Cool reception for state tour to sell paid leave program

It would be hard to overstate the depth of uncertainty plaguing Minnesota businesses, big and small, over the looming paid family and medical leave program rammed through the DFL-controlled state legislature in 2023. A vast new state bureaucracy of 400 government employees will oversee and enforce the program scheduled to launch in 2026 that the Minnesota Chamber of Commerce summed up this way.

This biennium, the Legislature passed the most sweeping paid leave mandates on business in state history. Despite more than 80% of Minnesota members offering leave to their employees, the state now mandates all employers to grant employees sick, safe and paid time off equaling nearly 40% of a work year.

The business community’s skepticism only heightened when bungling lawmakers had to go back to the drawing board this year to further jack up the payroll tax on employees and employers to fund the sprawling bureaucracy.

It will be paid for through surplus funds and a considerable increase in payroll taxes, which can be split between employers and employees. Additional program expansions and requirements along with technical and programmatic changes made during the 2024 legislative session revealed that the payroll tax would need to dramatically increase to cover the program and ensure solvency (0.88% amended from the originally stated 0.7%).

State officials know they have a perception problem on their hands, so they’ve embarked on a 16-city public relations tour to address employers’ questions and concerns. The high level of interest in Marshall was underscored by the fact the event had to be moved to a bigger venue to accommodate the crowd, according to the Independent.

Part of the event gave an overview of the Paid Leave program, but [program director Greg] Norfleet said lots of time was set aside for a question-and-answer session, and employer feedback.

“We’re still 16 months away from launch, and it’s a great time for us to get feedback from employers on what this program needs to look like in order to add an asset to your business rather than creating more administrative burden,” Norfleet said.

Good luck with that, considering that at least three state agencies will be involved in designing the program. No wonder many business owners in the audience were alarmed.

The Minnesota Department of Labor and Industry would be overseeing the job protection provisions of the law, and the Department of Commerce would help with a private plan option for employers. The Paid Leave division would also be partnering with the Division of Unemployment Insurance for a system for employer wage reports and premium payments.

A large part of Monday’s session was time for employers to ask questions about the Paid Leave program. Area businesspeople had questions about how paid leave would work with other types of seasonal employees besides hospitality workers. Agriculture and greenhouse businesses both hire seasonal employees, they said.

Even the limited subsidies to help smaller businesses offset the program’s costs came under fire.

Audience members also expressed concerns on how the cost of paid leave premiums would affect wages and business costs. One audience member questioned the state assistance funding planned to help small employers when employees go on leave. Employers would be eligible for up to $3,000 for each absence — but that wouldn’t go far, especially if an employee took a full 12 weeks of paid leave, she said.

“It’s fair feedback,” Norfleet said. “The Legislature gave us about $5 million for these, and grants are limited to $3,000 by statute.”

In other words, tough luck. It may be 15 months until the paid leave program takes effect, but businesses will need to submit their first wage statements to the state next month by Halloween.