Family, medical leave law allows workers up to 20 weeks of annual paid time off

A state-run insurance program has been created to provide Minnesota workers with up to 20 weeks per year of paid time off to deal with family or medical issues.

Beginning Jan. 1, 2026, benefits would be available to an employee unable to work due to a family member’s serious health condition, a qualifying exigency, safety leave, bonding leave, or the employee’s own pregnancy, pregnancy recovery, or serious health condition.

The law establishes a family and medical insurance account modeled after the state’s unemployment insurance fund. It will be managed by a new Family and Medical Benefits Insurance Division within the Department of Employment and Economic Development.

The law is sponsored by Rep. Ruth Richardson (DFL-Mendota Heights) and Sen. Erin Maye Quade (DFL-Apple Valley). It takes effect Aug. 1, 2023, unless otherwise noted.

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Employers/employees

A new tax on employers and employees would ultimately fund the account beginning Jan. 1, 2026.

The premium rate would be 0.7% of the employee’s wages, at least half of which would be paid by the employer. Self-employed individuals and independent contractors may, effective July 1, 2025, participate in the paid leave program if they pay the entire premium.

Beginning Jan. 1, 2027, and by July 31 of each year thereafter, the department must adjust the annual premium rates based on the prior year’s disbursements. The annual premium rate cannot exceed 1.2% of taxable wages paid to each employee.

Employers can opt out of the state-run paid leave program provided they offer private plan benefits that at least equal benefits under the state plan. This takes effect July 1, 2025.

Benefits paid under a leave will range from 55% to 90% of the employee’s wages and will be subject to state income tax. If child support is owed, the department must withhold that amount.

The maximum weekly benefit amount that can be paid to an employee taking paid leave is the state’s average weekly wage. Seasonal employees — individuals employed for no more than 150 days during any consecutive 52-week period in the hospitality industry — are not eligible for paid leave.

For employers with fewer than 30 employees, the amount of wages upon which the employer premium is based will be reduced by a formula, resulting in a lower annual premium rate. The annual premium an employee pays will not change.

The annual premium will be 0.4% for an employer participating in only the medical benefit program and with an approved private plan for the family benefit program, and 0.3%.for an employer participating in only the family benefit program and with an approved private plan for the medical benefit program.

Effective July 1, 2024, the department must fine an employer that colludes with any applicant to fraudulently receive benefits. The fine is the greater of $500 or the amount of overpaid benefits.

Employers with 30 or fewer employees, and less than $3 million in gross annual revenues, may apply for grants up to $3,000 to hire temporary workers or increase wages for current employees when an employee takes family or medical leave for a period of at least seven days. There is a $6,000 annual limit.

The department must contract with a qualified independent actuarial consultant to study the paid leave premium rate, its structure, weekly benefit formula, duration of benefits, and fund reserve to determine an actuarially sound rate and future rate-setting mechanism of the program. This section took effect May 26, 2023. (Art. 1, Secs. 9, 12, 19-20, 23-24, 26, 31, 40-41)

Further appropriations

In addition to the onetime $668.3 million appropriation in fiscal year 2024 to initially fund the account, the department will receive a $122.3 million appropriation in the 2024-25 biennium to create and oversee the paid leave program. The base for the family and medical benefit insurance account for the 2026-27 biennium is $45.5 million.

The Department of Human Services will receive $20 million in fiscal year 2026 for its home and community-based services workforce development grant program to pay the paid leave premiums of direct care workers who provide for people with disabilities and older adults.

Also in the 2026-27 biennium, the department will receive $6.1 million. Except for $70,000 for administrative costs, the money is to be used to pay premiums of state employees covered by the paid leave program. (Art. 3, Secs. 2, 11, 13)

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