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Understanding Minnesota’s New Paid Leave Program: A Guide for Small Businesses

What is the New Paid Leave Program?

Starting in 2026, Minnesota's new paid leave program allows employees to take paid time off for certain life events like having a baby, adopting a child, or dealing with serious health conditions. This program aims to help employees balance their work and personal lives better. An employee is paid a benefit by the state following an application and verification of eligibility. The Paid Leave program will be funded through employer and employee premiums starting in 2026. The Minnesota Legislature delegated authority to DEED to make rules necessary to carry out the Paid Leave program.  You can participate in the rulemaking process for Paid Leave in two ways: comment through the Office of Administrative Hearings via their website or attend a Virtual listening session. Starting in July 2024, most employers will be able to submit quarterly wage detail reports to the Paid Leave program.

Here's how the new paid leave law impacts small businesses:

• Employee Benefits: Employees can take up to 12 weeks of paid leave for personal health reasons and an additional 12 weeks for family reasons, potentially up to 24 weeks in a year.
• Cost to Employers: The program is funded by a payroll tax split between employers and employees. Small businesses with fewer than 50 employees are exempt from paying the employer portion of the tax, but employees will still contribute.
• Job Protection: Employees on paid leave are guaranteed to return to their jobs or a similar position.

Recent updates to the program, signed into law in May 2024, include:

• Simplified Premium Rates: Easier premium rates for small employers.
• Annual Adjustments: Premium rates will adjust annually based on actuarial studies.
• Private Plan Guidance: Improved guidelines for insurers offering private plan products.
• Appeal Process: More detailed appeal processes based on best practices from the Unemployment Insurance program.
• Multiple Employers: Clarifications on how paid leave works for individuals with multiple employers.
• Safety Leave: Clearer rules around safety leave applications and certification.
• Technical Concepts: Enhanced guidance for technical aspects of the law.

Here are steps to mitigate the impact of the new program:

• Plan Ahead: Prepare for possible employee absences now to maintain productivity.
• Cross-Training: Train multiple employees to handle critical tasks.
• Temporary Workers: Consider hiring temporary staff to fill in during longer leaves.
• Update Policies: Review and update your leave policies to align with the new program.

• First Wage Detail Reports: Due on October 31, 2024, based on wages paid between July 1, 2024, and September 30, 2024.
• UI Account Conversion: If your organization is covered by the Unemployment Insurance (UI) program, your UI account will automatically convert to a joint UI/Paid Leave account.
• Paid Leave Only Account: Organizations not covered by UI must register for a Paid Leave Only account through the UI Online system by summer 2024.

• When are the first wage detail reports due? October 31, 2024, covering wages from July 1 to September 30, 2024.
• What if my organization is covered by UI? Your UI account will automatically convert to a joint UI/Paid Leave account.
• Are employers exempt from UI also exempt from Paid Leave? No, the Paid Leave program is distinct and requires participation from all employers, including religious organizations, non-profits, and agricultural employers.
• What if my organization is not covered by UI? Register for a Paid Leave Only account through the UI Online system during summer 2024.

By understanding these requirements and preparing in advance, you can minimize disruptions and ensure your business complies with the new regulations while supporting your employees. If you have questions, contact Julia with JR Business Solutions at 320-979-7116 or visit the State’s Paid Leave Program website at https://paidleave.mn.gov/employers/index.jsp.