Getting Ready for Change: Minnesota's Paid Family and Medical Leave

Starting January 1, 2026, Minnesota's Paid Family and Medical Leave program will officially begin. This program is designed to provide leave for situations where an employee is dealing with a serious health condition, or leave for family care, child bonding, personal safety, or a qualifying exigency. Both employers and employees will contribute to a state fund that will support this program. 

While the full program won't be in effect until 2026, employers have obligations starting July 1, 2024. Employers will be required to start submitting quarterly wage detail reports to the state. Each wage detail report must contain specific information for every employee, including their name, total wages paid, and the total number of hours worked. The report should also include the number of employees employed during the payroll period. These reports need to be received on or before the last day of the month following the end of the calendar quarter, through electronic transmission.

Failing to meet these reporting requirements may result in financial penalties. For instance, a late report may result in a $10 fee per employee. If your report contains missing or incorrect information, you could be looking at a $25 fee for each affected employee. And if you omit an employee in your report, it could lead to a fee equal to 2% of that employee’s total wages.

Lawmakers have approved a 0.7% payroll tax to fund this program, to be split between the employer and employee. However, an analysis released by actuarial firm Milliman in October 2023 has thrown up an interesting revelation. Milliman found that the currently proposed 0.7% tax will require an increase to 0.92% (a 31% rise) in the second year to adequately fund the program. Milliman proposed an alternative model that raises the tax to 0.78% in the first three years and 0.83% in later years. As things stand, Minnesota’s Department of Employment and Economic Development is in the process of reviewing Milliman’s analysis.

Stay informed and prepared. While the program's full implementation is still a few years away, these changes will undoubtedly have an impact on both employers and employees.

If you have questions regarding the above or any other employment-related concerns, please contact Martin Kappenman at 952.921.4603 or [email protected], or any other attorney at Peters, Revnew, Kappenman & Anderson, P.A.

PRK&A have a standing offer for members of the Electrical Association that will fulfill these handbook requirements. www.prkalaw.com  or call 952-896-1700