The Minnesota Legislature has been busy! Over the past couple of years, they’ve passed new laws aimed at supporting working Minnesotans—and employers have a lot to keep track of. One of those laws is Earned Sick and Safe Time (ESST), which went into effect on January 1, 2024. Another big one is Paid Family and Medical Leave, and it’s right around the corner, starting on January 1, 2026. This post will help Minnesota employers understand what’s changing and how to prepare.
Quick Recap: Earned Sick and Safe Time (ESST)
Effective January 1, 2024, the ESST law requires employers to provide one hour of paid leave for every 30 hours worked to employees who work at least 80 hours per year. Employees can accrue up to 48 hours in a year, with a maximum balance of 80 hours at any given time. Sick and safe time can be used when the employee is sick, to care for a sick family member, or in situations involving domestic abuse, sexual assault, or stalking.
All employers, regardless of size, are responsible for complying with this law. If you’re a Minnesota employer, hopefully this is “old news” and you’ve had systems in place for over a year now. More on that here.
What’s New: Paid Family and Medical Leave (PFML)
Did you know that the Legislature also passed a Paid Family and Medical Leave law in 2023? Here’s a quick video summary if you want a high-level overview.
The idea is to offer wage-replacement benefits to employees going through major life events—like a serious illness, bonding with a new child, caring for a sick family member, dealing with certain military-related events, or personal safety issues. With this new law, Minnesota joins more than a dozen other states that have adopted similar paid leave programs aimed at supporting employees during critical times in their lives.
When the law was passed, the details weren’t fully worked out, but things are coming together. One of the first steps for employers was to start reporting employee wage detail through the Minnesota UI (Unemployment Insurance) website by October 31, 2024. If your employees are already covered by UI, no extra steps are needed—your UI account will automatically be converted into a joint UI & Paid Leave account.
However, if you have owners or other individuals not covered by UI (like certain nonprofits), you’ll need to create a separate Paid Leave-only account and report those individuals manually each quarter, starting October 31, 2024. Hopefully, you’re already on top of that! If not, we covered those details in a previous post here.
What’s Changed Since Then?
The Legislature talked through a number of PFML tweaks during the 2025 session, but the only actual change made was reducing the payroll tax cap from 1.2% to 1.1%. For now, the premium rate for 2026 is still set at 0.88%, with the program officially launching on January 1, 2026. The first employer premium payment will be due April 30, 2026.
What Do Employers Need to Do?
Here’s a breakdown of what you’ll need to take care of (more information can be found here, too):
✅ Review Your Existing Leave Policies
Take a close look at your current vacation, sick leave, PTO, and FMLA policies to see how they’ll interact with PFML.
Important: Employers cannot require employees to use ESST, vacation, or PTO before or during Paid Leave. However, employees can choose to use their paid time off to either replace or supplement their Paid Leave benefits.
✅ Designate a Paid Leave Administrator
This person will serve as your organization’s point of contact for all things PFML. To designate them:
Log into your Minnesota UI account at uimn.org
Go to User Maintenance. Add them as “Systems Administrator” and be sure the email address matches what you want to use for the Paid Leave account.
- Keep in mind: This may take a day to process before you can move to the next step.
Create a new account at paidleave.mn.gov
✅ Notify Employees
By December 1, 2025, you’ll need to:
Post a PFML notice in your workplace (in English and any language spoken by five or more employees)
Provide individual notices to each employee. A sample can be found under the heading “Notify your employees” here.
✅ Update Your Payroll System
As of January 1, 2026, you’ll need to begin collecting premiums to fund the PFML program. The first premium payment, based on wages paid from January 1, 2026 to March 31, 2026, is due on April 30, 2026. Employers will pay premiums quarterly to the state.
The premium can be split between you and your employees – you’re allowed to deduct up to 50% from employees’ wages, or you can choose to cover 100% of the cost yourself. Just keep in mind that deductions can’t reduce an employee’s pay below minimum wage, so you may need to cover more in those cases.
Use the state’s premium calculator to estimate your costs. For example, let’s say you have 31 employees with a $2 million annual payroll and plan to split the premium between employer and employees.
The total annual premium cost is split 50/50 between the employer and employees, collectively, with each contributing $8,800. The individual employee deduction annually would be approximately $283.87 ($8,800 divided by 31 employees).
Note: As shown in the screenshot above, premiums are only due on wages up to the Old-Age, Survivors and Disability Insurance (OASDI) limit set by the U.S. Social Security Administration. As a result, the calculator may slightly overestimate premium amounts.
What About Small Employers?
The PFML law applies to all employers, regardless of size, unless they are specifically exempt – such as employees of tribal nations, the federal government, or self-employed individuals who choose to provide their own coverage. However, small businesses (30 or fewer employees) may be eligible for reduced premiums and assistance funds to help cover costs for temporary workers or overtime. If the average employee wage is at or below 150% of the state’s average annual wage, the total premium rate is 0.66%, with 0.44% paid by employees and 0.22% by the employer. In other words, employees contribute two-thirds of the premium, and the employer contributes one-third.
Let’s look at the breakdown for a business that has 6 employees and a $500,000 annual payroll and plans to split the premium between employer and employees.
As you can see, the employer qualified for the reduced small employer premium rate of 0.66%, so the employer pays one-third and the employees collectively pay two-thirds of the cost. In this scenario, each employee’s annual deduction is approximately $366.67 ($2,200 divided by 6 employees).
Note: As shown in the screenshot above, premiums are only due on wages up to the Old-Age, Survivors and Disability Insurance (OASDI) limit set by the U.S. Social Security Administration. As a result, the calculator may slightly overestimate premium amounts.
Can I Use a Private Plan Instead?
Yes. Employers can opt for a private PFML plan—as long as it offers equal or better benefits than the state plan. Here’s a list of approved private insurers (PDF).
Now that we’ve covered what employers need to know, let’s look at how the program works from the employee side – who qualifies and what they can expect.
Who’s Eligible for Paid Leave?
Employees who:
Live in Minnesota or work at least 50% of their time in Minnesota
Earned at least $3,700 in the previous year
Experience a qualifying event lasting at least seven days
What Qualifies as Paid Leave?
Employees can take Paid Leave for:
A serious health condition (physical or mental illness, injury, substance use disorders, etc.)
Bonding with a new child (up to 12 months after the birth, adoption, or foster care placement)
Caring for a family member with a serious health condition
Military-related leave
Safety leave due to domestic violence, sexual assault, or stalking
There’s no waiting period—benefits start from day one of the qualifying event, and payments come directly from the state, not the employer.
Employees can receive up to 12 weeks of medical leave and up to 12 weeks of family leave, capped at 20 weeks total per year.
They’ll receive between 55% and 90% of their regular wages, up to $1,372 per week. Use the calculator here to estimate benefits.
Let’s look at an example of an employee earning $50,000 annually, which breaks down to $12,500 per quarter. Their Paid Leave payments would be $805.37 per week.
Key Protections for Employees
Paid Leave is job-protected once an employee has worked for you for 90 days. That means:
They must be reinstated to the same (or an equivalent) position after their leave
They retain access to employer-sponsored benefits – such as health or life insurance, as well as retirement accrual – while on leave
You cannot penalize, fire, demote, or discipline someone for requesting or taking leave
Taking leave cannot be used against them in decisions like promotions or layoffs
📅 Key Dates to Know
| Date | Action |
|---|---|
| Summer 2025 | Applications open for private plans |
| Dec 1, 2025 | Employee notices and posters due |
| Jan 1, 2026 | Program starts; deductions begin |
| Apr 30, 2026 | First premium payment due |
Wrapping Up
If this feels like a lot, you’re not alone. Many Minnesota employers are still figuring out the best way to prepare. The good news? There’s still time to get systems in place and make sure you’re in compliance before the deadlines hit.
Have questions or need help reviewing your policies, setting up payroll, or planning ahead? Reach out to our team—we’re here to help. We’ll make sure you’re ready for what’s coming in 2026.