By Laura Rohwer
Minnesota Employers: What You Need to Know and Do
As 2026 approaches, Minnesota employers face a wide range of HR compliance updates–from paid leave to payroll deductions, retirement plan mandates, and new federal catch-up contribution rules. Below is a comprehensive summary of key changes to help your team stay compliant.
2026 EMPLOYER TO-DO LIST:
Employee Handbook & Policy Updates
Work with your HR advisor or legal counsel to update policies by December 1, 2025, ensuring compliance with PFML requirements and maintaining clear communication with employees.
- Concurrent Leave Usage
- Clarify how PFML will run concurrently with other leave types such as FMLA, unpaid parental leave, or paid maternity/paternal leave programs
- Supplemental Pay or PTO “Top Off”
- Define whether employees may use PTO, vacation, or sick leave to supplement PFML benefits and reach 100% pay. Employers cannot require it, but they may permit it.
- Health Insurance During Leave
- State how employee health premiums will be handled while the employee is on PFML (e.g., prepayment, direct billing, or payroll deduction upon return).
- Ensure continued coverage during leave as required by law.
- PFML Eligibility and Job Protection
- Include basic PFML eligibility criteria and clarify that job protection applies after 90 days of employment, aligning with state rules.
- Intermittent Leave Rules
- Specify the minimum increment your organization will allow for intermittent PFML (minimum is 8 hours) and whether PTO may be used during those periods.
- ESST Accrual Adjustments
- Consider whether to shift from frontloading to true accrual tracking for ESST, since ESST does not accrue while employees are out on PFML and not working.
Payroll & Benefits Administration
- Set up payroll deductions for PFML and ensure timely remittance
- Adjust wages to meet updated state minimums and federal OT thresholds
- Identify high-earning employees (age 50+) for Roth catch-up contributions
- Ensure Roth option is available in retirement plans by year-end
Compliance & Tracking Systems
- Implement or update systems to track:
- ESST accruals, usage, and balances (even under PTO policies)
- Break and meal periods
- Leave taken under PFML and unpaid leave programs
Employee Communication
- Notify employees about:
- PFML rights and deductions (by Dec 1, 2025)
- Changes to sick leave use and documentation
- New break entitlements and scheduling practices
- Retirement plan updates and Roth contribution changes
Program Participation & Readiness
- Confirm enrollment or prepare for:
- Minnesota Secure Choice Retirement Program (if no current plan)
- Elimination of sub-minimum wages for employees with disabilities (by Jan 2027)
KEY 2026 HR CHANGES:
- Minnesota Paid Family & Medical Leave (PFML) – Effective January 1, 2026
- Provides up to 12 weeks of paid family leave (bonding, caregiving, safety, military)
- Up to 12 weeks of paid medical leave (serious health condition, pregnancy)
- 20-week cap/year total
- Applies to all employers regardless of size
- Payroll tax: 0.88% (split between employer and employee)
- Key deadlines:
- Employee notice: by Dec 1, 2025
- Deductions start: Jan 1, 2026
- First premium due: April 30, 2026
- Details: DHA Blog-MN PFML Law and MN DEED PFML Info
- Earned Sick & Safe Time (ESST) Updates – Effective January 1, 2026
- Frontloading allowed based on expected hours; reconcile if under-calculated
- May be used for bereavement leave
- Employers may request documentation after 2 consecutive absences
- Shift trading allowed as an alternative to using ESST
- Applies to employees expected to work 80+ hours/year
- Details: MN DLI ESST Overview
- Mandatory Paid Breaks & Meal Periods – Effective January 1, 2026
- One paid 15-minute rest break for every 4 hours worked
- One 30-minute unpaid meal break for shifts 6+ hours
- Noncompliance may result in back pay + penalties
- Details: MN DOR Work Breaks, Rest Periods
- Minimum Wage Increases – Effective January 1, 2026
- MN State minimum wage: $11.41/hr
- Healthcare facility wages (minimums):
- Nursing home worker (general): $19/hr
- Certified Nursing Assistants (CNA): $22.50/hr
- Medication Aide/Medical Assistant: $23.50/hr
- Licensed Practical Nurse (LPN): $27/hr
- Details: MN DLI Minimum Wage
- Ban on Sub-Minimum Wage for Employees with Disabilities – Effective August 1, 2025 – January 1, 2027
- Enacted: August 1, 2025
- Full enforcement: January 1, 2027
- Eliminates use of federal 14(c) certificates in MN
- All employees must be paid at least state minimum wage
- Details: MN Statutes on Subminimum Wage Ban
- Unpaid Parental Leave Coordination with PFML
- MN’s unpaid Parental Leave Act remains in effect—12 weeks unpaid leave for bonding
- PFML provides paid bonding leave starting Jan 1, 2026
- Employers may require concurrent use of unpaid and paid leave
- Applies to all employers (no exemption for small employers)
- Source: MN DLI Parental Leave Page
- SECURE Act 2.0: Federal Retirement Plan Updates – Effective in 2026
- High-Income Catch-Up Contributions:
- Employees aged 50+ who earned $145,000+ in prior year must make catch-up contributions as Roth (after-tax)
- Employers must adjust payroll and plan systems to enforce this
- Plans must offer a Roth option by Dec 31, 2026 to remain compliant
- Other Key Updates:
- IRA catch-up limits will be indexed for inflation starting in 2026
- RMD age confirmed at 73 for those born 1951–1959
- Delays and penalty relief apply for some RMD enforcement and new 1% excise tax
- Details: IRS – SECURE 2.0 Final Regs
- High-Income Catch-Up Contributions:
- Minnesota Secure Choice Retirement Program – Effective January 2026
- Requires employers with 5+ employees (and no retirement plan) to offer the state-facilitated program
- Employee opt-out allowed; contributions go to Roth IRA
- Employer duties: facilitate payroll deductions only
- Details coming from the MN Secure Choice Board in late 2025
- Details: MN Secure Choice Retirement Program