On May 25, 2023, Minnesota passed the Paid Family and Medical Leave program to provide paid time off for employees to care for themselves or a family member. With the law set to take effect on January 1st, 2026, many businesses still don’t know how this will work.
We sat down with Megan Johnson, HR Director at PRO Resources, to get her take on PFML and what it means for businesses across the state. Let’s dive into what we already know — and a few things we're still waiting to learn.
Q: What is Minnesota Paid Family and Medical Leave (PFML)?
Megan Johnson: "PFML represents a significant shift in how Minnesota approaches employee leave. In simplest terms, it's a state-administered program that will provide paid time off to employees who need to step away from their jobs due to serious health conditions or to care for family members.
Beginning in January 2026, most Minnesota employees will be eligible for this benefit. Structured as an insurance program, it provides partial wage replacement during qualified absences, making it easier for workers to prioritize their health or family without financial strain.
What sets this apart from current leave options is the paid component. Today, many workers face the difficult decision of choosing between income and caregiving. PFML seeks to eliminate that tough choice. For employers, this means preparing a new approach for managing leave and contributing to the program through a payroll tax system."
Q: What do we know about PFML in Minnesota?
Megan Johnson: "While some details are still being finalized, we have a solid understanding of the program’s core components.
Program Launch Date – The program officially begins on January 1, 2026. That’s when employees can start taking paid leave, and payroll contributions will commence. Although the launch will approach quickly, this gives businesses time to prepare.
Coverage Details – The program allows employees to take leave for several qualifying reasons, including:- Caring for a family member with a serious health condition
- Bonding with a new child
- Addressing safety needs related to domestic violence
- Managing qualifying military exigencies
- Dealing with their own serious health condition, including pregnancy and postpartum recovery
Duration of Leave – Employees may take up to 12 weeks of leave for their own medical needs and an additional 12 weeks for family-related reasons. However, the total leave cannot exceed 20 weeks per year.
Funding and Premiums – The program will be funded by a 0.7% wage premium for employers participating in both the family and medical leave components. This cost is generally shared equally between employers and employees, although employers may choose to cover a greater share. Small businesses (those with fewer than 30 employees) will benefit from reduced premium rates.
Program Administration – To oversee the program, the state is establishing a new body: The Family and Medical Benefit Insurance Division within the Department of Employment and Economic Development. This division will manage claims, payments, and regulatory oversight.”
Q: What don't we know about PFML in Minnesota?
Megan Johnson: "Despite the progress made, a number of critical details remain unresolved, creating uncertainty for businesses attempting to plan ahead.
Key administrative processes have yet to be defined. Questions such as how employers will report data to the state, how employees will file claims, and what documentation will be required are still awaiting clarification. These procedural elements are essential for day-to-day compliance but are still under development.
While the law outlines the program’s overall structure, comprehensive implementation guidelines have not yet been released. Detailed regulations are needed to provide clarity on what full compliance will look like in practice.
One of the more significant unknowns involves private plan options. Although the law permits employers to offer private plans in lieu of the state program (similar to models used in other states) the specific criteria and approval process for these plans have not been established. This leaves employers unsure of what alternatives may be viable.
Many employers are also wondering how the new program will interact with their existing benefit offerings, such as short-term disability insurance or paid time off (PTO) policies. Key questions remain unanswered, including whether current benefits can offset PFML contributions or reduce participation costs.
Although the initial premium rate is set at 0.7%, the state has commissioned an actuarial study to evaluate the program’s financial sustainability. Depending on the outcome, rate adjustments could occur before the program goes live.
The positive news is that the state plans to release additional guidance as 2026 approaches. We are closely monitoring all developments and will continue to support our clients as new information becomes available.”
Q: Are PFML and FMLA the same?
Megan Johnson: "No, the two programs are not the same, although it’s understandable why they might be confused. They share similar acronyms, and both relate to employee leave, but the differences are significant and meaningful.
The most notable difference lies in the name itself — the “P” in PFML stands for “Paid.” The Family and Medical Leave Act (FMLA) is a federal law that provides unpaid leave to eligible employees. In contrast, Minnesota’s new PFML program offers wage replacement, providing financial support during qualified leave periods.
Another major difference is in employer coverage. FMLA only applies to employers with 50 or more employees, which means many small businesses have never been subject to it. However, Minnesota’s PFML will apply to nearly all employers, regardless of size. That means many small businesses that never had to worry about FMLA will need to understand this new program.
If you qualify for both programs, employers can require the leaves to run concurrently — meaning you don't get to stack them and take 12 weeks of FMLA and then another 20 weeks of PFML."
Q: What other states have Paid Family and Medical Leave?
Megan Johnson: "Minnesota is joining a growing group of states that have adopted paid family and medical leave programs. Currently, thirteen states and the District of Columbia have comprehensive paid leave systems either in effect or in development. While each state’s approach varies, the underlying principles are largely consistent. Notably, Minnesota will be the first state in the Midwest to implement such a program, marking a significant regional milestone. Neighboring states are watching closely to see how the rollout unfolds."
Q: How can PRO Resources help businesses navigate PFML?
Megan Johnson: "This is precisely the kind of moment when having a dedicated HR partner becomes invaluable. While many business owners are just now learning about the new law and feeling uncertain about what it means for them, we’ve been monitoring its development since the earliest proposal.
Our role goes far beyond simply passing along updates. As new guidance is released, we thoroughly analyze the information, distill it into clear, practical language, and provide tailored recommendations based on each client’s unique circumstances.
As additional details emerge around private plan alternatives, we’ll be ready to assist businesses in evaluating all available options. For some companies, the state program might be the most cost-effective approach. For others, a private plan could offer more flexibility or better integration with existing benefits. We’ll conduct that analysis, walk you through the implications, and help you make informed, confident decisions.
- Configuring payroll systems to ensure accurate deductions
- Establishing streamlined procedures for processing and tracking leave requests
- Ensuring timely and accurate reporting to the state
Stay in the know about MN compliance changes
The best way to stay up-to-date about HR changes in MN (and surrounding states) is to follow us on LinkedIn. We post about key HR dates, resources, and upcoming webinars (be on the lookout for one on PFML). Or, to learn more about PRO Resources, visit our website.
The information in this blog is for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.