Minnesota Paid Family & Medical Leave: What Small Businesses Need to Know Before 2026

Starting January 1, 2026, Minnesota’s new Paid Family & Medical Leave (PFML) program kicks in. This law gives employees up to 20 weeks of paid leave for family or medical reasons, with costs shared between employers and employees through payroll contributions.

✨ Key Highlights✨

• Effective Date: January 1, 2026

• Employee Benefits: Up to 12 weeks of medical leave and 12 weeks of family leave (20 weeks total)

• Wage Replacement: Between 55% and 90% of regular wages, depending on income

• Job Protection: Employees returning from PFML must be reinstated to their job

• Funding: Payroll contributions split between employers and employees

• Small Employer Definition: A business with annual gross revenue under $500,000 qualifies for the reduced premium rate. (It’s based on revenue, not number of employees.)

• Employee Notice: You’ll need to notify your team about PFML rights by December 1, 2025.

• Premium Payments: First payments are due by April 30, 2026.

• Private Plan Option: If you already offer a paid leave plan that’s equal to or better than the state program, you can apply for approval to keep using your plan instead of joining the state program.

---

Large vs Small Employer Rates

Premium Rate (Large Employers): 0.88% of employee wages, split between employer (at least 0.44%) and employee (up to 0.44%).

Premium Rate (Small Employers): 0.66% of employee wages, with employer paying at least 0.22% and employee up to 0.44%.

---

✅ Steps to Take Now

1. Review Your Current Leave Policies
Take a close look at your existing PTO, sick leave, and family leave policies, and compare them to PFML requirements. Note any gaps. If your current plan already meets or exceeds the state program, you can apply for approval with the Minnesota Department of Employment and Economic Development (DEED) to continue using your plan instead.

2. Update Your Employee Handbook
Add PFML details so your team knows what to expect. Plan to send out notices before the December 1, 2025 deadline.

3. Get Payroll Systems Ready
Talk to your payroll provider about setting up PFML contributions. Make sure deductions and payments are ready by spring 2026.

4. Train Managers and HR Staff
Make sure anyone handling leave requests understands the basics: who qualifies, how to apply, and what job protections apply.

5. Budget Ahead (with Premium Costs in Mind)
Factor these contributions into payroll planning and cash flow.

6. Stay Plugged In
Keep an eye on updates from DEED. They have toolkits and more guidance to help employers prepare.

---

FAQ

• Do part-time employees qualify?

  Yes. PFML applies to most employees, including part-time workers, as long as they meet the minimum earnings and hours threshold set by the state.

• What about seasonal workers?

  Seasonal employees may qualify if they meet the earnings requirements. Employers should track hours and wages carefully to determine eligibility.

• Can I require employees to use PTO before PFML?

  No. PFML is a separate program. Employees don’t have to use vacation or sick time before applying for PFML benefits

• How are contributions splits?

  Employers and employees share the cost of premiums. For large employers, it’s 0.88% of wages split roughly half and half. For small employers (under $500,000 in annual revenue), it’s 0.66% of wages, with at least 0.22% covered by the employer.

• What if I already offer a better plan?

  You can apply for a private plan exemption. Your plan must cover the same qualifying events, provide equal or better wage replacement, and meet reporting requirements.

• I am self-employed or an independent contractor. Does this apply to me?

  You are not automatically covered, but you can choose to opt in to the program.