Employers in Minnesota should by now be familiar with the Minnesota Paid Family and Medical Leave law which goes into effect January 1, 2026 and provides job protected leave to most employees. The plan is a state-run insurance plan funded through employee and employer payroll tax contributions. Employers may opt-out of the State plan if they provide a private equivalent plan (“Equivalent Plan”) that meets certain requirements as set forth in  Minn Stat 268B.10.  An Equivalent Plan must be approved by the commissioner of DEED in consultation with the commissioner of commerce. DEED guidance on Equivalent Plans can be found here.

There are two types of equivalent plans:

• Insurance Carrier Plan sold by a private insurance carrier and meets the MN Paid Leave requirements. DEED has published a list of approved insurance carrier plans that can be accessed here.
• Self-Insured Plans where the employer manages paid leave requests and payments themselves. These plans must be backed by a surety bond equal to the employer’s total annual premiums required for the business and workforce and issued by a surety company authorized to do business in Minnesota.

An Equivalent Plan must meet certain criteria, including:

• Meets or exceeds the coverage offered under the state administered plan
• Costs: Employees costs are same or less than state plan.
• Covers all employees for duration of their employment.
• Applies to all the same protections as Minnesota paid leave (family, medical, bonding, military and safety).
• Timing of pay: Can align with employer payroll cycle or terms of Equivalent Plan.
• Duration: Equivalent Plan must remain in effect for at least one year and continuously thereafter. In order to withdraw from an Equivalent Plan, employers must meet notice requirements and other obligations as defined by statute or rule.
• Plan Changes: An employee will remain covered under the Equivalent Plan in effect at the time the benefits were approved.
• Reports/Records: Employers must maintain all records for six years from creation.
• Plan Year: Unlike the state plan, an equivalent plan can define a benefit year as a fixed year, calendar year, 12 months from the first day of leave or a rolling 12-month period.
• Premiums: Employer does not pay premiums to the state.
• Meets other statutory requirements and guidelines or rules established by the State.

An Equivalent Plan substitution can be submitted at any time but can only go into effect at the start of a quarter. Per DEED, in order for an equivalent plan to take effect as of January 1, 2026, requests must be received by November 15, 2025.  DEED guidance on the application process can be found here.

The Minnesota Paid Leave Law can be complex to administer. If you or your organization have questions on Minnesota Paid Leave and Equivalents Plans, contact Wiley Reber Law for legal advice that works.