Minnesota Paid Family and Medical Leave Program: Updated Summary for Employers

By Published On: October 22, 2025Categories: Businesses, Services - Tax

Beginning January 1, 2026, Minnesota’s new Paid Family and Medical Leave (PFML) program will go into effect. Administered by the Department of Employment and Economic Development (DEED), this statewide insurance program will provide wage replacement to eligible workers who take time off for qualifying family or medical reasons.

With final administrative rules adopted in June 2025 and premium rates confirmed, employers now have clear steps to prepare for implementation.

Program Overview

The PFML program provides Minnesota workers with partial wage replacement for up to:

  • 12 weeks of medical leave for a serious health condition
  • 12 weeks of family leave for bonding with a new child, caring for a family member, safety leave, or certain military-related needs
  • Up to 20 weeks total per benefit year, if an employee experiences both a qualifying medical and family event.

Coverage applies to nearly all employees in Minnesota, including part-time, temporary, and seasonal workers. Self-employed individuals and independent contractors may choose to opt in.

Funding and Premiums

  • The initial premium rate for 2026 is 0.88 percent of employee taxable wages.
  • This rate is split 50/50 between employers and employees (unless the employer chooses to cover the full amount).
  • Employers may not deduct more than half of the premium from employee wages.
  • A 2025 legislative update lowered the maximum premium cap from 1.2 percent to 1.1 percent.
  • Payroll deductions begin January 1, 2026, and the first quarterly premium payments are due April 30, 2026.

Benefit Amounts and Eligibility

  • Wage replacement ranges from 55 percent to 90 percent of an employee’s average weekly wage, up to a cap equal to the state average weekly wage (approximately $1,372 in 2025).
  • To qualify, employees must have earned at least 5.3 percent of the state average annual wage during their base period.
  • The benefit year begins on the first day leave is taken—not the calendar year.

Employer Responsibilities

  1. Register for a Paid Leave employer account through the existing Unemployment Insurance system once DEED opens registration.
  2. Begin payroll deductions and employer contributions January 1, 2026.
  3. Submit quarterly wage detail reports and premium payments starting April 30, 2026.
  4. Post and distribute employee notices by December 1, 2025 (DEED will provide official templates).
  5. Maintain job protections for employees returning from leave and continue their health insurance coverage during leave.
  6. Comply with anti-retaliation and confidentiality provisions.
  7. Consider a private plan option. Employers may apply for an exemption if they provide a private plan with benefits equal to or greater than those required under the state program. Private plans must be approved by the state and submitted for review to the state by November 10, 2025.

Recent Updates and Final Rule Highlights (2025)

  • Final administrative rules were adopted by DEED on June 16, 2025, establishing operational details for seasonal employees, intermittent leave, private plans, overpayments, and enforcement.
  • The premium rate for 2026 is confirmed at 0.88 percent, based on actuarial projections.
  • The maximum premium cap has been reduced to 1.1 percent under a 2025 legislative amendment.
  • Clarifications were issued on eligibility thresholds, benefit year calculation, and coordination with existing employer leave policies.
  • Employers must distribute DEED-provided notices to all employees by December 1, 2025, a requirement now finalized in rule.

Preparing Your Business

SDK recommends that employers begin planning now to ensure smooth compliance by 2026:

  • Review and update PTO, FMLA, and parental leave policies to coordinate with PFML benefits.
  • Assess payroll and HR systems for required deductions, wage reporting, and documentation.
  • Budget for the 0.88 percent premium and related administrative costs.
  • Designate internal contacts to manage leave requests and coordinate with DEED.
  • Communicate early and clearly with employees about the new program.

In summary, Minnesota’s Paid Family and Medical Leave program represents a major change in how employers and employees manage time away from work. With the final rules in place and the premium rate set, the focus now shifts to preparation. Employers should take the coming months to review policies, ensure payroll systems are ready for new deductions, and communicate clearly with employees about how the program will work. By taking proactive steps before January 2026, businesses can help ensure a smooth transition and maintain compliance with this significant new statewide benefit.