Perspectives

Minnesota’s Paid Family and Medical Leave (PFML) program is rolling out in 2026, but employers should start preparing now. One of the first steps in ensuring compliance is understanding who is eligible for leave under the new law. Here’s a breakdown of the questions we are getting at the Compliance Center related to employee eligibility that every MN employer needs to know.

Who is eligible to receive MN Paid Leave?

Nearly every employee working in Minnesota-including full-time, part-time, temporary, and most season workers, is eligible for PFML benefits. This includes company owners and corporate officers, who are required to participate in the program.

However, there are a few exceptions PFML does not apply to:

• Independent contractors
• Self-employed individuals (unless they opt in)
• Tribal Nations (unless they opt in)
• Federal government employees
• Railroad employees
• Certain seasonal hospitality workers (see below)

Is there a minimum hours or length-of-employment requirement?

No. Unlike some leave laws, MN Paid Leave does not require employees to work a specific number of hours or months before becoming eligible. Instead, employees must meet both of the following conditions:

• Earn at least 5.3% of the statewide average annual wage, which amounts to $3,700 in 2024, and

One of the following:

• Worked at least 50% of their time in Minnesota during a calendar year, or
• If no state accounts for at least 50% of their work time:
• Performed some work in Minnesota
• Lived in Minnesota for at least 50% of their time during a calendar year

When does job protection under PFML begin?

Job protection begins after 90 calendar days of employment. Once eligible, employees who take leave are entitled to return to their previous role-or an equivalent position-with the same pay, benefits, and working conditions.

Even if an employee’s position is filled or restructured during their leave, they must still be reinstated unless the employer can prove that the employee would not have remained employed regardless of the leave (such as during a legitimate layoff or business closure).

Are corporate officers or business owners eligible?

Yes. Even though they many not consider themselves “employees” in the traditional sense, company owners and officers must participate and are eligible for PFML benefits if they meet the earnings and residency/work location criteria.

Are first responders and government officials eligible?

Generally, yes. Municipalities and local government entities are required to participate in the PFML program. This means first responders, as well as elected or appointed city and state officials, are likely eligible-provided they meet the wage and work/residency requirements.

What about seasonal employees?

Most seasonal employees are covered, but there’s a specific exception for certian workers in the hospitality industry. These employees are excluded if they:

• Work 150 days or less within any 52-week period, and
• Work for an employer whose average receipts during any 6-month period fall below a certain threshold (typically defined for hospitality sector employers.)

Employers with seasonal workers in the hospitality industry should work with legal counsel to determines whether their business qualifies for this exclusion.

Bottom Line for Employers

Minnesota’s Paid Family and Medical Leave program is broad in scope and applies to most employees in the state. Employers should assess their workforce now, understand which team members are covered, and begin planning for compliance in 2026.

Have questions about your responsibilities under PFML? The employment attorneys at Wagner, Falconer & Judd are here to help you prepare your business for a smooth transition.

The pace of employment law updates across the U.S. is accelerating-and for employers, the risk of falling out of compliance has never been higher. As of mid-2025, sweeping federal changes and hundreds of new or amended state laws are reshaping workplace obligations. From salary thresholds to paid leave expansions and non-compete bans, there’s a lot to track.

Here’s a look at several major updates employers should act on now:

The “One Big Beautiful Bill”: Tax Breaks for Hourly Workers

Starting retroactively in 2025, qualifying tipped and hourly workers can deduct certain earnings:

• Tip deductions: Up to $25,000 annually in “qualified tips” (voluntary, non-negotiable, and paid by the customer).
• Overtime deductions: Up to $12,500 in federally mandated overtime wages beyond a standard 40-hour week.

Why it matters: Employers could see tax refunds for 2025. Employers should communicate these changes and prepare for increased payroll-related questions.

The DOL’s New Salary Thresholds for Exempt Employees

If you classify employees as exempt from overtime, pay attention:

• July 1, 2025: Minimum salary= $844/week or $43,888/year.
• January 1, 2026: Minimum salary jumps to $1,128/week or $58,656/year

Why it matters: Misclassification can lead to lawsuits. Now is the time to audit exempt employees and adjust compensation or reclassify roles if needed.

AI and Discrimination Laws

States like California and New Jersey have passed laws banning discriminatory use of AI tools in hiring and HR decisions.

• AI systems that analyze facial expressions or speech may violate anti-bias laws.
• Employers are liable even if they didn’t create the AI tool.

Action tip: If you use automated hiring or decision-making systems, review them immediately for bias.

Paid Leave Expansion Across the U.S.

States like Minnesota, Colorado, Maine, and Delaware are rolling out generous paid leave programs:

• Minnesota’s Paid Family and Medical Leave starts January 1, 2026, offering up to 20 weeks of combined leave.
• Colorado will provide an extra 12 weeks for NICU-related parental leave.
• Delaware’s leave benefits begin in 2026 with up to 80% wage replacement.

What to do: Budget for these changes and update your policies and payroll systems to stay compliant.

Non-Compete Agreements Under Attack

More states are banning or restricting non-competes, especially for healthcare workers:

Arkansas, Indiana, Maryland, Pennsylvania, Montana, Texas and others are banning non-competes for physicians and licensed medical professionals.

Colorado now prohibits certain non-competes for healthcare providers and even restricts what they can communicate to patients post-employment.

Recommendation: Review all non-compete templates and consult legal counsel before issuing new ones.

Stay tuned for Part 2

In Part 2, we’ll look deeper at state-specific sick leave mandates, wage transparency laws, new worker protections (like for whistleblowers and nursing parents), and how employers can stay ahead of these fast-paced developments.

On July 4th, 2025, President Donald Trump signed the One Big Beautiful Bill-a sweeping federal tax package that includes two headline-grabbing provisions: a new deduction for qualified tips and another for qualified overtime pay.

While these deductions are marketed as middle-class tax relief, they bring significant payroll and compliance changes for employers. Here’s what your business needs to know now-and how to prepare for what’s next.

Tip Deduction: Up to $25,000 for Eligible Employees

Employees in jobs that customarily and regularly receive tips-think hospitality or food service-can now deduct up to $25,000 in qualified tips from their taxable income.

To qualify:

• The tip must be voluntary, non-negotiable, and determined by the customer. 
• It must be received in 2025 or later while the provision is in effect (2025–2028).
• The deduction is reduced for high earners: $100 less for every $1,000 earned over $150,000 ($300,000 if filing jointly).

However, not all tip-based professions qualify. Employees in fields such as law, medicine, finance, performing arts, and consulting are excluded from this deduction. * (see the end of the post for a more comprehensive list of included fields.)

What this means for employers:

• You must report both the amount of cash tips received and the employee’s qualifying occupation on their W-2.
• FICA withholding and employer obligations for tips still apply.
• The deduction applies retroactively, so 2025 tips are already in scope.

Overtime Deduction: Up to $12,500 Per Employee

Non-exempt employees under the FLSA who work more than 40 hours per week can now deduct up to $12,500 in qualified overtime pay from their taxable income ($25,000 on a joint return). As with tips, the deduction phases out at higher income levels.

“Qualified overtime” must exceed the employee’s regular rate and be mandated under federal law. It cannot be counted as a qualified tip.

Employer impact:

• You must separately report total qualified overtime on W-2s and possibly Form 1099.
• Updated IRS withholding tables will take affect starting 2026.
• Like the tip deduction, this rule is retroactive for 2025 pay.

Key Takeaways for Employers

These new deductions may increase employee interest in reporting overtime and tips-but that accuracy comes with added responsibility for your business.

Here’s what you’ll need to watch:

• Payroll reporting updates: new W-2 data fields will require software and process updates.
• Recordkeeping requirements: Detailed tracking of qualifying wages, occupations, and hours worked is essential.
• Expiration timeline: These provisions are set to end after 2028 unless extended, so employers should prepare for both implementation and sunsetting.
• Behavioral shifts: More employees may seek tipped or overtime work, which could ease staffing gaps but also raise overtime costs.
• State taxes: These are federal deductions only-your state tax obligations may not change.

What Comes Next from the Treasury

The law directs U.S. Treasury (via the IRS) to:

• Publish a list of eligible tipped occupations within 90 days.
• Issue regulations to prevent misclassification of wages as tips.
• Provide new withholding guidance starting in 2026.
• Allow employers to use reasonable estimation methods to comply during the 2025 transition period.

How WFJ Can Help

Industries like hospitality, healthcare, retail, construction, and service are likely to feel the biggest impact from these changes. But any business with tipped or non-exempt employees should take note.

The WFJ Compliance Center is monitoring IRS rulemaking closely and can help your business:

• Interpret the new federal requirements
• Adjust internal systems and payroll process
• Maintain compliance and avoid reporting errors

If your team is affected by these new provisions, now is the time to act. Contact us today to get ahead of these changes and ensure your reporting compliance practices are ready for what’s next.

*Additional fields excluded from tip deductions

• health
• law
• engineering
• architecture
• accounting
• actuarial science
• performing arts
• consulting
• athletics
• financial services
• any trade or business where the principal asset of such trade or business is the reputation or skill of 1 or more of its employees
• investing
• investing management
• trading
• dealing in securities partnership interests
• commodities

For too many businesses, compliance becomes a priority only after something goes wrong. Maybe it’s an employee complaint, a Department of Labor audit, or a lawsuit that lands on your desk with no warning. These moments often trigger a reactive approach-scrambling to hire a lawyer, conduct internal investigations, or settle claims to avoid deeper trouble.

At WFJ, we help businesses shift from costly reaction to strategic prevention. And we believe the smartest way to do that is by outsourcing legal support.

Reactive Compliance: The Cost of Waiting Too Long

Reactive compliance means responding to legal issues only after they’ve surfaced-when the damage is already done.

Common Characteristics:

Focus: Putting out fires instead of preventing them.

Cost: Legal fees, fines, and reputational hits can add up quickly.

Risk: Waiting until a lawsuit, audit, or complaint arises increases your exposure to penalties and public scrutiny. 

Example: A business responds to a discrimination lawsuit by hiring legal counsel after the claim is filed-often leading to a costly settlement, public relations fallout, and internal morale issues.

Why it’s a problem:

• Delayed response often limits your options
• You have little control over how the issue unfolds
• Trust with employees and the public may take years to rebuild

Proactive Compliance: A Legal Safety Net Built to Prevent

Proactive compliance focuses on identifying potential risks and putting policies in place to avoid them altogether. 

Common Characteristics:

• Focus: Prevention through education, documentation, and clear processes
• Cost: Requires an upfront investment-but far less than litigation
• Risk: Significantly reduced, because you’re not waiting for problems to arise

Example: A company performs a pay equity annually with attorney review, fixing disparaties before a complaint is ever filed.

The benefits of proactive compliance include:

• Fewer suprises and emergency legal costs
• Stronger employee relationships and retention
• A reputation for transparency and responsibility
• Peace of mind for your leadership team

 Final Thought: Don’t Wait for Trouble to Knock

Businesses that prioritize prevention over reaction aren’t just protecting themselves legally-they’re building a stronger, more resilient workplace.

If your company is still operating reactively, now is the time to rethink your strategy. Partner with WFJ and let us simplify the complex-so you can focus on what you do best: running your business. 

Minnesota’s new Paid Family and Medical Leave program is set to significantly impact employers starting January 1, 2026. While most Minnesota employers will participate in the state-run paid leave program, there is an alternative: offering an equivalent private plan. For employers considering this option, it’s critical to understand the requirements, benefits, and compliance obligations.

What is Minnesota Paid Leave?

Minnesota Paid leave is a state-mandated insurance program providing eligible employees with partial wage replacement for qualifying medical and family reasons. The program is funded by premiums paid by both employers and employees and covers nearly all private and public employers in the state.

Can Employers Opt Out?

Generally, no. Minnesota employers are required to participate-unless they offer an approve priate plan that meets, or exceeds the benefits of the state-run program.

Key Benefits of a Private Plan Alternative

• No State Premium Payments: Employers with approved private plans do not have to submit premiums to the state but must continue submitting quarterly wage reports.
• Direct Benefit Payments: Under a private plan, the employer (or insurance carrier) determines eligibility and pays benefits directly to employees, potentially speeding up the process compared to the state.
• Flexibility: Employers can offer a fully or self-funded plan and may cover medical leave, family leave, or both.

Requirements for Equivalent Private Plans

Private plans must match or exceed the state’s coverage in all major areas, including:

• Benefit Duration: At least 12 weeks of medical leave and/or family leave, depending on the type of plan.
• Eligibility Standards: Cannot be more restrictive than the state program.
• Employee Costs: Premiums charged to employees cannot exceed what they would pay under the state plan.
• Job Protections: Must provide equal employment protections as those in the state program.
• Coverage Continuation: Coverage must continue for 26 weeks after employee separation or until they start a new job.
• Types of Leave: Private plans must cover the same qualifying reasons, including medical conditions, bonding with a child, care for a family member, military-related leave, and safety leave.

Additionally, the private plan must:

• Allow intermittent leave or reduced schedules.
• Not impose additional restrictions or conditions beyond those in the state plan.
• Continue benefits for former employees on approved leave.

Approval Process and Next Steps

The state plans to open private plan applications in July 2025. Employers can prepare by:

• Working with insurance providers to explore pre-approved plan options.
• Gathering required application materials, including policy numbers, coverage documents, and payment of applicable fees.
• For self-insured plans, securing a surety bond equal to the total annual premiums that would be due under the state program.

Employee Notice Requirements

Employers with approved private plans must provide written notice to employees within:

• 30 days of the employee’s start date, or
• 30 days before collecting premiums, whichever is later.

The notice must include:

• Confirmation that the private plan offers all rights and protections under the state law.
• Details of wage replacement and leave benefits.
• Eligibility and premium contribution processes.
• Appeal rights and claim procedures.

Recordkeeping Obligations

Employers must securely maintain records related to an employee’s private plan benefits and provide copies of relevant claim information within 10 business days of an employee’s request-at no cost to the employee.

Why Consider a Private Plan?

For some employers, a private plan could offer:

• Potential cost savings.
• Faster processing of leave requests and benefit payments.
• More control over the leave administration process.

However, private plans come with strict compliance obligations. Employers must carefully weigh the benefits against the adminstrative responsibilities.

Stay Compliant. Stay Prepared.

Minnesota’s Paid Leave program is evolving, and the private plan offers an alternative path that could benefit your workforce and your bottom line. If you’re considering this option, now is the time to start planning.

WFJ is here to help you navigate the complexities of Minnesota Paid Leave and ensure your private plan meets all legal requirements. Contact us with your questions or to get started.

The 2025 Minnesota legislative session brought a range of important updates to employment laws, focusing on rest and meal breaks, Earned Sick and Safe Time (ESST), and Minnesota Paid Leave. While these changes may not be sweeping, they significantly impact employer responsibilities and workplace policies. HR professionals and employers should take note and prepare to update their practices accordingly.

Rest and Meal Breaks: More Structure, More Liability

Starting January 1, 2026, Minnesota’s rest and meal break laws will have stricter requirements and new penalties.

Rest Breaks

Employers must now provide:

• At least 15-minute rest break for every four consecutive hours worked, or
• Enough time to access the nearest convenient restroom, whichever is longer.

What’s Changing?

Previously, employers were only required to give employees “adequate time” to use the restroom. The new rule sets a clear minimum of 15 minutes, offering more definitive protection for employees.

Meal Breaks

Employers must now allow a 30-minute meal break for employees who work six or more consecutive hours.

What’s Changing?

The old rule required employers to “permit” meal breaks after eight hours, without specifying the length. The new law lowers the threshold to six hours and requires employers to actively allow a 30-minute break.

New Penalties

If an employer violates these break requirements, the employee is entitled to:

• Back pay for the missed break time at their regular rate of pay, plus
• An additional, equal amount in liquidated damages

In other words, employers could face double the liability if they fail to comply.

🗓 Effective Date: January 1, 2026

Earned Sick and Safe Time (ESST) Updates

Several employer-friendly adjustments to ESST went into effect on July 1, 2025.

Notice for Unforeseeable Leave

Employees must now give advance notice as “reasonably required by the employer” for unforeseeable absenses, replacing the former standard of “as soon as practicable”.

Documentation Timeline

Employers can now request reasonable documentation after two consecutive scheduled workdays of ESST use. The previous rule allowed requests only after three consecutive days.

Shift Replacements

Employers remain prohibited from requiring employees to find a replacement worker, but the law now clarifies that employees can voluntarily trade shifts if they choose.

ESST Advancement

🗓Effective January 1, 2026:

Employers may advance ESST hours based on anticipated hours the employee will work for the remainder of the accrual year. If the advanced amount is less than what the employee would earned based on actual hours, employers must make up the difference.

MN Paid Leave: Premium Adjustments

The legislature made made a technical update to the maximum premium cap for Minnesota Paid Leave:

• 2026 premium rate: Remains at 0.88% of employee wages.
• Future cap: The annual premium cap may now be adjusted up to 1.2% (increased from the original 1.1%).

The Minnesota Department of Employment and Economic Development (DEED) can adjust future premiums based on the program’s financial performance and actuarial principles.

Key Takeaways for Employers

• Review and update rest and meal break policies by January 1, 2026.
• Update ESST policies now to reflect the July 1, 2025 changes.
• Stay informed on future premium adjustments under MN Paid Leave.

Although these changes may seem incremental, noncompliance-especially regarding rest and meal breaks-could lead to significant penalties.

Stay Ahead of Compliance

WFJ is here to help you review your policies, update your handbooks and ensure you’re fully prepared for these changes. Reach out to our team for support in navigating Minnesota’s evolving employment laws.

Creating a fair, respectful, and legally compliant workplace starts with understanding anti-discrimination and Equal Employment Opportunity (EEO) laws. These laws are designed to protect employees and job applicants from unfair treatment based on certain protected characteristics-and they’re more than just best practices; they’re legal requirements.

For HR professionals and employers, staying informed and compliant with these laws is essential to fostering a workplace culture built on trust, inclusion, and legal integrity. Here’s an overview of the key federal anti-discrimination laws and how they impact your hiring and employment practices.

What is Employment Discrimination

Employment discrimination occurs when an employer takes an adverse action-such as refusing to hire, denying a promotion, or terminating employment-based on individual’s membership in a protected class. This kind of conduct is often referred to as disparate treatment and is prohibited under a patchwork of federal, state, and local laws.

Key Federal Laws the Prohibit Employment Discrimination

Understanding these major federal statutes is a critical first step in building a compliant and inclusive workplace:

Title VII of the Civil Rights Act of 1964

Prohibits discrimination based on:

• Race
• Color
• Religion
• Sex (including sexual orientation, gender identity, and pregnancy)
• National origin

Americans with Disabilities Act (ADA)

Protects individuals with disabilities from discrimination and requires reasonable accommodations in most employment situations. This includes the ADA Amendments Act (ADAAA), which broadened the definition of disability.

Rehabilitation Act

Mirrors the protections of the ADA but applies to:

• Federal employers
• Federal contractors and subcontractors (with contracts over $10,000)
• Employers receiving federal funding

Age Discrimination in Employment Act (ADEA)

Prohibits discrimination against individuals aged 40 and over.

Genetic Information Nondiscrimination Act (GINA)

Protects employees from discrimination based on genetic information, including family medical history.

Uniformed Services Employment and Reemployment Rights Act (USERRA)

Prohibits discrimination based on past, present, or future military service.

Section 1981 of the Civil Rights Act of 1866

Ensures equal rights to make and enforce contracts, including employment contracts, regardless of race, color, or ethnicity.

Equal Pay Act (EPA)

Requires that men and women in the workplace be given equal pay for equal work.

Family and Medical Leave Act (FMLA)

Prohibits retaliation against employees who take unpaid job-protected leave for qualifying family or medical reasons.

Immigration Reform and Control Act (IRCA)

Prohibits employment discrimination based on citizenship status or national origin and governs the employment eligibility verification process.

Why Compliance Matters

Failing to comply with EEO and anti-discrimination laws can result in:

• Costly lawsuits and settlements
• Damage to your company’s reputation
• Decreased employee morale and engagement
• Increased turnover and recruitment challenges

What HR Departments and Employers Should Do

• Review and update your policies to reflect current federal and state anti-discrimination laws.
• Train hiring managers and supervisors on appropriate interviewing, accommodation, and disciplinary practices.
• Establish clear procedures for handling discrimination complaints and conducting internal investigations.
• Audit pay practices and job classifications to ensure compliance with equal pay laws.
• Document decisions related to hiring, promotion, and termination to demonstrate non-discriminatory practices.

WFJ Can Help

At WFJ, we understand how complex and ever-evolving employment laws can be. Our team is here to support your HR department with tailored legal guidance, policy reviews, training, and proactive risk management strategies. By partnering with us, you gain peace of knowing your practices align with the law-and your employees’ rights are protected.

Ready to build a compliant and inclusive workplace? Let’s talk.