Minnesota House passes bill establishing state paid family and medical leave program

ST. PAUL, Minn. -- The Minnesota House on Tuesday evening passed a bill establishing a state paid family and medical leave program that guarantees all workers have access to those benefits.

Under the bill, workers would be eligible for up to 18 weeks of paid leave to care for themselves if they are suffering from a serious medical condition or a family member, including a newborn. It represents a significant step for a top DFL priority since Democrats took back the reins at the state capitol this year.

"We are going to catch up with the rest of the world today with the passing of paid family medical leave and making steps to have a much more inclusive safety net," said Rep. Ruth Richardson, DFL-Mendota Heights, the chief bill author.

Roughly 75% of workers in Minnesota didn't have access to paid leave benefits in 2021, according to the Minnesota Department of Employment and Economic Development.

 
If they experience complications due to pregnancy, they could receive an additional six weeks for no more than 24 weeks in a single year.

It would be a state-run program similar to unemployment insurance. The bill seeds the account with more than $660 million but it would be funded by a payroll premium tax of 0.7% on an ongoing basis. Minnesotans can apply for benefits in 2025 and it would be a partial wage replacement.

The 18-week cap is lower than the initial 24-week plan the House had proposed. Richardson introduced the change on the House floor and said it was a compromise.

"We've been working with a lot of folks, not only those that are standing behind us. Folks in the faith community, the business community - just working to try to get to the most workable solution that works for businesses and also protects families as well," Richardson said.

Business groups like the Minnesota Chamber of Commerce and the National Federation of Independent Business are staunchly opposed, arguing it is a "one-size-fits-all mandate" that will be harmful for businesses because of the estimated $1.5 billion in annual tax increases needed to sustain the program.

"This will be the most expensive and complicated paid family and medical leave mandate for small businesses and workers in the country," said John Reynolds, state director for the National Federation of Independent Business in Minnesota.

Twelve other states have mandatory paid leave programs administered by state governments, according to the Bipartisan Policy Center, with varying payroll premiums. Delaware, Virginia and New Hampshire have programs that have an opt-in for businesses.

Republicans failed to amend the proposal on Tuesday to incentivize employers with tax breaks if they join a new state health plan administered by private insurance. Those changes were modeled after New Hampshire's law.

They also characterized the bill as a burdensome bureaucracy, criticizing the 400 new state employees needed to make the program possible, according to a fiscal analysis from nonpartisan legislative staff.

"It's not about whether Minnesotans should have some sort of paid leave benefit. As Republicans, we fully agree with that," said House Minority Leader Lisa Demuth, R-Cold Spring. "What we're differing on is how we're going to get there-how it's going to be affordable and workable for all Minnesotans."

Other small business owners rallied at the capitol Tuesday to voice their support for the legislation.

Sarah Piepenburg, owner of Minneapolis' food store Vinaigrette, recalled falling behind on commercial rent and her mortgage payments to pay for paid leave for her employee, Linda, who broke both of her arms in a fall and needed time to recover.

She said she looked into private insurance options that don't offer enough benefits and are more expensive than the payroll tax hit her business would see under the bill before the House.

"The universal paid family medical leave program creates a system where everyone pays in a little and everyone benefits," Piepenburg said. "A social insurance program would help (businesses) offer paid leave to their employees, helping them to attract and retain dedicated employees like Linda and avoiding the cost involved in replacing employees who have to take extended time off to grow a family, give care or recover."

House and Senate Democrats have different versions of the legislation. Details will be ironed out in the final weeks of session during conference committees.  

A company that already offers paid leave will have to offer time off that at least meets the standards detailed in this bill. Companies that offer more generous benefits packages can keep them and be exempt from the tax increases by paying a fee.