Minnesota workers will be able to take up to 20 weeks off work each year when a tax-funded, state-administered paid family and medical leave program launches less than three months from now.
It’ll be the 13th state-run program of its kind, and is one of many new policies Democratic-Farmer-Labor leaders enacted when they controlled state government during the 2023 legislative session.
The program, which will be run by the state’s Department of Employment and Economic Development, will have around 400 staff and is expected to cost about $1.6 billion in its first year.
Most workers will be eligible when paid leave starts on Jan. 1, 2026, and DEED officials have said they will be ready to launch by the deadline.
“We’re confident that we’re going to be staffed to the level that will allow the desired customer experience on day one,” said Greg Norfleet, who is leading the development of Minnesota’s paid leave program for DEED and developed a similar program for Massachusetts.
Initially, anywhere between 12,000 to 15,000 people are expected to use the new benefit, according to an actuarial analysis from 2024. Though if that number grows, the cost to taxpayers could rise.
Paid leave’s initial costs are covered by $668 million from the historic $18 billion surplus during the 2023 legislative session. The rest will be covered by a new payroll tax that will be shared by employers and employees.
Here’s what the program will mean for workers, businesses and the state:
How it works
Starting next year, most employers will be required to offer employees 12 weeks of family leave and 12 weeks of medical leave. Annual time off will be capped at 20 weeks.
Events like having a child, a serious illness, or caring for a sick family member are eligible for coverage. Supporting a family member called to active duty in the military, responding to personal safety issues and bonding with a child also qualify.
All applications will need certification or documentation from a doctor or other service provider, according to DEED.
The amount of money workers will qualify for under paid leave will depend on their wages.
Someone who earns less than 50% of the state’s average weekly wage — $1,423 as of October 2025, according to the state Labor Department — would get 90% of their normal pay.
A worker earning more than 50% of the state’s average weekly wage would get 66%. Anyone earning double the weekly average pay would receive 55% of their regular wage.
A person earning Minnesota’s annual average salary of $71,300 would get $1,075.72 a week in payments from the leave program. DEED has calculators that provide estimates of premiums and weekly payments on its paid leave website.
Employers also have the option to fully reimburse an employee for their wages beyond the requirements of state law.
Other key aspects
There are protections for employees who use the benefit. Employees must be able to resume their job upon return and there are protections against retaliation.
Employers have to continue covering their share of health benefits while an employee is on leave.
Payment checks come from the state, not the employer, and taxes will be deducted before they are sent, according to the state.
DEED officials say they hope claims can be processed within two weeks, though the fastest path to approval is working with an employer beforehand, Norfleet said.
In the event of an emergency where someone making a claim can’t do so immediately, like a heart attack, benefits could apply retroactively, according to DEED.
The cost
Paid leave will be funded by a new 0.88% payroll tax on most employers. It can be split by employers and employees.
Employers can choose to cover the entire cost of the benefit, but most can charge employees up to about half the amount: 0.44%
Early estimates found the average worker will pay around $3 in additional taxes each week.
Under the current premium rate, an employee making $50,000 a year can expect to pay $4.24 a week, or $220 a year.
A person earning Minnesota’s annual average salary of $71,300 will pay $6.03 per week or $313.73 per year.
Deductions can start on Jan. 1, and the first premiums for the benefit won’t be due until April 30, 2026.
Rates may grow depending on the number of people who use the benefit.
The maximum rate the state can tax for paid leave is 1.1%. In 2025, Republicans in the Legislature negotiated a slight decrease from the 1.2% set by the original bill passed by the DFL-controlled state government in 2023.
Businesses can opt out of the state paid leave program if they offer an equivalent or better benefit.
Who is eligible?
Paid family and medical leave applies to most workers, whether they are full-time or part-time employees.
To qualify, a worker must have earned a minimum of $3,700 in the past year at any job.
Railroad employees, who have a federally dictated set of worker benefits, and federal employees won’t be eligible.
Some seasonal employees in the hospitality industry aren’t eligible, either.
Hotels, restaurants and other seasonal businesses that get more than two-thirds of their business in six months don’t have to participate. Agricultural and retail employees, who are seasonal, are eligible.
Independent contractors, tribal nations and people who are self-employed are exempt from the leave requirement, but they can opt in if they want to, according to DEED.
Small employers with fewer than 30 employees and who have an average employee wage under 150% of the statewide weekly average will be eligible for a reduced rate of 0.66%. Small employers will still have to contribute at least part of the premium: 0.22%.
Out-of-state workers
Whether remote or other workers for out-of-state employers are covered by the paid leave law largely depends on where they do their work.
The general rule is that if 50% of work happens in Minnesota, they are covered, according to DEED.
Norfleet gave this example: A remote worker living in Hudson, Wis., performing work for a company in Stillwater would not qualify for paid leave.
But if a Minnesota worker living in Stillwater were working for a Wisconsin-based company in Hudson while doing work in Minnesota, they would qualify.
Growing cost?
Paid leave is expected to cost more than it was expected to when created during the 2023 legislative session, according to a 2024 actuarial analysis commissioned by the state.
When Democrats first pitched the program, the estimated payroll tax was 0.6%. By the time Gov. Tim Walz signed it into law in 2023, it grew to 0.7%.
An actuarial analysis commissioned by DEED last year found the rate would have to be 0.88%.
Also, retroactive payments for people making medical claims and immediate payment for new mothers are expected to grow program costs by $312 million more when it starts in 2026.
Groups opposed to paid leave, like the National Federation of Independent Business, had warned that costs would grow.
Advocates have argued that low-wage workers often do not have access to the same benefits as higher-paid members of the workforce, and that about one-third of Minnesota workers — about 900,000 people — don’t have any paid time off.
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