As we know from all our local and national news stations, it's tornado season and PFML, like Dorothy and Toto, is again swept up in the winds of change. We haven't blogged about Minnesota PFML since last year about this time. Back then, Governor Walz (the great and powerful wizard wasn't available) had just signed the Minnesota Paid Family and Medical Leave (MN PFML) program into law. This year, the legislature (the Lollipop Guild?) made several changes to their program which will become effective before January 1, 2026, when both contributions and benefits begin.

The PFML changes were buried deeper than Auntie Em's tornado shelter in the omnibus bill identified as HR 5247 and located now at Article 73 of Chapter 127 - MN Laws. Rather than making you dig through the post-storm rubble (600-1000 pages depending on how you download it!) of the omnibus bill, we'll summarize the changes for you.

First, the basics of the PFML law remain the same. Employers (private and public) will be required to provide eligible employees (those who have earned at least 5.3% of the state average annual wage and excluding some seasonal employees) with paid leave for:

the employee's own serious health condition, including pregnancy,
caring for a family member with a serious health condition,
bonding after the birth or placement of a child,
exigent circumstances related to a family member's military service or caring for a military family member, or
addressing domestic abuse, sexual assault or stalking of the employee or the employee's family member.

Employees may take 12 weeks of medical leave (employee's own serious health condition) and 12 weeks of family leave (everything else) up to a 20-week limit in a 12-month period. The pay benefits are based on a tiered formula with a minimum of $50 per week and a maximum equal to the state's average weekly wage. Employees are also guaranteed job protection after 90 days of employment.

The omnibus bill adds coverage for former employees to the PFML law. Previously, former employees weren't covered. Now, otherwise qualified employees who are separated from employment for less than 26 weeks may receive MN PFML benefits. Coverage for the purposes of benefits applies until the individual is hired by a new employer or 26 weeks pass, whichever occurs first.

The bill added a new employer reimbursement section to the PFML law stating that if an employer provides wage replacement to an employee for weeks that should be paid by the Paid Leave division, the division may reimburse the employer directly for those weeks.

The contribution calculation for small employers changed. For employers with fewer than 30 employees and an "EMPLOYER average weekly wage" less than or equal to 150% of the SAWW, the rate is now 75% of the regular rate. Of that, employers pay 25% and employees pay the remainder. What is an "EMPLOYER average weekly wage" you ask? Well, that is a good question since we haven't yet seen that in a PFML program. How is the employer count determined? Also, a good question. However, the answers to those questions are more complicated than Dorothy's relationship with the Wicked Witch of the West and beyond the scope of this munchkin sized blog.

One of the biggest areas of confusion to date had been MN PFML's use of an "initial paid week" which stated that except for bonding leave, benefits are based on one qualifying event of at least 7 calendar days. It was unclear whether this was a waiting period. The omnibus bill resolves the issue, clearly stating that it is not. Instead, the initial week must be paid retroactively after the applicant has met the 7-day qualifying event and must be paid in the first benefit payment. Clear as the water thrown on the wicked witch? Stated another way, the minimum period for which benefits are payable, except for a bonding claim, is a single qualifying event of at least 7 calendar days. Therefore, an employee who only needs qualifying leave for 5 days is not eligible for MN PFML. For intermittent leave, "initial paid week" means 7 consecutive or nonconsecutive, or a combination of consecutive and nonconsecutive, calendar days from the effective date of leave, of which only days when leave is taken are payable.

Speaking of intermittent leave, the omnibus bill also changed increments of leave. Previously, leave could be taken in increments of 1 workday. Now, intermittent leave must be taken in accordance with the established policy of the employer for other forms of leave; as long as, the policy allows for increments of at least 1 workday. Additionally, an applicant cannot apply for payment for intermittent leave benefits until the applicant has accumulated 8 hours of leave time, unless more than 30 calendar days have lapsed since the initial taking of the leave.

In the private plan section, the bill addresses claims transitions. This is more helpful than ruby slippers. When moving from private plan to private plan, state plan to private plan, or private plan to state plan – the plan covering the employee when benefits were approved is required to continue paying benefits. If an extension or recertification is required, the employee reapplies with the new plan. If an application for leave is filed by a former employee to a private plan, the plan pays benefits for the totality of the leave. Private plans may not cut off eligibility for a former employee during the course of an approved leave.

The bill added offset language stating that eligible employees may receive both PFML and STD benefits and that STD benefits may be offset by PFML benefits paid to the employee pursuant to the terms of the STD policy.

There are also smaller but still important clarifications included in the bill. For example:

the base period is only going to be calculated once during the benefit year;
"typical workweek" is now based on the last 2 quarters prior to applying for leave;
covered employment no longer refers to where work is controlled from;
benefit year now means the effective date of leave which means the date of the first absence;
PFML benefits are not available while receiving unemployment benefits;
premium rate changes based on actuarial studies;
clarifications for situations where an employee has more than one employer; and
an entirely new appeals section and a reduction in the time to appeal from 60 days to 30 days.

There is also one issue outside of the omnibus bill. Coming sooner than we want to think about, employers, even those wanting to apply for a private plan, must submit quarterly wage detail reports to the state through the state's current online unemployment insurance system no later than October 31, 2024, for wages paid between July 1, 2024, and September 30, 2024.

Employers should be able to submit the quarterly report beginning July 1, 2024. If an employer is covered by the UI program, their UI account will be automatically converted into a joint UI/PFML account. These employers will then be able to submit a single wage detail file for both programs when they pay their UI taxes. The data used in the UI filing will be used to report wages directly to the Paid Leave program. If an employer is not covered by the Unemployment Insurance program, they will need to set up a "Paid Leave Only" account. Remember, the first premiums for PFML will not be due until April 30, 2026, and those initial premiums will only apply to wages earned between January 1, 2026, and March 31, 2026.

The yellow brick road of MN PFML still needs some clean up so we will be anxiously looking for more guidance from the state in the form of regulations.

Reliance Matrix Can Help!

Better than any wizard or good witch, Reliance Matrix offers state leave administration services to help employers get through the spooky forest of paid leaves and the poppy field of unpaid and earned leaves. For more information, contact your Reliance Matrix account manager or send us a message to AbsenceMentor@rsli.com.

Through its insurance and administrative services entities, Reliance Matrix offers integrated leave management services involving the FMLA, state-mandated paid family and medical leave and accommodation solutions. Product features and availability may vary by state. For more information, please contact your Reliance Matrix account manager, or reach us at AbsenceMentor@rsli.com.