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Marj




Hello from the State Capitol,

 

In less than a month, Minnesota’s Paid Family & Medical Leave (PFML) program will go into effect. If you are an employer or work at any job, you will be impacted by this new law, so I wanted you to have an idea of what is about to happen and where things are headed.

 

PFML provides paid time off for qualifying family or medical events. It affects all employees in the state, whether full-time, part-time or seasonal and affects all businesses with at least one employee. Eligible employees may receive up to *12 weeks of family leave* AND *12 weeks of medical leave*, with a maximum of *20 total paid weeks per year*. 

 

The program is funded by a *0.88% payroll tax*, a 25% increase from the original estimate. Minnesota’s Department of Employment and Economic Development (DEED) may also increase the tax – without legislative approval – to 1.1%. It is scheduled to bring in roughly $1.7 billion per year.

 

Employers must pay at least half of this tax, which may strain budgets for schools, local governments, and small businesses. Small employers (30 or fewer workers) pay a reduced rate of 0.66% and may apply for small grants, though these grants only cover replacement staff or increased wages - not broader business costs. Payments during leave are made on a sliding scale, capped at the state’s average weekly wage ($1,423).

 

Leave can be taken for serious health conditions, pregnancy, bonding with a new child, safety issues, military deployment, or caring for a broad list of family members or even individuals with a “personal relationship that creates an expectation of care.” The law does not define the threshold for what “care” means, which to me raises concerns about verification and potential abuse.

 

Employers may opt out only if they offer a private plan that meets all state requirements and is approved by DEED. DEED may audit private plans and can revoke eligibility for three years if standards are not met. Employers interested in an approved equivalent plan can see what the state accepts by clicking here. [ [link removed] ] All private plans have to offer the same (or more) amount of paid leave for the same reasons as the state plan, which is why most of the private plans are slightly more expensive. However, many businesses may still favor the private plan as it may have better customer service than a department agency.

 

Governor Walz and a DFL-led legislature approved this law in 2023. No Republican legislators voted for the law, and concerns continue about its impact on businesses and local governments. During the 2025 session, House Republicans proposed several reform, but none of them passed because the House was in a statistical tie between Republicans and Democrats, and Democrats would not support our changes.

 

We have heard from many concerned about this program. PFML represents one of the largest state interventions in private business history. Many employees may lose existing benefits that were more flexible or generous, and small businesses are likely to subsidize higher usage by other sectors. There’s also the very real possibility that increased payroll taxes may translate to higher property taxes and consumer prices.

 

The program begins January 1, 2026.

 

*BUDGET FORECAST SHOWS DEFICIT AHEAD*

Yesterday, Minnesota budget officials unveiled the latest economic forecast. While its good that we won’t be forced to cut spending for the remainder of this budget cycle, in the next budget cycle we are expected to see a $3 billion budget deficit.

 

It cannot be denied that if Governor Walz and the previous Democrat-led legislature hadn’t wasted a $19 billion surplus and grown state government spending by 40%, we would not be facing these future economic problems. Despite the claims you hear from others, President Trump has nothing to do with this. Common sense says if you wouldn’t have spent all the surplus, and you would have kept government growth to a percentage in the single digits, we would not be facing a future deficit.

 

Last session we reduced state spending – thanks to another deficit alert – but it’s clear we didn’t go far enough. It’s pretty clear that we need to heed this warning and continue finding ways to reduce our state expenses next session.

 

Have a good weekend,

 

Marj






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2486 Centennial Office Bldg.
658 Cedar Street
St. Paul, MN 55155
651-296-5373
[email protected]







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