Minnesota Republicans propose paid family leave through private insurance

Minnesotans who've had a baby or need to care for an ailing parent or sick child would be able to take paid time off through a private insurance plan, under a proposal Republican legislators unveiled Monday.

"We have heard this need from families and from businesses," said Sen. Julia Coleman, R-Waconia, chief sponsor of Senate Republicans' paid family and medical leave bill. "Businesses want to offer their employees more, and families need more help."

The bill is the GOP's answer to a DFL proposal to provide up to 12 weeks of paid leave through a state-managed fund that employers and employees would pay into. It would allow employers to customize an insurance plan for paid leave, and would provide tax credits to small businesses — the majority of businesses in Minnesota, according to the Department of Employment and Economic Development — to help them afford to provide coverage.

Senate Democrats pushed back, saying the proposal doesn't go far enough to address the need — exacerbated by the COVID-19 pandemic — for widespread paid family and medical leave.

"This is not a real proposal," said Senate Minority Leader Melisa López-Franzen, DFL-Edina. "We've tried private insurance, and you've seen how that's worked with our market and our rates."

Coleman and lead House sponsor Rep. Jordan Rasmusson, R-Fergus Falls, said working within the private insurance market will be more efficient and less restrictive than a government-run program. They noted that the Virginia legislature recently approved a similar measure with bipartisan support.

"When I talk with Minnesotans, they want more access to paid leave but they don't want to see a new, big-government program that increases payroll taxes and creates a new government bureaucracy," Rasmusson said. "I think it's something that we can make progress on this session, and I think deserves bipartisan support."

The bill cleared its first hurdle in the Senate commerce committee Monday afternoon. Representatives from organizations representing businesses, including the Minnesota Chamber of Commerce and the National Federation of Independent Businesses (NFIB), spoke in support during the hearing.

"Given that many small businesses currently offer paid leave, it's important for legislative efforts not to disrupt existing employment arrangements that work for employers and employees, or impose an unfair burden on small businesses that makes it harder for them to compete," said John Reynolds, NFIB state director in Minnesota.

A few progressive groups raised concerns during the hearing, including the cost of private insurance and the fact that the bill doesn't specifically include personal medical leave or prevent insurance companies from refusing coverage.

Business owner Sarah Piepenburg, who owns Vinaigrette in Minneapolis, recalled being late on her commercial rent and house payment after covering the salary of an employee recovering from an injury. Private insurance options were "unaffordable and substandard," she said.

The proposed tax credit — which would offer up to $3,000 per enrolled employee to businesses with fewer than 50 employees — wouldn't be enough, Piepenburg said, because it would mean waiting until tax season to get reimbursed.

"This shouldn't be a struggle for any of us," she said. "A private paid leave program would create further barriers to paid leave through cost and accessibility."

Sen. Susan Kent, DFL-Woodbury — the chief sponsor of Senate Democrats' family leave bill — called the GOP measure "a cumbersome workaround to try to pretend like we're addressing a very real issue."

"We have serious challenges in our economy, for workers, for working families all across the state," Kent said. "And the Republicans keep coming forward with these little symbolic gestures that do not solve the problem."

But Gov. Tim Walz and Lt. Gov. Peggy Flanagan — who have also prioritized paid family and medical leave with a plan that would allow workers to accrue up to 48 hours a year — said Republicans' willingness to talk about the issue is a reason for optimism.

"We're ready to have this conversation — we've been ready to have this conversation for the last three years," Flanagan said. "So I'm hopeful."