Making leave policies work for Minnesota businesses

By Doug Loon
President and CEO
Minnesota Chamber of Commerce

Last week, the Legislature was in recess. This week, they’ve returned and are urgently working toward their required adjournment on May 19, which is just a few weeks away. They still have a lot to accomplish, especially finishing work on the state budget. The new fiscal year starts July 1, and if the Legislature doesn’t wrap up by May 19, a special session will be required. We’d much prefer them to finish on time, produce a balanced budget and address a few key priorities for the business community.

Today, we’re focusing on workplace mandates passed during the 2023 legislative session—specifically two that have a significant impact on Minnesota’s private sector economy: sick and safe time, and paid family and medical leave. I was joined on our latest podcast episode by Lauryn Schothorst, Director of Workplace Management and Workforce Development Policy at the Minnesota Chamber. She laid out how the policy may affect Minnesota businesses and what you can do to lower the impact of these new policies. You can read a transcribed version of our conversation below:  

Doug Loon: Sick and safe time went into effect on January 1, 2024. Paid family and medical leave is slated to begin January 1, 2026—just eight months from now. To discuss these, I’m joined by Lauryn Schothorst, the Chamber’s point person on workforce, labor and education policy. Lauryn has spent much of this session focused on making these mandates more workable for both employers and employees.

Lauryn, can you start by giving us background on both mandates—what we've learned from the sick and safe time mandate and how that informs our approach to the paid family and medical leave law?

Lauryn Schothorst: Absolutely. In the past two years, roughly 35 new workplace mandates have been placed on businesses. The sick and safe time mandate has been one of the most burdensome. Because of that, our members are strongly urging the Legislature to refine the paid family and medical leave mandate before it takes effect.

Generally, we believe policies meant to support employees shouldn’t create undue or uneven financial burdens on employers—but that hasn’t been the case. The sick and safe time mandate, for instance, has increased costs, created operational and staffing challenges, and forced some businesses to hire new staff just to handle compliance.

We conducted focus groups with employers statewide, and many shared that the sick and safe time mandate is being misused by employees due to its broad scope and minimal documentation requirements. Employers are also seeing a negative impact on their workforce.

The upcoming paid family and medical leave law includes a new payroll tax—0.88%—shared by employers and employees. That’s nearly a $2 billion annual tax. This program will create more administrative burden and further strain staffing. And unlike sick and safe time, which is managed internally, paid family and medical leave will be run by the state. Employers and employees alike are concerned about this shift.

DL: So, with this new state-run insurance program, how does the definition of family and medical leave under this law compare to what employers already offer?

LS: It’s much broader. The mandate is prescriptive—there’s no flexibility for employers. All employees, from day one, are entitled to 12 weeks of paid medical leave and 12 weeks of paid family leave, with a cap of 20 weeks in a year. This exceeds the current market standard.

The new law is funded through payroll taxes. Employees will now interact directly with the state, not their HR department, to request leave and receive partial wage replacement. Depending on salary, wage replacement ranges from about 90% to 70%. Many employers want to explore private plan options, but the guidance and approval process from the state isn’t finalized, creating uncertainty.

DL: Let’s talk about the legislative efforts to refine these mandates. What changes are being proposed?

LS: We’ve worked with businesses and other employer groups to identify top-line refinements that would reduce costs and improve implementation. Proposed changes include reducing the number of weeks of leave, narrowing the definition of eligible family members, recalibrating the wage benefit formula, and setting a premium cap to prevent runaway costs.

We’ve also pushed for clearer guidance on private plan equivalency—if a company offers 100% wage replacement for fewer weeks, that should be considered similar. Seasonal employee definitions should apply consistently across all industries. And small businesses need relief—some proposals aim to offer flexible compliance options for them.

Two bipartisan bills encapsulate many of these refinements: Senate File 3141, authored by DFL Assistant Majority Leader Sen. Nick Frentz and GOP Assistant Majority Leader Jordan Rasmusson, along with House GOP Labor Chair Rep. Dave Baker. These bills are not about repealing the law but refining it so it works better for everyone.

DL: What are the chances we’ll see changes passed this session?

LS: Most lawmakers agree that non-repeal fixes are reasonable, and it’s likely these changes will be part of end-of-session negotiations. Even if the bills haven’t moved much yet, they’re not dead. Legislators need to hear from their constituents to keep this issue front and center.

We’re urging our members to contact their legislators and leaders now. Let them know that bipartisan refinements are not only reasonable, but essential. Senate File 3141 needs your support, there are fewer than three weeks left in session.

DL: That’s right. Even if your legislator is already supportive, they need to hear from you. Remind them to advocate for these changes within their caucus. Every voice matters in these final weeks.

Lauryn, thank you for all your work and for being with us today. And thank you to our listeners for your continued advocacy. These mandates—sick and safe time and the upcoming paid family and medical leave—require your attention and action.  

Join us on June 5 for a Chamber webinar where we’ll go into greater detail and share ways to prepare. Visit mnchamber.com for more information. Over the next few weeks, we will continue these discussions on Paid Family and Medical Leave. I will be joined by Ross Widmoyer, CEO of Faribault Mill, on next week’s episode of the Minnesota Business Podcast. He will be sharing how these policies are and will be affecting his business. You won’t want to miss it!