Updated June 8, 2023
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 number of weeks of partial wage replacement for family and medical leave funded through a payroll tax applied to all employers.
- 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.
A1. Yes, all cities are covered, including joint powers entities. There is no exemption for small cities. 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).
A2. Self-employed individuals and contractors are not covered by the new law. All other city employees are likely to be covered.
There is no specific exemption for paid on-call firefighters or elected officials. However, the city should consult with their city attorney to decide whether these positions would be considered “employees” of the city for the purpose of this law.
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 of $66,924, which is $3,546.97 for 2023 ($66,924 X .053=$3,546.97).
There is also an exemption for “seasonal employees” who work in hospitality for an employer whose average receipts during any six months of the preceding calendar year were not more than 33% of its average receipts for the other six months of the year. This exemption might apply to some municipal liquor store establishments that serve food. Your city should work with its attorney to determine whether this provision might apply.
Covered employment may exclude work outside Minnesota if it is greater than 50% of the employee’s hours worked.
A3. The law provides paid family and medical leave to employees who apply for the benefits and meet eligibility requirements. The dollar amount of the paid leave varies depending on the employee’s typical workweek and weekly wages during the base period defined by the law. If the 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.
The formulas for determining benefits are similar to the way unemployment compensation benefits are calculated. The maximum weekly benefit amount is the state’s average weekly wage ($1,287 for 2023). Benefits are paid on a weekly basis.
The total number of weeks that an applicant 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 within the same benefit year that the applicant received benefits for bonding, safety leave, family care, or qualifying exigency, vice versa, for a maximum of 20 weeks.
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 serious health condition of self or family member (see below for definition of family member).
- A “qualifying exigency” (a need associated with a military member’s active-duty service).
A family member is defined as:
- A spouse or domestic partner.
- A child, including a biological, adopted, or foster child, a stepchild, or a child to whom the applicant stands in loco parentis, is a legal guardian, or is a de facto parent.
- 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 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.
This bill also specifically includes safety leave. Safety leave means 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.
Except for benefits for bonding, this new state 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).
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.
A4. An employer cannot retaliate against an employee for requesting or obtaining this paid leave, nor can they 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.
A5. The program is funded in large part by employer and employee contributions. Employers pay 50% and employees pay 50% through payroll deduction. The payments must be made by employers through quarterly electronic payments to DEED.
For employers that are not applying to administer their own private plans (see Q14), the cost is .7% of taxable wages paid by the employer for employees in covered employment. The maximum earnings or taxable wages on which premiums are assessed are set as the FICA/Social Security wage base. Employers and employees pay the premium percentage set under this section on all earnings up to that amount.
There are some reductions in cost for employers with fewer than 30 employees. The cost is also reduced if the employer is approved to administer their own private plan.
A6. Beginning on July 1, 2026, and thereafter by July 31 of each year, the DEED commissioner will adjust the premium rates using a formula specified in the law. However, the annual premium rate cannot exceed 1.2% of the taxable wages paid to each employee.
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).
A8. 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. 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.
The city is also required to post a notice to employees about the availability of the paid leave. DEED will provide the wording for the required notice.
The city must also provide written information about the program 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.
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.
A9. DEED will send a notice to the employer after determining that an employee is entitled to benefits. Generally, this will occur no later than two weeks after the application date.
A10. Leave based on a serious health condition may be taken intermittently if reasonable and appropriate. All other leaves may be taken intermittently. 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.
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.
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.
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 a medical professional.
The paid family and medical 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, or care for a family member.
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). Employers that have been approved for a private family leave plan are subject only to a medical leave premium of 0.4%. Employers that have been approved for a private medical leave plan are subject only to the family leave premium of 0.3%.
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, but details on how to apply for the exemption will likely not be available for some time.
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.
A16. The city cannot require the employee to use paid leave first before applying for benefits under this new program. However, the 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 paid family and medical leave program, they are entitled to the employment protections of the law.
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.
Q18. What if the employee is using workers’ compensation benefits or receiving severance benefits; can they use this leave in addition to that?
A18. No. With some exceptions, an employee receiving workers’ compensation benefits that are equal to or greater than what they are eligible for under this program are not eligible for the paid leave provided by the new law. An employee is also ineligible for benefits for any portion of a week the applicant is receiving separation, severance, or bonus payments as wages, or Social Security disability benefits except in certain cases.
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. The new law may have a negative impact on participation levels in group short-term or long-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.
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. The 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.
A22. Action areas cities may want to begin considering in preparation for the new law include:
- Budget impact in fiscal year 2025.
- Bargaining with unions with multiple year contracts, especially 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.
- 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.