Area chambers host joint session on Minnesota’s new Paid Leave Law

Minnesota’s Paid Leave Law was passed by the Minnesota legislature in 2023, and it will go fully into effect on Jan. 1, 2026. A multi-chamber of commerce event, including New Prague, Montgomery and Lonsdale, was held on Thursday, Sept. 26, at Next Chapter Winery in Lanesburg Township to discuss the changes coming forward regarding the new law.

Minnesota Director of Paid Leave Greg Norfleet presented to a capacity group of about 40 registered area business owners, sole proprietors, and employees about what that means for them.

Norfleet comes from the position of chief operating officer for the Massachusetts Department of Education and Care and, previously, was the deputy director for operations at the Massachusetts Paid Family and Medical Leave program, which was started in 2021.

“It has positive impacts on children, parents, loved ones, but it also has positive impacts on employers with improved performance on the job,” said Norfleet.

Minnesota Department of Employment and Economic Development (MNDEED) Outreach Specialist Aaron Tell, who also joined Norfleet. “Paid Leave is about the big moments in your life,” said Tell. “They matter in your lives and they matter in your employees lives.”

MNDEED plays a large role in coordinating and simplifying employers role in paid leave, where the Unemployment Insurance reporting they already conduct quarterly for employees is shared with Paid Leave staff and eliminates, for most, the need for any additional reporting.

The things an employer or self employed individual must do actually start now, although Norfleet says there will not be penalties imposed until 2025 for those that skip reporting.

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What to Paid Leave look like?

Paid Leave is structured in a way that no more than 1.2% of any person’s wages will be contributed to the self-funded program. That is a maximum set, but it may be less, according to Norfleet.

The percentage of the premium paid in will include a minimum amount paid of 50% by the business and a maximum of 50% paid in by the employee. Some employers may choose to pay more than 50%, perhaps even 100% of it, as a benefit to their employees. However, employers are required to pay at least 50% of the required amount. This will be conducted as a deduction on employees paychecks.

The benefits of using Paid Leave are taxable, meaning that if you use the leave benefit that it will be taxed just like typical wages. The payments are made directly to the employee from the State of Minnesota with no need for the employer to do anything.

What a person will be paid under Paid Leave, falls into three brackets of income. Those making less than 50% of the state average income will be paid 90% of their average wage. Those making between 50-100% of the state average income will be paid 66% of their average wage. Lastly, those making more than 100% of the state average income will be paid 50% of their average wage.

Not everyone will qualify for Paid Leave benefits. An employee must have made at least 5.3% of the state-wide average salary in the last four quarters to qualify for receiving Paid Leave benefits.

Since the Paid Leave benefit will be at a reduced rate, employers can designate certain benefits like vacation and sick time as “supplemental benefits” to be paid out bridging the gap between Paid Leave and what the employees normal wage is for full wage replacement.

Vacation and sick leave cannot be taken concurrently though, one or the other must be used. Leave that falls under the Family and Medical Leave Act (FMLA), however, can be taken concurrently with Paid Leave if the employer chooses so.

Paid Leave is also separate from Earned Sick and Safe Time. See dli.mn.gov/sick-leave for more information on that program.

Each employee can have a total of 20 weeks maximum of Paid Leave in any calendar year but there is a maximum of 12 weeks of family leave and a maximum of medical leave under Paid Leave. This means if you have used 12 weeks of medical leave, you are not entitled to more medical leave but you could use up to 8 weeks of family leave for items that fall under that category. The leave can be taken in a continuous block or intermittent blocks of time, as well, and an employee can have multiple leaves take place in a single year up to the maximum amounts allowed.

Employee’s jobs are protected under Paid Leave, where the employee’s job must be restored to the same position or equivalent position with same pay, status, benefits, length of service, and seniority.

Employers cannot require employees to use benefits like paid time off or sick leave before collecting Paid Leave.

Employees can start using Paid Leave on Jan. 1, 2026. This will be done through the Paid Leave website where a form will be filled out that gets sent back to your employer for review and then the State of Minnesota will make a decision on whether or not to grant the Paid Leave.

For Employers and Self-Employed

Minnesota’s Paid Leave Law (PLL) is requiring that posters about the PLL be posted in a conspicuous area, much like labor law posters. These will be made available to print off from Minnesota Paid Leave. Employees also must be notified in writing of PLL in their native language by Dec. 1, 2025.

Some small businesses are excluded from needing to participate in PLL. This includes a seasonal hospitality business, where the majority of their business comes from 150 days or less, and the business has 30 employees or less. If those two requirements are met, the business would still continue quarterly reporting, as described later, but does not have to participate in Paid Leave.

Employers of tribal nations, the federal government and self-employed individuals who choose to provide their own coverage for themselves, through a private insurance option, are also exempt from participating. Self-employed individuals and independent contractors are not covered by Paid Leave but can opt in beginning in 2025.

Any employer that is offering private leave that meets or exceeds what Paid Leave Law covers, can also seek exemption of participating through the state.

Reporting of wages quarterly is necessary as well. For the average business, this means nothing different than what you already are doing to report wages of your employees for Unemployment Insurance — it is automatically shared. The first period for which this is due is for July-Sept. 2024, due by Oct. 31, 2024.

If your business is not covered by Unemployment Insurance and does not report currently, a Paid Leave Only account will need to be set up through the Unemployment Insurance system online so reporting can be done. If your business has both employees covered by Unemployment Insurance and some who are not, a joint account has already been created for you to report those that do not.

Some questions asked during the multi-chamber of commerce event were ones that Norfleet and Tell had not heard. Lonsdale business owner Scott Pelava asked, “If an employee has two jobs, is hurt on one of the jobs, collects workers compensation for the job they are hurt on, is not able to work either of their two jobs, is that employee able to collect Paid Leave for their second job?” This question prompted further investigation in which Norfleet said he would follow up with Pelava later with an answer.

To find out further information, to subscribe to updates, and/or to ask further questions, visit the Minnesota Paid Leave website at paidleave.mn.gov.

Here are a list of a few important dates to be aware of:

• Oct. 31, 2024 — First quarter of wage reporting due, covering the months of July-Sept. This will continue quarterly after that. For some, this will be a new item to address. This reporting will continue quarterly perpetually.
• Dec. 1, 2025 — Employees must be notified in writing of the Paid Leave Law and specifics of your business related to it.
• Jan. 1, 2026 — First date that any employee can start taking leave under the new law.
• April 2026 — First payments due from employer and/or employee due for Paid Leave.