Regardless of whether they’ve anticipated, forgotten, or dreaded it, Minnesota businesses need to address the state’s new Paid Leave program. Employers will have to comply with the new law starting Jan. 1, 2026.

Passed in 2023, the Paid Leave legislation has gone through some changes and plenty of controversy. The state Department of Employment and Economic Development (DEED) published its final Paid Leave rules in June.

On Wednesday, DEED Commissioner Matt Varilek presented a three-step strategy for employers (both for-profit and nonprofit) to comply with the new program. The intention is to simplify what many employers see as a complicated and expensive employee benefit.

On a basic level, the state’s Paid Leave program is fairly simple. Beginning next year, the state will provide partial wage replacement for employees for 12 weeks of medical leave and 12 weeks of family leave per year. An employee who qualifies for both can take a maximum of 20 weeks in one benefit year.

Nearly all employees will be covered, though there are some exceptions. Employees can use paid family leave for spending time with a newborn child, caring for a family member with a serious health condition, or supporting a family member called to active military duty. Workers can take leave in a continuous run of days or in smaller blocks of time. (How small is something the employer can determine. A single block might be less than a day.)

To fund the program, employers and employees will contribute a premium equal to 0.88% of an employee’s wages. Employers must cover at least half of the premium, with the employee paying the rest. The first premium will be due April 30, 2026.

From there, the details and requirements can seem confusing. To provide clarity, DEED has developed what Varilek described as “three bite-sized preparatory actions” for employers to follow:

1. Creating company and paid leave administrator accounts with the state, which businesses can set up now. To minimize redundant wage reporting and facilitate premium payments, employer accounts can be implemented through the state’s unemployment insurance system.
2. Notifying employees by Dec. 1 about the Paid Leave program’s launch. Employers must inform each employee in writing, and in his or her primary language. They must also conspicuously display a state-authorized poster (in multiple languages, if needed) that describes the program’s requirements and benefits.
3. Establishing “customized” Paid Leave policies by the beginning of 2026. For instance, employers should determine if and how program premiums are split with their workforce. Some employers may choose to cover more than half of the premium as an employee benefit. Employers may also wish to give employees on leave additional wage replacement above what the state provides. Employers with more generous leave plans may opt out of the state program, though they’ll need to submit their plans for state approval.

DEED has held numerous employer engagement sessions across the state over the past year “to maximize the impact of our message,” Varilek said. “Our goal has been to share information about the program and answer questions about how to make Paid Leave work best.” (DEED will conduct a session Friday in Duluth.) The department also has set up a Paid Leave website, which includes a detailed page for employers.

Gov. Tim Walz argues the program’s rollout will be smooth—smoother than, say, the introduction of the MNsure health insurance marketplace in 2013. DEED’s three-step approach to Paid Leave is meant to provide a less bumpy beginning. The real test will begin Jan. 1.