Minnesota business leaders push to roll back paid family leave this session

After DFL-majority Legislatures the past two years produced a slew of new regulations, Minnesota business leaders see this session as a chance to relax some of those controls.

A top concern: rolling back paid family and medical leave.

Members of the business community argue the law, which allows workers to take paid time off after having a child or to care for a sick family member, will put an undue cost burden on employers and could stymie productivity. With a power-sharing agreement in the House and a razor-thin DFL majority in the Senate, business leaders are optimistic the Legislature could scale back the law before its scheduled Jan. 1, 2026, implementation.

“I’d like to get us back to a place where we’re going to have a right balance in policy so that we don’t put headwinds in front of the state’s economy,” said Minnesota Chamber of Commerce President and CEO Doug Loon. “Right now, our data shows our economy’s not growing at the pace it should be, and we’re falling behind.”

While proponents argue paid leave will help employers attract and retain workers at a time when the state is facing a labor shortage, “time will tell whether or not that actually plays out,” Loon said.

More than a dozen states have passed paid family leave laws. Minnesota’s program will also allow workers to take paid time off after adopting a child as well as in other situations, including a family member’s military deployment or cases of domestic abuse, sexual assault or stalking.

A payroll tax of up to 1.2%, which employers can split with their employees, will fund the program.

Employers can opt out of the state program and choose to offer the benefit through a private plan. Scott Nawrocki, regional director at MetLife, said paid leave is “dominating 80% of every conversation” his company is having as it rushes to educate business owners about the law in the lead-up to implementation.

“We are at the mercy of the state,” Nawrocki said. “We continue to hear that Jan. 1, 2026, is absolutely when it will happen.”

Efforts are underway at the Capitol to change that. Though there were concessions for businesses in the bill Gov. Tim Walz signed into law in 2023 — including a later implementation date and 20 weeks of total leave instead of 24 — Republican lawmakers have introduced bills this session to delay the law’s implementation for a year or repeal it altogether.

Rep. Dave Baker, R-Willmar, sponsors the bill that would delay the program’s start.

“We have not had enough time to really look at both sides and how it affects everybody,” Baker said at a Feb. 13 meeting of the workforce committee he chairs. “This pause will just allow us to hear from more this session.”

Mendota Heights DFL Sen. Matt Klein, who chairs the commerce committee, said he would not support a delay. There’s no appetite among Democrats for repealing paid leave, he said.

“I truly believe that paid family medical leave is one of the strongest pro-business accomplishments that we have delivered in the last generation,” Klein said. “We know that Fortune 500 companies already offer paid leave to their employees because it’s the best employee satisfaction and retention tool out there. What we’re trying to do is make sure that same product is available to all Minnesotans regardless of where they work.”

Klein said he’s sensitive to concerns from small businesses, cities and school districts about how paid leave will impact their operations and is open to small adjustments. He declined to offer specifics but noted potential changes to the state’s earned sick time law this session, including exemptions for very small employers and seasonal or agricultural workers.

The cost of paid leave is a concern for Traci Tapani, co-president of Wyoming Machine in Stacy, Minn., and a U.S. Chamber board member. That’s especially true given recent contraction in the manufacturing sector, ongoing inflation pressures and the looming burden of steel and aluminum tariffs.

“I believe that people should be able to have a leave of absence from work, so that’s not the issue for me,” said Tapani, whose family-owned business employs about 45 people. “I’m concerned about the cost to employers, and I’m concerned about the cost that is going to be passed on to employees, partially because we have been in an inflationary time, and employees are already feeling pinched.”

In addition to pushing against new taxes and workplace regulations, the Minnesota Chamber’s priorities this session include expanding the research and development tax credit, accelerating the environmental permitting process, extending reinsurance and incentivizing recent graduates to stay in Minnesota.

“There are these pathways, as I see them, for meaningful progress this year,” Loon said, “and I’m optimistic that they can get something done.”