Minnesota's paid family medical leave surpasses projections in first 6 months

MINNEAPOLIS — Minnesota’s new paid-leave program surprised naysayers by coming in $70 million under budget as of the sixth-month point, even with soaring demand.

About 124,000 Minnesotans have applied for paid leave during the first six months of this year. The state has approved 75,000 of those applications so far. But state officials originally expected to approve 130,000 applications for the full year, so demand has exceeded projections.

“We are seeing very robust interest in this program,” said Matt Varilek, commissioner of the Minnesota Department of Employment and Economic Development (DEED).

The unapproved claims included those that were denied, withdrawn or in the process of being reviewed, state officials said Tuesday while presenting the six-month results.

Most denials were for applications missing necessary identification or medical verification information, DEED Deputy Commissioner Evan Rowe said.

The deluge of initial requests is starting to lighten, Rowe said, adding that early glitches in the system are getting resolved and improvements have made the system easier for both employers and employees.

Minnesota’s paid leave law offers 12 to 20 weeks of paychecks and job protections to workers needing time to bond with a child, care for their own health or take care of a family member. It offers employees partial paychecks during their approved leave, with lower-wage workers receiving a higher percentage of what they’re normally paid.

About 38,000 workers submitted applications for birth-related time off.

Rowe and Varilek acknowledged some workers have complained about missteps that led to approval delays and pay gaps for their medical leaves. Several small businesses complained that it was expensive to temporarily replace workers on leave.

Separately, health care employers across the state say they are struggling to fill staffing shortages as more workers apply to take intermittent leave that jumbles schedules.

While many health care facilities applaud the new law’s intentions and the benefit it offers employees, “hospitals are (still) seeing real operational strain, particularly in small departments and highly specialized roles that require extensive training and are not easily interchangeable, making them especially difficult to backfill,” the Minnesota Hospital Association said in a statement.

Varilek and Rowe said the majority of the program has run well, with staffers handling more than 350,000 calls and emails from Minnesotans. The state has also implemented a contact portal for applicants who need leave soon and videos to help people understand how the new benefit works.

Nationally, just 27% of American workers have access to paid family leave, with lower-wage and rural workers impacted the most, according to the U.S. Bureau of Labor Statistics.

Prior to the Legislature mandating the statewide program, many Minnesotans did not have access to paid family or medical leave.

“Strong participation and performance metrics show Minnesotans are using paid leave when they need it most,” Varilek said, “This is an important milestone, and we’re encouraged by the impact we’re already seeing.”

So far, the program has collected $344 million in premiums from employers and employees to date. Officials said program costs were reduced with the help of efficiencies, software and partnerships. Several changes made it faster and easier for doctors to send medical verifications directly to the state. Other systems helped the state quickly share or verify applicant’s information with employers.

Data collected shows the program is broadly popular across the workforce. It also showed 54% of applicants make less than $78,000 a year and 64% of applicants are women. About 58% are younger than 40. About 44% live outside the Twin Cities metro area.

Nearly $600 million has been paid directly to Minnesotans on approved leave, with an average weekly payment of $1,083.

The payments are made from a combination of the $668 million benefit account the legislature allotted when it passed the paid leave law in 2023, as well as the more than $300 million in premiums paid by employers and workers during the first quarter of the program.

Small-business employers report varied experiences with the program. Some are grateful for the chance to offer workers a benefit they previously couldn’t afford, while others resent the added cost and last-minute gaps that create administrative headaches.

Logan McKee, who owns eight Games By James retail stores in Minnesota and Wisconsin, said he had mixed results with the program. The state denied leave requests filed by two ill workers and his wife. He only knows of one friend and one employee who were successful getting approvals.

His wife, who is a nurse, was denied leave despite having surgery that required her to be out of work for six weeks. “She never got a paycheck,” despite a series of calls and online requests to the state.

She was told the state was waiting on a note from her doctor that never came. She eventually gave up, McKee said. “I like the idea of the program and see that there is value there. It’s real when somebody can’t work and can’t collect a check. I just don’t think the state of Minnesota is very good at running a problem like this.”

Other employers sung the program’s praises.

Greg Conley, the human resources manager at the popular Northern Waters Smokehaus in Duluth, said his company couldn’t afford to provide paid leave to its workers prior to the new law. Since then he’s used the new state benefit once for an employee who was hurt outside of work and needed several weeks to heal.

“The new law was really impactful and helpful for us and saved us a bunch of money,” because the employee’s benefit costs were covered by the state and not the business, he said.

The only cost to the business was the payroll tax, which it splits with employees, so the company “didn’t pay out a bunch of money” at the time of the employee’s injury and need to take time off, Conley said.

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