As Minnesota continues preparing to launch its Paid Family and Medical Leave (PFML) program in 2026, employers have many questions about how the new law will affect their business operations. This article is part of Smith Schafer’s PFML insight series, designed to help Minnesota employers navigate every stage of the rollout from understanding the law’s foundation to preparing payroll systems and applying for exemptions. If you’re new to the topic, start by reviewing our earlier articles: Understanding Minnesota’s New Paid Leave Law, Employer Account Setup and Key Deadlines, PFML Tax Implications, Employer Exemption Process, and Reduced Rates for Small Employers.
At Smith Schafer, we help Minnesota businesses plan ahead with clarity and confidence. While this law is specific to Minnesota, it may still affect employers who have remote workers or branches in the state a complex but increasingly common scenario in today’s hybrid and remote workforce. Here’s what you need to know:
1. Who is Affected?
Minnesota PFML will apply to most employees working in Minnesota, regardless of whether their employer is based in-state or out-of-state. If an employer has employees who work in Minnesota for even a portion of their workweek, they’ll be eligible for PFML benefits once the program is in place.
2. Payroll Contributions
The PFML program is funded by employee and employer payroll contributions. If your employees in Minnesota are eligible, you will need to deduct these contributions (starting in 2026) and remit them to the state. The contribution rate will be split between the employer and employee, so even if your business is based outside Minnesota, you’ll need to make sure these deductions are correctly made for eligible workers.
3. Managing Benefits Across State Lines
When employees take leave under the PFML program, the benefits will be paid by the state of Minnesota, not the employer. However, coordinating the leave with other company leave policies (like FMLA or company-specific paid time off) can get complicated when employees live or work in different states. It’s crucial to establish clear policies to avoid confusion around leave usage.
4. Remote Workers
If you have remote employees living outside Minnesota but working within the state occasionally, they may still be eligible for PFML. For instance, if an employee works remotely in another state but occasionally travels to Minnesota for meetings or other work activities, the time they spend working in Minnesota could make them eligible.
5. Compliance Steps for Employers
- Review Payroll Systems: Ensure your system can handle multi-state payroll taxes and deductions.
- Update Employee Handbooks: Clarify how PFML integrates with other leave policies, especially for employees working across state lines.
- Stay Informed: As implementation approaches, keep an eye on updates to Minnesota’s PFML regulations and how they may affect your multi-state workforce.
By planning ahead, you can ensure compliance and reduce disruptions when the Minnesota PFML program takes effect.
For more detailed guidance, consult with legal or HR professionals who specialize in multi-state employment laws.
Partner with Trusted Advisors
Multi-state compliance can be complex, but preparation today will help your business adapt efficiently when PFML takes effect. Contact Smith Schafer’s team of Minnesota-based CPAs and advisors to discuss how we can help your organization prepare for PFML implementation and work collaboratively with your legal and HR teams.
