2023 MN Family and Medical Leave Bill
On May 8th the Minnesota Senate voted 34-33 to pass the statewide mandatory Paid Family and Medical Leave Act. This comes a week after the Minnesota House passed their version of the bill in a 68-64 vote. Lawmakers in the House and Senate now have until May 22nd to reconcile the final bill which will then be presented to Governor Tim Walz for signature. If signed into law the benefits and new payroll tax would begin in 2025.
What is the proposed law?
The proposed legislation allows for working Minnesotans up to a total of 20 weeks of paid time off per year. Paid time off would be split into two categories (Paid Family Leave and Paid Medical Leave). Workers would be allowed up to 12 weeks of paid leave within each category but capped at a maximum of 20 weeks over a 52-week period.
What types of leave would qualify?
Paid Family Leave: Leave used to care for a newborn baby, sick child, spouse or parent.
Paid Medical Leave: Leave used for an employee to care for their own medical conditions (including pregnancy).
How would the leave program be funded?
The proposed legislation includes a new payroll tax of 0.7% which could be paid entirely by the employer or split 50-50 with the employee.
What are the proposed eligibility requirements for a worker to qualify?
- The worker must have been employed for 90 days.
- The worker must have earned at least 5.3 % of the states average annual wage in employment in their base period.
- The worker must accrue at least seven days for which they are eligible for benefits before making a claim for benefits.
- The worker must be unable to work due to a family member’s serious health condition, a qualifying exigency, safety leave, bonding leave, or applicant’s own pregnancy, pregnancy recovery, or serious health condition.
- The worker has earned enough money through covered employment in the prior four completed quarters to establish a benefit account; and (4) submits certification supporting request for benefits.
What can Employers do today to prepare?
Budget for a New Payroll Tax
In 2025, a new payroll tax of 0.7% to fund this legislation will likely be coming. Employers can count on paying half of this cost under new legislation, requiring employers to cover at least half of the cost. At a minimum employers will be responsible for paying half of this cost. The bill also allows for the possibility of annual increases to the fee based on the performance of the overall pool.
Monitor the Progress of Legislation
The bill is expected to be signed into law no later than May 22nd 2023. Stay tuned to the bills status by regularly checking in with Schatz Benefit Group for assistance and information on how this legislation may affect your business.
Prepare for Additional Administrative Requirements
Employers will be required to maintain records of the proposed payroll tax, employee eligibility, and other program related information for a minimum of four years. It is recommended that employers consult their payroll provider, CPA, or benefits broker for additional guidance and record keeping advice.
Review Current Benefits for Duplicate Coverage
Employers should consider reviewing their current employee benefit offerings for policies that could potentially overlap with the proposed paid family medical leave act. According to the bill, the paid family medical leave act would serve as secondary coverage, offsetting any existing PTO or employer-provided short-term disability insurance. Given that the proposed new payroll tax would not decrease for employers offering these plans, it raises concerns about whether providing these benefits would truly benefit their employees. Therefore, it is important for employers to carefully assess the potential impact
Schatz Benefit Group specializes in group benefit options. They understand that each business has unique needs for their employees. Contact them today to learn more about the benefit options available to you and receive complimentary quotes to streamline the shopping process.