Every business in Minnesota with employees needs to create a plan this fall to implement the state’s new Paid Leave program.
”Paid Leave is protected and allows for more time away – and it will be paid,” observed Gina Lemon of Vivid Joy HR during a Paid Leave informational event organized by the Longfellow Business Association on Oct. 14, 2025. “We’re the 14th state to roll this out.”
Minnesota Paid Leave will provide payments and job protections to Minnesotans who need time off for medical treatments, care-giving responsibilities, and parental leave. Businesses are required to withdraw premiums from the employee’s paychecks and to pay into the fund.
“It’s a big equity moment,” remarked Longfellow Business Association Board President Anna Tsantir of Two Betty’s Cleaning (3101 Minnehaha Ave). “I still think it’s going to be a pain. I can hold both things.”
“This has been a hot topic for Minnesota,” stated Gwen Gierke of Gierke Jungbaurer Human Capital. “This is an extended family leave need.”
The Oct. 14 event was held at the S.H.A.K.E event space in the Coliseum (2708 E Lake St.). Other organizations involved included Lake Street Council, Business Women’s Circles, Korn Ferry, Women Venture, Dogwood Coffee, and Smart Set Printing.
411 ON PAID LEAVE
How is Paid Leave different from what’s already offered through Earned Sick and Safe Time (ESST) and Family and Medical Leave (FMLA)? Earned sick and safe time allows for the accrual and use of paid time off for qualifying reasons, including medical illnesses and treatment, caregiving, bereavement, and safety issues. It started in Minnesota January 2024. An employee earns one hour of sick and safe time for every 30 hours worked and can earn up to 48 hours a year. The employer pays for this directly at the employee’s base rate.
Under the federal FMLA, employees of covered employers can take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave. This is unpaid.
In comparison, Paid Leave provides partial wage replacement for a qualifying condition that lasts at least seven days. It can be used for medical treatments, as well as parental leave, active duty, and care-giving. A health care provider or designated professional must certify the need for leave, and approval of the Paid Leave is done by an agency (state or private) outside the employer, like medical insurance reimbursement. Each year, an employee is eligible for 12 weeks of family leave, 12 weeks of medical leave, or a combination of the two not exceeding 20 weeks. An employer pays into the fund, as do the employees, similar to Social Security.
Small and seasonal employers, as well as part-time staff, are covered by Paid Leave. People who are self-employed or independent contractors (1099s) are not covered, but can opt in.
When an employee uses Paid Leave, the state makes payments directly to them. Paid Leave will pay up to 90% of one’s wages, based on income level, with a maximum weekly amount set at the state’s average weekly wage. This amount changes each year, and is $1,423 for the start of Paid Leave in 2026.
Paid Leave can be taken in one chunk or intermittently, according to Lemon. This is something employers are concerned about, the uncertainty about knowing how many staff members might be out at any given time and for how long. She advised businesses, “The more we know about what’s happening with our employees, the more we can know if they’re going to take leave.” She added that it is unlikely that all employees will take off at the same time, particularly because they will only be making part of their wages and not the whole amount.
“Do 10 people really have a need for more than seven days out at a time at the same time?” asked Gierke. “Not likely.” She recommended that businesses ask these questions: What’s your back-up plan for specific roles? What’s your succession plan? Have you trained enough people?
What about unemployment? That’s a separate program, Lemon stated, and an employee can’t “double dip.” The only exception to this is that in 2026, someone who had a baby in 2025 can take multiple maternity and paternity leaves.
She stressed that the businesses won’t be making the decision about Paid Leave. “It’s going to be up to the third party provider to approve or deny the leave,” Lemon said.
She recommended that employers create clear policies and expectations for their staff members. One of the most important things to communicate is that it may take months for them to receive the payment. On top of needing to be out for seven days before they qualify for Paid Leave, then they need to wait for the state or the third party provider. “They could be out and back before they get paid,” she cautioned.
As the state of Minnesota rolls out this program, it is unknown how long the payments will take, in part because the program isn’t funded right now but will be as employers begin paying in.
Because of this, Lemon recommended that businesses consider private third-party providers. However, to use one of these right off the bat in January 2026, the businesses would have to sign up by the Nov. 1 deadline (and most had earlier deadlines for their plans). Third party providers are currently signing companies up for second quarter 2026. The state allows businesses to leave the state plan every quarter.
For this program, businesses are divided into two categories. Small employers with less than 30 staff, have a total premium of 0.66 percent, with the employer paying at least 0.22 percent and the employee up to 0.44 percent. Or, large employers with 31 or more staff, have a total premium of 0.88 percent, breaks down to the employer paying at least 0.44 percent and the employee up to 0.44 percent.
Small employers can tap into grants to help cover costs of hiring temporary workers, increasing hours, wages, or training for staff when an employee is out on Paid Leave. Grants will be up to $3,000 per leave or $6,000 per employer and are not guaranteed.
WHAT’S THE FIRST STEP?
The first step for any business is to consider whether they are going to use the state program or have a private contract, according to Gierke.
Gather information on what the role is for employer, employee, and plan provider. Pull together the wage information for all employees over the last year. Designate a Paid Leave Administrator for your business, and then log into the state’s unemployment portal to register an account for Paid Leave and an account for the Paid Leave administrator (two accounts needed).
Other items on an employer checklist, according to Bonnie Schultz of Korn Ferry, is to: notify individual employees, decide how to split premiums, and set up a clear notification process. Decide whether you will allow supplemental payments and bring an employee up to their full wage when they’re out by using vacation or ESST. When seting an intermittent leave policy, consider if you will require an employee take a full or half day, or whether you will allow shorter increments such as 15 minutes or an hour.
Some types of workers might not use Paid Leave, but instead opt to rearrange their work schedules in order to continue to earn their full wage, Schultz said.
The proof of need for Paid Leave is not up to the employer to provide, which makes it different from worker’s compensation, Gierke pointed out.
If an employee out on Paid Leave is unable to return to work, long-term disability might kick in and take over.
For example, if a person is in a car accident, do they qualify for Paid Leave or disability? A representative at the hospital should be able to advise the employee in a situation like this.
“You’re not alone in making these decisions,” said Gierke. “Reach out with questions.”
The Longfellow Business Association plans to hold additional events offering information, links to experts, and support.
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