MN Paid Leave: 2026 Emerging Payroll Considerations & Challenges

Leah Davis, a CPA with Abdo, presented on emerging payroll considerations and challenges related to Minnesota Paid Leave, providing insights based on data through June 30th and trends across multiple states. She discussed key statistics showing over 115,000 approved unique applications with a 60% approval rate, primarily for medical and bonding leave, with 87% of leaves being continuous rather than intermittent. The presentation covered leave management implications, including the complexity of managing concurrent protected leaves under FMLA and Minnesota Paid Leave, particularly for first-year employees who may not be eligible for FMLA yet. Leah addressed significant payroll challenges, especially with supplemental and top-off pay calculations, particularly for intermittent leave situations, and emphasized the importance of proper benefit continuation and tax reporting. She detailed the taxation implications of premium deductions and benefit payments, noting that premium deductions are post-tax for employees while benefit payments for non-medical leave are reported on 1099 forms, with medical leave benefits being taxable to the extent of employer-paid premiums. The presentation concluded with recommendations for employers to consider moving pay period end dates back at least five business days to better handle intermittent leave calculations and to ensure proper handling of voluntary pickup contributions that are fully taxable.

 

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