Business community concerned about MN paid leave, paid time off bills

DETROIT LAKES — The Minnesota House has passed one bill and is considering another that shook up some in the business community, but will be helpful to part-time workers and others who need paid leave, or who don’t currently get paid time off days for illness or personal time.

The more controversial of the two is a bill to provide workers up to 12 weeks per year of paid family and medical leave, paid weekly. That time could be taken either all at once or on a reduced-schedule basis, depending on need.

It would cover workers who need time off for a number of reasons, including serious medical issues with themselves or family members, pregnancy, bonding with the new baby after birth or adoption, inpatient care, and other reasons.

It includes safety leave, for example, which means leave from work because of domestic abuse, sexual assault, or stalking of the applicant or applicant's family member.

The bill is generous in defining qualifying family members for medical leave. It includes the usual family members — spouse, kids, parents — and goes far beyond that to include step-grandparents, nieces, nephews, aunts and uncles, all possible in-laws, foster children, and those who fall under legal guardianship. In fact, the bill includes “any other individual who is related by blood or affinity and whose association with the applicant is equivalent of a family relationship.”

Which pretty much covers all the bases for workers, and is alarming to many employers.

Beneficiaries shouldn’t expect to get rich on the program: Payment is based on the state’s average weekly wage, which was about $881 on Jan. 31, 2003, according to YCharts.

The average weekly wage moves around, but using $881 as an example, if you make less than $440 a week, paid leave would provide 90% of your regular wages.

If you make between $440 and $881, paid leave would provide 66% of your regular wages.

And if you make over $881 a week, paid leave would provide 55% of your regular wages.

That’s far from full coverage, but better than nothing, in a jam.

The program would be funded by businesses and employees. For an employee making — for example — $45,000 a year, the business owner would contribute .07% of that, or about $315, toward the new plan.

The business could then charge half that cost back to the employee, so each would pay $157.50 per year. The employee’s share would be withheld from their paycheck over the course of a year.

Employees making minimum wage would not have to pay their 50% share, since that would set their actual wage lower than the legal minimum.

The paid leave program won’t come cheap: The bill appropriates $1.7 billion in fiscal year 2024 to the Department of Employment and Economic Development. The money would go into a fund to pay benefits, hire staff and administer the new program.

The bill requires businesses to regularly submit wage data, which is largely private information, but will be available to federal, state and county fraud, tax, welfare, and criminal investigators for legitimate purposes under law, as well as state health and education personnel for legitimate purposes.

DEED will pay for administration of the new program by taking a percentage of projected benefit payments.

From July 1 through Dec. 31 of 2025, DEED may spend up to 7% of projected benefit payments for the administration of the new program.

Beginning Jan. 1, 2026, DEED can spend up to 7% of projected benefit payments for that year to run the program.

The bill does throw small businesses a bone: Small Business Assistance grants of up to $5,000 a year would be available for businesses with 50 or fewer employees. A grant of up to $3,000 would be available if the employer hires a temporary worker to replace an employee on family or medical leave for seven days or more.

For an employee's family or medical leave, grants up to $1,000 would be available as reimbursement for significant additional wage-related costs due to the employee's leave.

Two of the bill’s sponsors — Rep. Ruth Richardson, DFL-Mendota Heights, and Rep. Liz Olson, DFL-Duluth — did not respond to phone messages and emails asking for comment on Wednesday.

But Detroit Lakes Regional Chamber of Commerce President Carrie Johnston said that “some of the concerns we’re hearing is cost, that’s the biggest factor — not only for employers, but also for employees.”

The next biggest concern is the bill makes no provision for smaller businesses. “There are no exceptions to the rule — there could be some major impacts on smaller businesses as written.”

The chamber’s position is that paid family and medical leave should be left up to individual businesses to provide. Some businesses are competing for employees, and offer paid leave as an incentive to work there, she said. “It’s good to have some flexibility,” she said. “But this (bill) is kind of a one-size-fits-all program.”

The Detroit Lakes Chamber has joined with United For Jobs MN, “an organization that has looked into this closely,” she said. “We would recommend that businesses take a look at (the bill) closely,” she said. “Be knowledgeable, call their legislators. Some may like it, some not, but they should be aware of it and the impact it may have on their business.”

The bill is making its way through committees and has not yet been voted on by the full House. The companion bill has not had a full Senate vote either.

A separate bill – The Earned Sick and Safe Time bill – did pass the House on Feb. 23, however.

It allows workers to collect an hour of paid time off for every 30 hours worked — up to a total of 48 hours a year.

If that paid time off isn’t used in a year, it carries over to the next year — up to 80 hours total.

Employers have the flexibility to provide better benefits than this, but not worse, and workers not eligible for overtime will accumulate paid time off based on a 40-hour week.

So how can the paid time off be used? The list is long and includes physical and mental health issues, care of a family member (including during a weather emergency), and absence due to domestic abuse, sexual assault or stalking.

It also gives workers the right to use the paid time off, if they have health concerns or are waiting for test results, in the case of a declared contagious health emergency like COVID-19.

Employers can require up to seven days' notice if the use of the paid time off is foreseeable, or as soon as possible if not. But a business has to have a written policy to require such notice.

Retaliation by an employer against a worker using earned paid time off is prohibited, and medical information regarding a worker or their family, and, information on domestic abuse, sexual assault, or stalking, is confidential.

The bill also has some teeth: Employers are required to provide employment records to the state when asked, and face a fine up to $10,000 for each time they fail to do so. There is also a civil penalty up to $10,000 for each violation for each worker for employers that violate a compliance order from the state.

The bill appropriates $1.5 million in fiscal year 2024, $2.2 million in fiscal year 2025, and $1.9 million in fiscal year 2026 for enforcement and other duties regarding earned sick and safe time.

Other appropriations in the bill include one-time $300,000 amounts in 2024 and 2025 for grants to community organizations.

And Christmas came early for the Ninth Judicial District: The bill also includes $494,000 in FY 2025 for a new “judge unit" in the Ninth Judicial District, to be set at $461,000 per year starting in 2026.

That 17-county judicial district includes Hubbard, Mahnomen, Clearwater, Cass, Crow Wing and Norman counties.