Minnesota Paid Family & Medical Leave (PFL): Employer Requirements, Premiums & Payroll Rules for 2026

Minnesota Paid Family & Medical Leave, commonly referred to as Minnesota Paid Leave, is a statewide paid leave program that began January 1, 2026. The program provides partial wage replacement and job-protected leave for employees who need time off for qualifying medical or family reasons.

Nearly all employers with employees working in Minnesota must comply with the program by reporting wages, paying premiums, and following state leave requirements.

The following employer FAQ explains registration requirements, premium rates, payroll deductions, remote worker coverage, and how Minnesota Paid Leave interacts with FMLA and employer PTO policies.

Minnesota Paid Leave is a state-run insurance program that provides partial wage replacement and job protection to eligible employees who take leave for qualifying medical or family reasons, including bonding with a new child. Benefits begin January 1, 2026.

Nearly all employers with employees working in Minnesota must participate, including:

• Private employers

• Nonprofits

• Public employers

Coverage is broad and not limited to employers that participate in Minnesota Unemployment Insurance (UI). 

NOTE: Employers participating only in the Paid Leave program will be assigned a Paid Leave–only account number. Employers with a hybrid workforce must submit two reports: one under the joint Unemployment Insurance/Paid Leave account number and another under the Paid Leave–only account number. These employers will also need separate login credentials for each account.

Do employers need to Register?

Yes. Employers must register through the Minnesota Unemployment Insurance system to:

• Report quarterly wages

• Submit Paid Leave premiums

What are employer reporting requirements?

Employers must:

• Submit quarterly wage detail reports

• Pay quarterly Paid Leave premiums

• Begin reporting wages earned January 1, 2026

First premium payment due: April 30, 2026 (for Q1 wages)

What is the premium rate for 2026?

The Minnesota Paid Leave premium rate for 2026 is:

• 0.88% of taxable wages

• Employers must pay at least 50%

• Up to 50% may be deducted from employee wages

Employee deductions cannot reduce pay below minimum wage.

Are there small employer considerations?

Yes. Employers with 30 or fewer employees who meet certain wage criteria may qualify for:

• Reduced employer premium rate

• Wage-bases assistance when employees take leave

Coverage for remote or hybrid employees is determined by where the work is performed, not where the employer is located. Minnesota Paid Leave follow the same work-location rules used for Minnesota Unemployment Insurance.

A remote employee is covered by Minnesota Paid Family Leave is any of the following apply:

• The employee performs 50% or more of their work in Minnesota, including work performed from a Minnesota home.

• The employee does not perform 50% or more of their work in any single state and resides in Minnesota

A remote employee is generally not covered by Minnesota Paid Leave if:

• They perform more than 50% of their work in another state.

Employers are responsible for:

• Evaluating remote work location

• Applying correct state coverage rules

• Reporting wages and paying premiums for covered employees

Can employers deduct the employee share from payroll?

Yes, up to 50% of the premium, subject to minimum wage rules.

Are Paid Leave benefits taxable or reported on Form W-2?

• Employers do not report Paid Leave benefits on Form W-2
• Employers do not withhold or pay taxes on Paid Leave benefits
• Benefits are paid directly by the state

Tax treatment may evolve – future guidance should be monitored.

How does PFL interact with FMLA and employer PTO?

• Paid Leave is separate from FMLA
• Leave may run concurrently with FMLA when applicable
• Employers may allow employees to supplement Paid Leave with PTO
• Employers cannot require employees to exhaust PTO before Paid Leave

Can employers opt out by offering their own plan?

Yes. Employers may opt out for approval of an equivalent private plan that:

• Meets or exceeds state benefits
• Provides the same employee protection
• Is approved by the state

Approved plans exempt employers from paying into the state fund for that period.

Are independent contractors covered?

• Independent contractors are not automatically covered
• Some may voluntarily opt in
• Employers are responsible for correctly classifying workers and reporting covered wages

• Employer FAQs
• Registration guidance
• Equivalent plan applications