Overview
The purpose of MN Paid Leave is to provide short-term assistance for family and medical leave; it will be paid directly by the state to employees on qualified family and medical leave and administered by the Minnesota Department of Employment and Economic Development’s Paid Leave Division. MN Paid Leave is not the same as Earned Sick and Safe Time (ESST) which went into effect in 2024. The Minnesota Paid Family & Medical Leave (Paid Leave) program begins January 1, 2026, providing wage replacement and job protection to Minnesotans for significant life events such as:
- Welcoming a child
- Recovering from a serious illness
- Caring for a loved one
- Addressing certain military or personal safety needs
Payroll deductions start in January 2026, with the first quarterly employer premiums due in April 2026.
Scope and Coverage
- Applies to nearly all MN employers—private and public—with 1 or more employees, regardless of size or revenue.
- Exemptions: federal government, tribal nations, railroad workers; self-employed and contractors may opt in.
- Employers may opt out in certain situations, see below on Optional Equivalency Plans.
Employer Responsibilities
Account Setup
Unemployment Insurance (UI) Account:
- Report quarterly wage details
- Pay Paid Leave premiums
- Designate Paid Leave Administrator(s)
Paid Leave Administrator Account:
- Review employee leave applications
- View determinations on leave
- Request equivalent plan substitutions
Employers must have both a UI account and a Paid Leave Administrator account to fulfill program requirements.
Premium Rates and Contributions
Type |
Rate (% of wages) | Notes |
| Total Premium | 0.88% | Split between employer & employee |
| Max Employee | 0.44% | Employee share; can be paid by employer if desired |
| Min Employer | 0.44% | Employer share (can pay up to 100% of premium if they choose) |
| Min Small Employer | 0.22% | Reduced rate for small employers |
| Max Weekly Benefit | $1,372 | Maximum benefit employees can receive per week |
| Premium Cap | 1.2% | Maximum annual rate (set by law) |
- Funded via both employer and employee payroll premiums.
- Initial rate: 0.88 % of wages, subject to adjustment up to 1.2 % annually.
- Employers must cover at least 50% of the total; the remainder (up to 50%) may be withheld from employees beginning Jan 1, 2026.
- Wage base will be the FICA limit.
- Small employers may qualify for reduced premiums and grant support.
- Small employers for this consideration are ≤30 employees, avg wages ≤150% State Average Weekly Wage (SAWW)
How Premiums Work
- Employers must pay at least half the premium (0.44%)
- The remaining half can be deducted from employees’ pay
- Employers may choose to cover the full premium
- Small employers pay a reduced rate, but employee maximum contribution remains the same
- Premiums are due quarterly, with the first payment due April 30, 2026
Premium Adjustments
- The premium rate will be reviewed and set annually after 2026, based on an independent actuarial study
- The rate cannot exceed 1.2% of wages
Submitting Premiums
- Premiums are paid via the employer’s UI/Paid Leave account
- Wage detail reporting and premium payment for Paid Leave are integrated into the existing UI system
Equivalent Plans
- Employers may offer their own Paid Leave plans if they meet or exceed state coverage. Equivalent plans must be approved through the Paid Leave Administrator account.
Step-by-Step Setup
1. Designate Paid Leave Administrator
- Through the UI system
2. Set Up Paid Leave Administrator Account
- Register on the Paid Leave website with the designated email
- One account can manage multiple employers if needed
Reporting and Timing
- Quarterly wage detail reports for Paid Leave started October 31, 2024, covering wages from July-September 2024 onward.
- Reporting leverages the MN Unemployment Insurance (UI) wage system.
- Employers already using UI have their accounts auto enabled.
- Others and previously UI exempt must register for a Paid Leave Only account before October 31, 2024.
- First premium remittance by April 30, 2026, covering January–March 2026 wages.
Key Dates
- January 2026: Payroll deductions and program benefits begin
- April 30, 2026: First premium payments due (covering Q1 2026)
Optional Equivalency Plans
- Employers may opt-out of state premiums by offering a state-approved private plan matching or exceeding benefits.
- Regardless, wage reporting and notification requirements still apply.
- The process for opting out and certifying an employer has a state approved plan is still in progress. More information will be provided as its available.
What You Should Do Now
- Confirm UI account status; ensure wage-reporting setup.
- Determine if you’ll share or cover the full premium.
- Consider private equivalency plan – If you want your plan to be in place when the program launches on January 1, 2026, you should submit your request by November 10, 2025.
- Budget for new payroll tax and premium processes.
- Map leave policies & employee training ahead of late 2025 rollout.
Resources
We’re here to help! Contact one of our payroll experts at (888) 388-1040.
