Minnesota Paid Leave is live, and it applies to employers with one employee

By David J.S. Madgett

Minnesota attorney, license no. 390494 · Published August 7, 2026

If you are forming a Minnesota business that will have employees, this is the single largest change to your cost structure in years, and the thing most new employers get wrong about it is assuming it does not apply to them yet.

There is no headcount threshold. Minnesota Paid Leave, chapter 268B, reaches employers with employees — full stop. What size gets you is a discount, not an exemption.

The premium

Under Minn. Stat. § 268B.14, subd. 6, beginning January 1, 2026 the rate for an employer participating in both the family and medical benefit programs is 0.7 percent of taxable wages. The statute caps future annual adjustments at 1.1 percent, so the number can move, but only within a ceiling the legislature set.

Who pays it. Subdivision 3: “employers must pay a minimum of 50 percent of the annual premiums paid under this section,” and employees pay the remainder. So the default split is half and half — an employer may absorb more, never less.

The deduction limit. An employer may withhold the employee’s share from wages, but the deduction “must not cause an employee’s wage, after the deduction, to fall below” the applicable minimum wage. For employees at or near minimum wage, the employee share is effectively the employer’s problem.

The small-employer rate

Subdivision 5a sets the threshold at 30 or fewer employees. Qualifying employers pay 75 percent of the standard rate, and the cost-sharing changes: the employer must pay a minimum of 25 percent of the rate rather than 50, and — critically — “Employers shall not deduct from any employees’ pay to fund the employer portion.”

Read that last clause carefully, because it is the one that generates payroll errors. The reduced employer obligation does not become an employee obligation. You cannot make up the difference by withholding more.

What employees can take

Section 268B.04, subd. 5 does not set two independent 12-week buckets, which is how it is usually described. The caps are interlocked.

For bonding, safety leave, family care, and qualifying exigency, the maximum is “the lesser of 12 weeks, or 12 weeks minus the number of weeks within the same benefit year that the applicant received benefits for a serious health condition plus eight weeks.” The provision for a serious health condition is the mirror image.

In practice: up to 12 weeks for either category, and a combined ceiling in the neighborhood of 20 weeks in a benefit year — not 24. If you are modeling coverage for a small team, model 20.

What to do about it

• Budget the 0.7 percent into your first-year payroll model, not as a rounding error. On $400,000 of payroll that is $2,800, of which at least half is yours.
• Count your employees honestly against the 30-employee line, and know that dropping below it changes not just the rate but who may be charged for what.
• Fix payroll before the first run. The prohibition on deducting the employer portion at the small-employer rate is the kind of thing a payroll provider gets right only if it has been told the employer qualifies.
• Do not confuse this with earned sick and safe time. They are different statutes, with different triggers, different funding, and different recordkeeping. Both apply.

This article states the statutory rates and the framework. It does not cover registration, wage reporting, the private-plan substitution option, or the notice you owe employees — all of which exist, and all of which have their own deadlines. If you are about to hire your first employee in Minnesota, that is a conversation worth having with someone before the first paycheck, not after the first mistake.