Beginning January 1, 2026, Minnesota’s new Paid Family and Medical Leave (MPL) law takes effect. This program gives most Minnesota employees the right to paid time off for major life events — including their own serious health condition, caring for a family member, bonding with a new child, or certain military-related needs.
The state, not employers, will handle benefit payments through the Minnesota Department of Employment and Economic Development (DEED). But employers must still set up their accounts, handle payroll deductions, and provide required notices and policy updates.
It works a lot like unemployment insurance: the state runs the program and pays the benefits, but employers have to handle payroll deductions, reporting, and employee notifications.
If you own or manage a business with employees in Minnesota, here’s what this means — and what you need to do next.
1. Payroll contributions start January 1, 2026
All Minnesota employers must contribute to the new Paid Leave fund through a 0.88% payroll tax, shared equally between the employer and employee (unless you choose to cover the full amount).
Example: If an employee earns $1,000 a week, you’ll pay $4.40, and they’ll contribute $4.40 through a payroll deduction.
Your first payment to the state is due April 30, 2026, covering the first quarter of the year.
2. Set up your DEED Paid Leave account
Every employer must create a Paid Leave account through DEED’s system. This is where you’ll report wages, manage premium payments, and update your business information.
You can start setting up your account now, even if you already have a DEED unemployment insurance account — this will be a separate but similar process.
3. Update your policies and notify your team
Employers are required to notify employees about the new program before it takes effect. By December 1, 2025, you must:
- Post the official Paid Leave poster in a visible spot.
- Give each employee a written notice explaining their new rights.
- Get a signed acknowledgment from each employee confirming they received it.
It is also a best practice to add a Minnesota Paid Leave policy to your employee handbook and make sure it works alongside your existing leave programs (like FMLA, Minnesota Parental Leave, or Earned Sick and Safe Time).
It is also advisable to train your HR team and / or managers on how to handle a leave request.
4. After January 1, employees apply to the state for benefits
When an employee takes Paid Leave, they’ll apply directly through DEED. The state reviews the claim and pays the benefit directly to the employee — you don’t pay their wages while they’re out.
Your job is to:
- Keep their position protected if they’ve worked for you at least 90 days.
- Track their leave time.
- Keep up with your payroll reporting and payment.
Small Employer Assistance could reduce your costs
Minnesota has created a Small Employer Assistance program for businesses that have 30 or fewer employees and pay an average wage of less than $2,134.50 per week (that’s 150% of the state’s average weekly wage). If you qualify, the state may help offset the costs when an employee takes Paid Leave.
The application deadline for 2026 coverage is November 15, 2025, but you can still prepare to apply for 2027 coverage when the next window opens in fall 2026.
What This Means for You
Minnesota’s Paid Leave program shifts the cost of wage replacement to the state, but employers still have new responsibilities. You’ll need to handle payroll deductions, report wages, make quarterly payments, update your handbook, and communicate with employees about their rights.
The good news: once your payroll and policies are updated, the process should run smoothly in the background, similar to how unemployment insurance works.
Even though the January 1, 2026, start date is fast approaching, there’s still time to prepare.
