Minnesota Paid Leave Update: DEED Issues Guidance for Employers Opting for Private Plans

Minnesota’s Department of Employment and Economic Development (DEED) has issued initial guidance for employers who do not want to participate in Minnesota’s Paid Leave Law (PLL) program and instead offer an equivalent private plan. In this article, we summarize DEED’s recent guidance on private plan substitutions (with the full guidance available here).

Overview of Paid Leave Compliance Options

PLL takes effect on January 1, 2026. Under the law, Minnesota employers must provide their employees with up to 20 weeks of family and medical leave per year.

To comply with PLL, Minnesota employers must choose one of three options:

1. Pay into the state-run insurance account;
2. Apply to the Minnesota Department of Commerce to administer its own private Paid Leave Plan, independent from the state; or
3. Purchase a qualifying Paid Leave Plan from a third-party insurance carrier which, like the second option, must be approved by the Department of Commerce.

DEED’s recent guidance focuses on the second and third options, explaining the general criteria that employers and insurance carriers must fulfill for their private plans to comply with PLL and receive Department of Commerce approval.

Equivalent Plan Guidance 

Mirroring the statute, DEED identifies several criteria that a private plan must fulfill to obtain Department of Commerce approval. Specifically, both Departments require that:

1. The plan covers all employees;
2. Eligibility requirements are no more restrictive than the state plan;
3. Weekly leave payments are at least equal to the state plan and presented distinctly from other benefits;
4. The total amount of available leave is at least equal to the state plan;
5. The cost to the employee does not exceed the cost to the employee under the state plan;
6. For medical leave, the plan covers the same serious health conditions or medical care related to pregnancy as the state plan;
7. For family leave, the plan covers any care for a family member with a serious health condition, bonding with a child, military-related exigency, and safety leave event as the state plan;
8. There are no additional conditions or restrictions on using leave beyond those permitted by the state plan;
9. The plan covers any employee or former employee who would be eligible under the state plan;
10. The plan covers employees during their employment and for 26 weeks after separation or until they are hired by a new employer, and;
11. The plan pays benefits for the full leave for qualifying former employees.

In addition, private plans must offer equivalent or superior job protections and coverage as the state plan. Thus, private plans must meet or exceed requirements relating to (1) leave time available, (2) amount of pay during the leave, and (3) job protection. Under both the state plan and any private plan, employers cannot retaliate against employees who exercise their PLL rights, and must generally offer reinstatement following a leave.

In short, DEED will approve a private Paid Leave Plan that provides the same or greater substantive benefits and protections as those mandated by the state.

Plan Approvals Beginning Spring 2025 

The Minnesota Department of Commerce will begin reviewing equivalent plan applications in the Spring of 2025. Neither DEED nor the Department of Commerce have specified an exact date for when that process will begin.

Conclusion

Employers seeking to implement or administer private leave plans — and avoid paying into the state’s Paid Leave fund — should act now to formalize their plan and obtain approval from the state. Prior to seeking approval, employers should ensure that their proposed plan provide benefits that meet or exceed those mandated by the state.

Contact any member of Fredrikson’s Employment, Labor & Benefits Group to assist you in applying for an equivalent plan exception and in complying with Minnesota’s new Paid Family Medical Leave law.