The Minnesota Senate's version of budget bill HF 3931 would establish a paid family and medical leave program, similar to the disability insurance programs in a few other states (i.e., New Jersey), that would provide partial wage replacement for up to 12 weeks after the birth/placement of a child or for an employee's personal or family member serious illness. The program, required for employers with 21 or more employees, would be funded by matching employee and employer contributions. Smaller employers and self-employed individuals would be allowed to opt-into the programs.

The bill would also create an unpaid 12-week family care leave requirement subject to the same requirements that exist for state mandated unpaid pregnancy and bonding leave.

The paid family and medical leave program provisions were originally provided for under SF 2558, which was passed by the Senate committees in April 2016.

Because the Senate-passed version of the bill differs from the House-passed version (which did not include the paid family and medical leave provision), the bill must now go through conference committee before heading to the governor's desk. However, news sources are reporting that the paid family and medical leave provision faces stiff opposition in the House and may not survive the conference committee process.

Family and medical leave program would be funding by matching employer/employee contributions

Should the final version of HF 3931 contain the family and medical leave program provisions as passed by the Senate, and the governor signs the bill into law, effective January 1, 2020, employers participating in both the family and medical leave programs would pay contributions at a tax rate of 0.09% on employee wages up to the Social Security wage base. The employee contribution, withheld by the employer from employee wages, would match the employer's contribution. Contributions would be collected through the unemployment tax process.

After 2021, the tax rate would be determined each year by the Minnesota Department of Employment and Economic Development (DEED) commissioner. However, the rate would not be allowed to increase or decrease by more than 0.1% each year and could not be less than 0.01% or more than 1.5% annually.

An employer would be allowed to apply to be exempt from either or both of the family and medical leave programs if the employer could show that employees are covered by an employer-provided plan that provides benefits that are equal or greater than under the state plans and that costs the employees the same or less than the state plans.

An employer participating only in the medical leave program would be assigned a tax rate of 0.08% for calendar year 2020. Employers participating only in the family leave program would be assigned a tax rate of 0.01%. Employers would withhold at these same rates from employees' pay.

According to the Minnesota Senate DFL, an average Minnesota worker would pay $45 per year, with the lowest paid workers receiving approximately 80% replacement of their wages when on leave.

The provision's sponsor, Senator Katie Sieben, gave the following statement upon Senate passage of the bill:

"I am proud the Senate passed paid family leave as part of the tax bill today. The proposal is a big step forward for families. Currently only 13% of workers have access to paid family leave. Minnesotans should be able to take time away from work to care for a new baby or an elderly parent without jeopardizing their economic security. As the state with the largest percentage of women in the workforce, I thank my colleagues for joining me in supporting policies, like paid family leave, to promote even greater workforce participation."

———————————————

———————————————