Under Minnesota’s Paid Leave Law (PLL) that was passed in 2023, eligible employees may take up to 20 weeks per year of paid leave during certain family and medical leave events starting in January 2026. However, the new law left many questions unanswered—some of which have now been answered, or at least clarified, by the Minnesota Department of Employment and Economic Development (DEED) and the Minnesota Legislature.
On May 1, 2024, DEED released a limited set of questions and answers, including information about the wage detail reports employers must submit this year. On May 15, 2024, DEED published separate FAQs for employers and employees to assist with comprehension and compliance. Additionally, the legislature passed several amendments to the PLL, which were signed into law on May 24, 2024.
MN DEED Guidance
The PLL created a state-run family and medical leave insurance account modeled after the unemployment insurance fund. To ensure appropriate payments to employees, employers must submit wage detail reports starting in 2024. DEED’s recent Q&As contain employers’ first look at what, specifically, is required this year.
By October 31, 2024, employers must submit their first quarterly wage detail report. This first report will be based on wages paid between July 1, 2024, and September 30, 2024. Reports will be submitted through DEED’s employer portal. DEED’s website explains in detail what must be included on a wage detail report and how to submit it.
The Q&As also contain good news for most Minnesota employers: Those with Minnesota Unemployment Insurance (UI) accounts do not need to do anything outside of submitting their usual wage detail report—DEED will convert UI accounts into a joint UI/Paid Leave account and a single wage detail report can be submitted for both accounts. Employers who do not have a Minnesota UI account will need to create a Paid Leave Only account. DEED says these accounts can be established in summer 2024.
DEED has also announced it will be engaging in rulemaking, and that its “Paid Leave division is seeking comments related to private plan exemptions, safety leave certification, medical leave certification, and more.” Comments can be submitted through the Office of Administrative Hearings website.
Legislative Updates
During the 2024 legislative session, the Minnesota legislature made several changes to the PLL. PLL will be funded through payroll taxes, which may be split between employees and employers. Initially the tax rate was set at 0.7%, but an actuarial analysis last year showed that this rate would not support the anticipated funding demand. Therefore, the PLL was amended to require DEED to rely on an independent actuarial analysis when setting the tax rate each year and to authorize DEED to set the initial rate prior to January 1, 2026. While recent actuarial reports have suggested that an initial rate as high as 0.88% would be necessary to support the program, DEED has not yet raised the tax rate. Small employers (30 or fewer employees) may qualify for a lower “small employer premium rate” if their average worker’s wage is equal to or less than 150% of Minnesota’s average wage. Small employers may also apply for assistance grants through DEED. No details of the assistance grant process are available yet.
The amendments also established a framework for the appeal process for employers and employees, clarified that intermittent leave must be taken in increments consistent with the employer’s policy for other forms of leave (but with a minimum increment of no more than one calendar day), changed how benefits are calculated (now based on the average hours the employee worked during the two quarters prior to applying for benefits), modified several definitions, and amended a number of other technical and procedural aspects of the law.
Conclusion
While most employers do not need to do anything new to comply with the wage detail reporting requirement due by October 31, 2024, it is not too soon to start planning ahead for premium payments and benefits to begin in 2026, including whether to participate in the state’s plan or a private plan, whether to require employees to pay a portion of premiums, and whether to allow employees to use supplemental benefits (like PTO) to make up the difference between PLL benefits and their regular wages.
Contact any member of Fredrikson’s Employment, Labor & Benefits Group to assist you in complying with Minnesota’s new Paid Family Medical Leave law.
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