What Minnesota Businesses Need to Know About Paid Family and Medical Leave in 2025

Minnesota employers are standing on the edge of one of the most significant workplace policy shifts in decades. Beginning January 1, 2026, the state’s Paid Family and Medical Leave (PFML) program will take effect, providing paid and job-protected time off for eligible employees.

While that may sound like the distant future, 2025 is a critical year for preparation. Employers must take proactive steps now to ensure benefits compliance, communicate clearly with employees, and manage the financial and operational implications.

At Growth Operators, our team of HR and compliance experts is already guiding Minnesota businesses and PE-backed companies through this transition. With the first employee notification deadline coming in December 2025, time is short to evaluate your organization’s policies, workforce needs, and cost exposure.

Are you ready?

This guide will walk you through what’s changing, why it matters, and how to prepare—so you can navigate Minnesota Paid Family and Medical Leave with confidence.

What Is Minnesota Paid Family and Medical Leave (PFML)?

PFML—also referred to as Minnesota Paid Family Leave (MNPL)—provides MN workers with paid, job-protected leave for:

• Their own serious health condition
• Caring for a family member with a serious health condition
• Bonding with a new child
• Certain safety concerns
• Military demands

Starting January 2026, employees will be able to take advantage of this benefit. The program is funded by payroll deductions from both employers and employees, and coverage applies regardless of employer size. Visit the Minnesota Chamber of Commerce website to learn more.

PFML vs. ESST: Understanding the Difference

One of the biggest sources of confusion we’re hearing from employers is the difference between Minnesota’s Earned Sick and Safe Time (ESST) law and the upcoming paid family and medical leave program.

Here’s what you need to know:

• ESST (in effect since January 2024) provides MN workers with paid time off for short-term illnesses, preventive care, or issues related to domestic violence, sexual assault, or stalking. It accrues over time, typically at the rate of one hour for every 30 worked, up to a set maximum each year.
• PFML (effective January 2026) is broader, offering weeks of Minnesota Paid Family Leave for serious health conditions, caregiving responsibilities, bonding with a new child, and more. It is a state-administered program that provides job protection and partial wage replacement funded by payroll contributions, not an accrual-based system of paid time off like ESST.

In short: ESST covers short-term sick and safe paid time off, while PFML provides long-term paid family and medical leave. While both programs can run concurrently, they are different, and employers must comply with the requirements of each.

Quick Example and Compliance Checklist for Employers

To help put PFML into perspective, here’s a simple planning scenario:

If your 2026 taxable payroll is $1,000,000, the total PFML premium at 0.88% comes to $8,800. As the employer, you must pay at least half ($4,400), though you may choose to cover more if you prefer not to deduct from employees’ paychecks.

Why 2025 Is the Pivotal Year for PFML

Even though benefits don’t start until 2026, compliance responsibilities begin in 2025.

Key milestones include:

• July 2025—Outreach grant funds available for community-based groups.
• December 2025—Employers must notify employees about their new Minnesota Paid Family Leave benefits.
• January 2026—Payroll deductions begin for employers and employees, and MN workers can begin taking leave.

That December 2025 notification deadline is a hard stop. To meet it, businesses need to have their strategy, policies, and communication plans well in advance. Contact Growth Operators today to get started!

Mini PFML Compliance Checklist

• By November 10, 2025: Decide if you will use the state plan or pursue an equivalent private plan. If you want a private plan in place by January 1, 2026, you should apply by no later than November 10, 2025.
• By December 1, 2025: Post the official PFML workplace poster and provide individualized written notices (including multilingual versions where required).
• December 31, 2025: Name a Paid Leave Administrator, set your intermittent leave increment, and update policies for concurrent leave, supplemental pay, and other compliance requirements.
• By January 1, 2026: As benefits become available, configure your payroll to support the 0.88% split.
• By April 30, 2026: Submit your first quarterly premium payment.

Challenges Minnesota Employers Will Face

Every business is different, but common challenges we’re helping clients prepare for include:

1. Change Management

PFML isn’t just a compliance checkbox; it’s a cultural and operational shift. Employers will need a change management plan that identifies key stakeholders, outlines the business impacts, and outlines strategies for adoption.

2. Employee Experience

Confusion around benefits can erode trust. Employers must create clear, accessible, and transparent policies to help employees understand how paid family and medical leave works in conjunction with existing benefits, such as ESST, PTO, and disability leave.

3. Administrative Burdens

Tracking leave requests, managing documentation, and reporting will require updated systems and processes. Companies relying on manual or outdated tools will face significant inefficiencies.

4. Compliance Complexities

With new legal requirements, staying aligned and up to date is non-negotiable. Employers must ensure PFML integrates seamlessly with existing policies to maintain benefits compliance.

5. Cost Management

Employers must budget for new payroll contributions and consider the indirect costs of higher leave utilization. Scenario modeling is crucial for preparing for multiple financial outcomes.

6. Workforce Management

Absences due to leave can disrupt productivity and strain teams. Businesses will need strategies to maintain performance without overburdening staff.

How Growth Operators Can Help

At Growth Operators, we combine deep HR, finance, and operational expertise to help organizations prepare for PFML. Our cross-functional team has already been analyzing the legislation, running financial models, and advising leadership teams on strategic implementation. Our goal is to help employers not only meet the deadline but also leverage PFML as an opportunity to strengthen their culture, improve employee experience, and build resilience.

Here’s how we support Minnesota businesses:

• Change Management Planning—Build organizational alignment and prepare leaders and employees for a smooth rollout.
• Policy & Employee Communication—Draft clear, accessible policies and employee communications that build trust and reduce confusion.
•  Leave Administration Optimization—Evaluate leave tracking systems, documentation processes, and reporting to minimize inefficiencies.
• Compliance Readiness—Stay aligned with evolving legal requirements, receive timely updates, and ensure your PFML program integrates with existing benefits.
•  Financial Modeling—Run various cost scenarios based on premium rates, cost sharing, and leave utilization to inform budgeting.
• Workforce Impact Strategies—Develop staffing and scheduling strategies to keep operations running smoothly during employee absences.

If you don’t have internal expertise to manage this transition, consider engaging a fractional CHRO or interim HR executive. Having an experienced, embedded HR leader can accelerate planning, ensure compliance, and reduce risk as your business adapts.

Don’t Go Into 2026 Unprepared

Some organizations are tempted to wait until late 2025 to act. But the reality is that PFML requires strategic preparation, not just policy updates.

By starting now, you can:

• Align leadership and employees around what’s changing
• Build or upgrade leave-tracking systems
• Model and budget for new costs
• Evaluate whether private plan alternatives may be a better fit
• Avoid rushed, reactive compliance work as deadlines approach

Remember: Minnesota employers must notify employees about Minnesota Paid Family Leave before December 1, 2025. That leaves less than four months to prepare and communicate properly.

What if You Don’t Comply? What Are the Risks?

Besides risks associated with employee satisfaction and morale, as well as reputational risk, if an employer is found to have violated the Paid Leave Law, they may be held responsible for any harm caused in the form of:

• Damages
• Interest on those damages
• Additional penalties equal to the sum of the damages and interest (unless the employer demonstrates in good faith that the act or omission leading to the violation was not intentional and had reasonable grounds to believe it did not violate the Paid Leave Law, in which case, the court may exercise discretion to waive the liquidated damages penalty)
• Injunctive relief
• Other equitable remedies, including reinstatement and promotion

In addition to other remedies available under the law, the DEED commissioner may impose penalties on the employer ranging from $1,000 to $10,000 per violation of retaliation towards an employee for requesting or obtaining Paid Leave Benefits and/or Paid Leave, or for exercising any rights under the Paid Leave Law.

Failure to comply with employee notice requirements may result in penalties, starting at $50 per employee for initial violations and increasing to $300 per employee for subsequent violations.

PFML FAQs from Minnesota Business Owners

We’ve collected some of the most asked (and commonly misunderstood) parts of Minnesota’s Paid Family & Medical Leave program, taking effect January 1, 2026.

1. We’re too small—will this apply to us?

PFML applies to virtually all Minnesota employers with at least one employee—including nonprofits, religious organizations, agricultural employers, and local governments. Part-time and most seasonal workers are covered, and independent contractors or self-employed individuals can opt in.

2. How much leave can employees actually take?

Employees may take up to 12 weeks for their own serious health condition and up to 12 weeks of family leave (bonding, caregiving, safety, or military), capped at 20 weeks per year in total. After 90 days of employment, their job is protected, and you must maintain group health coverage during the leave.

3. Is there a waiting period?

No. PFML benefits are payable from day one once the qualifying event lasts at least seven days. The first week is retroactively covered. Bonding leave (new child) is exempt from the seven-day threshold.

4. Who pays, and how much?

The program is funded by payroll premiums totaling 0.88% of wages (up to the Social Security wage cap). Employers must pay at least half; employees can be responsible for the rest, but deductions may not reduce pay below minimum wage. Premium collection begins with Q1 2026 wages, and the first payment is due April 30, 2026.

5. Are small employers treated differently?

Yes. If you have 30 or fewer employees and pay wages at or below 150% of the statewide average wage, you may qualify for reduced premiums. The state also plans to provide small-employer assistance (up to about $3,000) to help cover temporary staffing costs.

6. What do employees actually receive?

Employees receive partial wage replacement, ranging from about 55%–90% of their typical earnings, capped at the state maximum (currently $1,372 per week, indexed annually). Payments are made directly by the state—not by employers—though you may allow employees to use PTO or offer supplemental pay to “top up” their benefits.

7. Can we require employees to use PTO or ESST first?

No. Employers cannot force employees to use PTO, vacation, or Earned Sick and Safe Time (ESST) before taking PFML. However, you can offer supplemental benefits so employees may choose to combine PFML with accrued time off to reach full wage replacement.

8. How does this interact with FMLA, Minnesota parental leave, or ESST?

Employers can require PFML to run concurrently with leave under the federal FMLA and Minnesota Parental Leave Act, when both apply. ESST is a separate program with its own rules, but it may be taken alongside PFML if applicable.

9. What about taxes?

PFML benefits are considered taxable income. Employees can elect to have 10% federal and 5% state withholding applied directly to their benefit payments.

10. Do remote or multi-state employees count?

Yes—if 50% or more of their work is performed in Minnesota. If no single state accounts for 50% of their work, they’re covered if they live in Minnesota.

11. Can we opt out with a private plan?

Yes. Employers may apply to offer an equivalent private plan (insured or self-insured with a bond) that provides benefits and protections equal to or better than the state plan. If you want a private plan in place for launch, apply no later than November 10, 2025.

12. Who counts as family under PFML?

The definition of family is broad: spouse or partner, child, parent (or the person who raised you), sibling, grandparent, grandchild, in-laws, and others who depend on you like family (“affinity relationships”).

13. Do we control the minimum increment of intermittent leave?

Yes—your policy can set the minimum increment of intermittent PFML (such as an hour, half-day, or day), but it cannot require more than one calendar day as the minimum. Employees must accrue 8 hours before applying for payment for intermittent leave, unless 30 or more days have passed since the leave began.

Let’s Start Building Your PFML Strategy Today

Paid family and medical leave is one of the most significant employee benefits compliance changes Minnesota employers will face in the next decade. However, with proper planning, communication, and execution, it doesn’t have to be disruptive.

At Growth Operators, we help businesses transform challenges into opportunities, navigating change with confidence, building stronger organizations, and ensuring benefits compliance every step of the way.

Contact Melissa Bryan today to initiate a conversation about PFML readiness and how to develop your organization’s compliance strategy.