Minnesota State Wire

Minnesota's Paid Family and Medical Leave (PFML) mandate, passed by the state legislature in 2023 despite opposition from the National Federation of Independent Business (NFIB), is set to take effect on January 1, 2026. The law applies to nearly all employers in Minnesota, regardless of size or industry.

The PFML program introduces a payroll tax for employers and employees to fund paid leave benefits. Small businesses may qualify for a reduced payroll tax rate if they employ 30 or fewer people and their average wage does not exceed 150% of the state's average wage—estimated at about $107,000 in 2025. For eligible small employers, the payroll tax rate will be 0.66%, compared to the standard rate of 0.88%. Of this amount, small employers are responsible for one-third (0.22%) while two-thirds (0.44%) can be shifted to employees.

Employers do not need to apply for this reduced rate; the state will automatically determine eligibility based on reported employee numbers and wages. A payroll tax calculator is available through Minnesota Paid Leave's resources to help estimate costs.

Seasonal hospitality employers have an option for a special designation that provides limited exemptions from PFML coverage for certain employees. To qualify, businesses must operate within specific hospitality industries such as hotels, restaurants, food stands, and resorts; prove that most revenue comes during six months of the year; and ensure designated seasonal workers are employed no more than 150 days within any consecutive 52-week period.

Employers who receive this designation must submit quarterly lists of seasonal employees and provide written notice to these workers explaining their ineligibility for PFML benefits during their seasonal employment. Notices must be delivered by December 1, 2025 or upon hiring if after that date. Failure to comply with notification requirements can result in penalties or loss of designation.

If circumstances change—such as exceeding the allowed number of working days or losing seasonal status—employers must notify Minnesota Paid Leave within five business days.

The PFML law also includes several employee protections enforced by the Department of Labor and Industry’s Labor Standards Division:

- Employees have a right to reinstatement after leave if they have held their position for at least 90 days.

- Employers cannot retaliate against workers seeking leave or exercising rights under PFML.

- Employers may not interfere with applications for leave or related benefits.

- Health insurance coverage must be maintained during an employee’s paid leave period.

Additional guidance—including webinars and FAQs—is available through Minnesota’s Department of Employment and Economic Development website.

The NFIB has described the PFML mandate as "the single-biggest employer mandate that has ever passed in Minnesota." The organization encourages business owners working toward compliance to participate in its member survey regarding impacts and challenges related to the new law.