In Minnesota, nonprofits exempt from unemployment coverage may not have unemployment system legal updates front of mind. However, of critical urgency for Minnesota nonprofits, all employers must properly register with the Minnesota Unemployment Insurance Program for purposes of government-provided paid leave benefits. Such registration carries additional wage reporting obligations, starting October 31, 2024.
As of today, thirteen states including California, Colorado, Connecticut, Delaware, Maine, Massachusetts, Maryland, Minnesota, New Jersey, New York, Oregon, Rhode Island, and Washington, as well as the District of Columbia, have passed legislation to create paid family and medical leave programs, as a social insurance benefit for employees. These laws impose specific requirements that employers must be aware of and comply with. Failure to do so may result in significant fines and fees.
In 2023, the Minnesota Legislature passed a Paid Leave law that provides paid family and paid medical leave for employees starting on January 1, 2026. The new law applies to nonprofit organizations including churches and other ministries. While employee benefits eligibility does not commence until 2026, employers’ quarterly wage detail reports are due on October 31, 2024. These reports must detail the wages paid to employees from July 1 to September 30, 2024.
Notably, these government-provided paid leave benefits will be administered through Minnesota’s Unemployment Insurance Program, with premiums payable from employer and employee shares starting in 2026. For organizations currently covered by Minnesota Unemployment Insurance, such as secular employers and non-church employers, no additional action needs to be taken at this time since they are required to participate in Minnesota’s Unemployment Insurance Program and should have an existing government account.
However, church-controlled organizations, and any other non-registered employers, if not required to participate in Minnesota Unemployment Insurance, likely do not have a current account with Minnesota Unemployment. Consequently, such employers must immediately set up a “paid leave only” account, via the Unemployment Insurance Minnesota website.
It is very important for employers to pay particular attention and take due care when setting up this "paid leave only" account, and not inadvertently opt-in to Minnesota Unemployment Insurance. Otherwise, exempt nonprofit employers may voluntarily sign up or “opt-in” to Minnesota Unemployment Insurance. Such elective inclusion should only be done following serious consideration by the organization’s leadership. Additional guidance about unemployment taxes for nonprofits is available through our law firm’s related blog article.
For employers that have some employees who are covered by Unemployment Insurance and others who would be covered by Paid Leave Only, separate wage detail reporting will be required through both a joint UI / Paid Leave account as well as a separate Paid Leave Only account for the respective employees.
If an employer offers private paid leave, they may seek qualification for an exemption from the Paid Leave Law beginning in 2025. Commercially offered private plan options are still being evaluated by the Minnesota Department of Commerce, but they have not yet been approved.
Further resources can be found directly on the Minnesota Paid Leave website.
