Starting January 1, 2026, Minnesota employers will be subject to a new Paid Family and Medical Leave (PFML) program. While the program provides financial security for employees during significant life events, it also creates new requirements for businesses, from payroll updates to compliance with job protection rules. Here’s what you need to know to prepare.

What the Program Provides

The PFML program offers:

  • Medical Leave: Up to 12 weeks of medical leave for an employee’s own serious health condition
  • Family Leave: Up to 12 weeks of family leave for bonding, caregiving, military service, or safety concerns
  • Maximum Leave: A combined maximum of 20 weeks per year if both types of leave are used


Which Employees Are Eligible?

Most Minnesota workers are covered, including full-time, part-time, temporary, and seasonal employees. Coverage also extends to Minnesota non-residents who perform 50% or more of their work in the state, and residents who split their time evenly across three or more states. A few groups are excluded, such as federal employees, railroad workers, and seasonal hospitality workers. Independent contractors and self-employed individuals may choose to opt in voluntarily.

How the Program Will Be Funded

PFML is funded through a payroll tax premium shared by employers and employees. For 2026, the combined contribution rate is 0.88% of covered wages (split evenly between employer and employee). Small employers (30 or fewer employees with lower average wages) may qualify for a reduced rate. Premiums are capped at the Social Security wage base and will be remitted quarterly through Minnesota’s Unemployment Insurance system, with the first payment due April 30, 2026.

Employers must contribute a minimum of 50% but can choose to cover the entire cost. This flexibility enables businesses to tailor their approach according to their company values and financial capacity.

Example: For an employee earning $70,000 annually, the weekly premium would be approximately $5.93, split evenly between the employer and the employee.

Benefits for Employees

When employees take PFML, they’ll receive partial wage replacement based on their earnings. The benefit formula is tiered, with higher replacement percentages for lower-wage workers. In 2026, the maximum weekly benefit is $1,423. The benefit amount will be updated annually based on employer wage detail reporting.

Employer Compliance Requirements

PFML comes with strict compliance obligations. Employers will need to:

  • Post required PFML notices (in multiple languages, if applicable) by December 1, 2025
  • Provide written notice to employees at hire or before premium collection begins
  • Update handbooks and policies to reflect PFML rules
  • Track leave and coordinate with other programs such as FMLA, PTO, or short-term disability
  • Reinstate employees to the same or equivalent position upon return from leave

Failure to comply may result in penalties.

Private Plan Option

Employers can opt out of the state program if they provide a private plan that meets or exceeds the state’s requirements. Plans can be insured or self-funded (with a surety bond) and must be approved by the state by November 10, 2025, for a January 1, 2026 start.

Small Employer Assistance Grants

To help offset costs, Minnesota is offering grants of up to $3,000 (for eligible small employers) per employee absence (with a $6,000 annual cap per business). These funds can be used for temporary staff, additional wages, or training.

What You Should Do Now

With the start date approaching, Minnesota business owners should:

  • Decide whether to use the state plan or apply for a private plan
  • Set up a Paid Leave Administrator account in the UI system
  • Update payroll processes to handle contributions and ensure paystubs will reflect the new deduction.
  • Revise handbooks and leave policies
  • Educate managers and employees about the new rules
  • Plan to post and distribute notices by December 1, 2025


Final Thoughts

Minnesota’s PFML program represents a major shift in workforce policy. Preparing now will help you stay compliant and reduce disruption when the law takes effect. If you’d like to discuss how PFML could affect your business — from payroll to employee policies — reach out to your Copeland Buhl advisor or learn more by visiting the Minnesota Paid Leave website.