copy of their plan details to PERA. PERA will then review the program provisions to determine whether the payments are eligible for deductions.
PERA members may purchase salary and service credits lost during a period of authorized unpaid leave. Cities are required to complete an annual leave report documenting all authorized leaves taken during the prior year that resulted in any unpaid time. Refer to PERA’s Employer Manual (pdf).
Q26. How will premiums be treated on an employee’s W-2?
A26: On Jan. 15, 2025, the Internal Revenue Service (IRS) issued Revenue Ruling 2025-4, which clarifies how the federal government will treat income taxes for premiums and benefits received from programs like Minnesota Paid Leave. Minnesota generally follows federal tax law to determine what is included or excluded from a taxpayer’s gross income, meaning it will conform to the IRS conclusions regarding federal gross income.
Minnesota Paid Leave premiums
- For cities paying the minimum employer contribution (i.e., generally.44% of the total premium rate of .88% in 2026) and collecting premiums from employees, the employee portion is included as wages on the employee’s W-2 and does not reduce federal or state taxable wages. In other words, the employee’s 50% contribution of the premium is a post-tax deduction.
- If a city opts to pay more than the required minimum employer share (i.e., more than 0.44% of the total premium rate of .88% in 2026), the additional amount is treated as additional compensation and must be included in the employee’s federal gross income as wages.
- Employers will report the employee contribution and any employer “pickup” contributions in Box 14 of the W-2 labeled as “MNPFML.” For employees splitting medical and family benefits, these can be reported separately in that same box as “MNPL” and “MNPFL,” respectively.
Minnesota Paid Leave benefits
Family leave benefits (i.e., bonding, caring, military, or safety leave) are not considered wages, so they are not subject to employment taxes, and thus do not appear on employee’s W-2 forms. Instead, DEED will issue a 1099 to employees who take family leave at the end of the year.
When applying for paid leave, an employee can opt to have state and federal taxes withheld from their weekly benefits. If selected, Minnesota Paid Leave will withhold 5% for state taxes and 10% for federal taxes.
Medical leave benefits will be treated two different ways for federal tax purposes, according to DEED. Part of the benefit (the amount attributable to the employer contribution) will be treated as wages. The remaining portion (the amount attributable to the employee contribution) is excluded from the employee’s federal gross income and is not taxable.
For small employers, 33% of medical benefits will be treated as wages. For other employers, 50% of medical benefits will be treated as wages.
Medical leave benefits are treated similarly to third-party sick pay, under IRS Notice 2015-16. This portion of the benefit is subject to federal income tax withholding, Social Security, Medicare, and Federal Unemployment Tax Act (FUTA) taxes.
The state will deduct Social Security and Medicare taxes from the claimant/employee and send them to the IRS on the same frequency they send payroll tax deposits. The state will provide information about these payments to the employer on a frequent basis. Employers are required to pay the employer portion of the Social Security and Medicare taxes on the taxable portion of the medical benefits. Employers are required to include these amounts, along with any wages paid by the employer for other services, on Form W-2.
DEED will also provide tax withholding information to employers through their employer/paid leave administrator account, which will include total payments, taxable amounts, and employee portions of Social Security and Medicare taxes for those on leave. Employers will access this information within their accounts to help them with reporting and withholding for their employees.
Q27. How will the state’s minimum wage impact employee cost sharing for Minnesota Paid Leave premiums beginning in 2026?
A27: Employers who share Minnesota Paid Leave premium costs with employees (refer to Q5 and Q17), should carefully review any positions subject to the federal minimum wage law, Minnesota’s minimum wage statute, or applicable city ordinance — especially if the city has its own minimum wage — to ensure that employee premium deductions do not cause wages to fall below the required minimum wage.
Under Minnesota Statutes, section 268B.14, subdivision 3, employee premium deductions “must not cause an employee’s wage, after the deduction, to fall below the rate required to be paid to the employee by any specific statute, regulation, rule, ordinance or government resolution or policy, whichever rate of pay is greater.” DEED has indicated that the Department of Labor and Industry (DLI) plans to use the Minnesota Paid Leave definition of wages, which includes tips for any tipped employees when calculating taxable wages.
For reference, the state’s minimum wage for many city positions in 2026 is $11.41 per hour, with annual inflation adjustments announced by Aug. 31.
Common city exceptions to the state’s minimum wage include city employees providing police or fire protection services. For a full list of exceptions see Minnesota Statutes, section 177.23.
Now is an ideal time to identify any positions paid at or near the minimum wage rate to ensure there is a plan to address situations where sharing 2026 Minnesota Paid Leave premiums might cause wages to fall below the applicable minimum pay rate.
While cities set pay rates based on various factors, some roles, such as election judges, may be paid close to the minimum wage and could be impacted by premium cost sharing in 2026.
If cost sharing of up to 50% of the premium would reduce an employee’s pay below the minimum wage, the city may consider lowering the employee’s share of the premium (less than 50%) or eliminating employee cost sharing entirely for those positions.
