Minnesota Paid Leave: New Law Taking Effect January 1, 2026

Have questions, or would you like access to our Minnesota Paid Leave GTP to ask how these questions pertain to your specific business? Please reach out to info@carpfishcreative.com

Minnesota's groundbreaking Paid Leave program officially launches on January 1, 2026, marking a historic shift in how employees across the state can access time off for critical life events while maintaining job protection and partial income replacement. This state-administered program is funded through a new payroll premium system paid by both employers and employees, and it will provide broader coverage and more generous benefits than the federal Family and Medical Leave Act (FMLA).​​

Two Types of Leave with Generous Time Allowances

The Minnesota Paid Leave program offers two distinct categories of leave that employees can use when facing qualifying life circumstances.​​

Medical Leave provides up to 12 weeks per benefit year for employees to address their own serious health conditions, including pregnancy, childbirth, recovery from surgery, or any medical situation that prevents them from performing their job duties. This leave covers conditions that typically last more than seven days and must be certified by a healthcare provider.​​

Family Leave also provides up to 12 weeks per benefit year and covers four specific qualifying situations:​​

• Bonding Leave: Time to bond with a new child through birth, adoption, or foster placement, which must be taken within 12 months of the child entering the home​

• Caring Leave: Time to care for a family member with a serious health condition, with "family member" broadly defined to include parents, children, spouses, siblings, grandparents, grandchildren, domestic partners, and various in-laws​

• Military Family Leave: Time to support a family member who has been called to active military duty​​

• Safety Leave: Time to address personal or family safety issues related to domestic violence, sexual assault, or stalking​​

Employees who need both medical and family leave in the same benefit year can access a combined total of up to 20 weeks, though no more than 12 weeks can be used for any single type. A benefit year is defined as a rolling 52-week period that begins on the first day an employee takes leave for a qualifying event.​​

Broad Employee Eligibility with Low Barriers to Access

Minnesota's Paid Leave program covers nearly every worker in the state, making it one of the most inclusive state-administered programs in the nation. Unlike the federal FMLA, which only applies to employers with 50 or more employees, Minnesota Paid Leave covers all Minnesota employers regardless of size, with the exception of the federal government and certain tribal entities.​

To qualify for Paid Leave benefits and wage replacement, employees must meet several criteria:​

• Work at least 50% of their time in Minnesota, or live in Minnesota at least 50% of the year while working for an out-of-state employer​

• Have earned at least $3,900 (which represents 5.3% of the state's average annual wage) during the four most recent completed calendar quarters before applying​

• Have a qualifying event that typically lasts longer than seven days (except for bonding leave)​

• Provide certification from a healthcare provider or authorized professional confirming the need for leave​

Importantly, employees can aggregate wages from multiple employers to meet the earnings threshold, meaning part-time and seasonal workers who work multiple jobs may still qualify. Additionally, former employees remain eligible for coverage for up to 26 weeks after their employment ends or until they begin a new job with a different employer.​

For job protection specifically, employees must have worked for their current employer for at least 90 days. This means that while a newly hired employee who meets the earnings threshold could receive wage replacement benefits, they would not have the right to return to their job unless they had been employed for 90 days.​​

Partial Wage Replacement on a Sliding Scale

Minnesota Paid Leave provides partial wage replacement calculated on a progressive sliding scale designed to replace a higher percentage of income for lower-wage workers. The calculation is based on the employee's average weekly wage compared to the State Average Weekly Wage (SAWW), which is set at $1,423 for 2026.​

The wage replacement formula works as follows:​

• 90% replacement for weekly earnings between 0% and 50% of SAWW (up to $711.50)

• 66% replacement for weekly earnings between 51% and 100% of SAWW ($711.51 to $1,423)

• 55% replacement for weekly earnings above 100% of SAWW (over $1,423)

The total weekly benefit cannot exceed the SAWW of $1,423, meaning that higher earners will see a smaller percentage of their wages replaced. For example, an employee earning $50,000 annually ($961.40 per week) would receive approximately $805.37 per week, or about 84% of their regular wages. Meanwhile, an employee earning $115,000 annually ($2,211.54 per week) would receive the maximum of $1,423 per week, representing only about 64% of their usual income.​

There is no waiting period to start receiving benefits, though employees must be out for at least seven days total to qualify for payment (this requirement does not apply to bonding leave). For intermittent leave taken in smaller increments, payment cannot be requested until the employee has accumulated at least eight hours of leave, unless more than 30 calendar days have passed since the initial leave was taken.​

Funding Through Employer and Employee Contributions

The Minnesota Paid Leave program is funded through a payroll premium of 0.88% of covered wages, which is split between employers and employees. By default, employers must pay at least 50% of the premium (0.44%), and they can deduct up to 50% (0.44%) from employee wages, though employers may choose to cover a larger share or the entire premium.​​

Small employers with 30 or fewer employees and an average employee wage of less than 150% of the statewide average wage (currently $107,016) qualify for a reduced premium rate of 0.66% instead of 0.88%. Even with the reduced rate, small employers can still charge employees up to 0.44%, meaning the employer would be responsible for at least 0.22%.​

Premiums are collected and remitted on a quarterly schedule through the Minnesota

Unemployment Insurance system. Employers may begin deducting the employee portion from paychecks starting January 1, 2026, when benefits become available, though the first premium payment to the state is not due until April 30, 2026, covering wages paid between January 1 and March 31, 2026.​

Employers already submitting quarterly wage detail reports for unemployment insurance purposes can use those same reports to comply with Paid Leave wage reporting requirements. However, all employers must ensure they have registered for an employer account and designated a Paid Leave Administrator through the UI system.​

Critical Employer Obligations and Deadlines

Minnesota employers face several immediate compliance obligations before the program launches on January 1, 2026.​

By December 1, 2025, all covered employers must:​

• Post the official Paid Leave workplace poster in a conspicuous location where employees can easily see it, in English and any other language that is the primary language of five or more employees at the worksite​

• Provide individual written notice to each employee regarding the availability of Paid Leave benefits, in the employee's primary language, and obtain written acknowledgement of receipt from each employee​

Both of these requirements apply even to employers who choose to offer an approved equivalent private plan instead of participating in the state program.​

By November 10, 2025 (recently extended from an earlier deadline), employers who wish to substitute the state program with an approved equivalent private plan must submit their requests to the Minnesota Department of Employment and Economic Development (DEED). Equivalent plans can cover medical leave, family leave, or both, and must meet or exceed all statutory requirements, including coverage duration, benefit amounts, eligibility, job protections, and employee rights. Plans can be purchased from approved insurance carriers or self-insured with a surety bond. Employers with approved equivalent plans are excused from paying premiums to the state but must still comply with wage reporting and employee notification requirements.​

Ongoing quarterly obligations include:​

• Submitting wage detail reports electronically through the UI system by the last day of the month following the end of each calendar quarter

• Paying Paid Leave premiums to DEED on a quarterly basis, with the first payment due April 30, 2026

Intermittent Leave and Flexibility

Minnesota Paid Leave can be taken continuously in one block of time or intermittently in smaller increments, depending on medical necessity and employer policies. Employees can take up to 480 hours (equivalent to 12 weeks at 40 hours per week) of Paid Leave intermittently each year. If an employee qualifies for more than 480 hours (for example, if they need both medical and family leave totaling up to 20 weeks), employers have the discretion to decide whether that additional time can also be taken intermittently or must be taken in one continuous block.​

Employers set the minimum increment for intermittent leave, which can range from as little as one minute up to one full calendar day. This increment must be consistent with the employer's policy for other types of leave. It's important to note that while Minnesota Paid Leave allows employers to set minimum increments up to one full day, the federal FMLA still requires minimum increments of no more than one hour for FMLA-eligible leave, so employers must ensure compliance with both standards.​

Employees taking intermittent leave must provide their employer with a schedule of needed days off as soon as practicable and must make a reasonable effort to schedule leave so as not to unduly disrupt the employer's operations. They must also submit weekly reports to DEED to process payments, and employers receive absence reports and payment notifications two business days before DEED makes payment.​

Strong Job Protection and Anti-Retaliation Provisions

Minnesota's Paid Leave law includes robust protections for employees who exercise their rights under the program. Employers are strictly prohibited from discharging, disciplining, penalizing, interfering with, threatening, restraining, coercing, or otherwise retaliating or discriminating against any employee for requesting or obtaining benefits or leave, or for exercising any other right under the law.​

Employees who have worked for their employer for at least 90 days are entitled to job protection upon return from leave. This means they must be restored to the same position they held when leave started, or to an equivalent position with:​

• The same or equivalent pay, including any pay premiums such as shift differentials

• The same or equivalent benefits

• The same or equivalent terms and conditions of employment

• The same shift or equivalent work schedule

• The same or equivalent opportunity for bonuses, profit-sharing, and other discretionary and nondiscretionary payments (excluding bonuses paid to other employees for covering the work during the leave)

Additionally, employers must continue to fund their portion of health insurance premiums while the employee is on leave.​

Violations of these protections carry significant penalties. The Minnesota Commissioner of Labor and Industry may issue penalties ranging from $1,000 to $10,000 per violation, payable to the aggrieved employee. Employees also have the right to bring civil actions in state or federal court to recover damages, including lost wages, benefits, and interest, as well as an additional amount in liquidated damages equal to the lost wages plus interest (unless the employer proves the violation was in good faith). Employees bringing civil actions are entitled to a jury trial and cannot be forced to waive this right.​

Importantly, employers cannot obstruct or impede an application for leave or benefits, with similar penalties applying to interference violations.​

Coordination with Other Leave Laws and Benefits

Minnesota Paid Leave can run concurrently with other types of leave, including the federal FMLA, Minnesota Parental Leave, and Minnesota Earned Sick and Safe Time, when an absence qualifies under multiple laws. However, there are important differences between Minnesota Paid Leave and FMLA that employers must understand.​

Feature	Minnesota Paid Leave	Federal FMLA
Employer Coverage	All employers, regardless of size (except federal government and tribal entities)	Employers with 50+ employees
Employee Eligibility	No tenure requirement; earnings threshold applies	Must have worked 12 months and 1,250 hours
Pay Available	Partial wage replacement (55%-90%)	Unpaid
Covered Family Members	Broad definition including siblings, grandparents, in-laws, domestic partners	Limited to spouse, parent, and child
Medical Leave Qualification	Must typically last at least 7 days	Requires 3 consecutive days of incapacity
Bonding Leave	May be taken intermittently	Must be taken continuously unless employer approves
Post-Employment Coverage	Up to 26 weeks after separation	No post-employment coverage

Employers have the option to allow employees to "top off" their Paid Leave benefits by supplementing them with other paid time off, vacation, or sick leave to reach 100% of their regular wages (but not exceed 100%). However, employers decide whether to allow this supplementation, and employees cannot be required to use other paid time off instead of Paid Leave.​

Small Employer Support and Grants

Recognizing the potential burden on small employers, Minnesota's Paid Leave law includes financial assistance provisions. Small employers with 30 or fewer employees whose average employee wage is less than 150% of the statewide average wage are eligible for a reduced premium rate of 0.66% instead of 0.88%.​

Additionally, the law includes grants for eligible small employers who have employees on leave, with a maximum grant amount likely to be around $3,000. Originally, the language excluded nonprofit employers, but advocacy efforts in 2024 successfully expanded eligibility to include nonprofit organizations. DEED is working with stakeholders to structure the grant program to be as accessible as possible for small employers.​

Special Early Application Window for 2025 Parents

In a significant development announced just days before the program's official launch, Minnesota Paid Leave is accepting early applications from parents who welcomed a child into their home in 2025. Beginning December 2, 2025, parents who had a baby or welcomed a child through adoption or foster placement during calendar year 2025 can apply for bonding leave to be used in 2026.​

This early application window is available only to parents who plan to take leave within the next 60 days and intend to take their bonding leave in a single continuous block of time. DEED hopes this early window will help reduce the surge of applications on January 1, 2026, and allow new parents to access benefits more quickly.​

Key Takeaways for Minnesota Employers and Employees

Minnesota's Paid Leave program represents a fundamental change in how the state supports working families during critical life moments. For employees, it provides an unprecedented safety net with partial income replacement and job security when facing serious health conditions, welcoming new children, caring for loved ones, or dealing with personal safety crises.​​

For employers, particularly small businesses and cannabis industry operators in Minnesota, the program requires immediate action to ensure compliance with posting and notification deadlines by December 1, 2025, decisions about whether to participate in the state plan or pursue an approved equivalent plan by November 10, 2025, and implementation of payroll systems to collect and remit premiums starting January 1, 2026. Employers must also review and update their leave policies to coordinate with the new program and ensure they do not interfere with or retaliate against employees exercising their rights.​

With the program's 0.88% premium rate ranking as the fourth lowest among the 14 states with paid leave programs, Minnesota has structured its system to be affordable for both employers and employees while providing meaningful benefits during life's most important moments.​​

Have questions, or would you like access to our Minnesota Paid Leave GTP to ask how these questions pertain to your specific business? Please reach out to info@carpfishcreative.com