Members of the Minnesota House on Tuesday were set to pass a bill to create a new state program that would offer 12 weeks of family leave and 12 weeks of medical leave. All businesses would be required to participate or offer equivalent benefits, though existing union collective bargaining agreements would be exempt.

Minnesota is taking another step toward creating a tax-funded, state-administered paid family and medical leave program backed by Democratic-Farmer-Labor lawmakers.

Members of the Minnesota House on Tuesday were set to pass a bill to create a new state program that would offer 12 weeks of family leave and 12 weeks of medical leave. All businesses would be required to participate or offer equivalent benefits, though existing union collective bargaining agreements would be exempt.

Low-wage workers often do not have access to the same benefits as higher-paid members of the workforce. Advocates say one-third of Minnesota workers — about 900,000 people — don’t have any paid time off. House bill sponsor Rep. Ruth Richardson, DFL-Mendota Heights, said access to leave shouldn’t depend on where a person works. She pointed out the U.S. is the only wealthy country that does not have a national paid leave mandate.

“At the heart of this bill is a recognition of our universal humanity,” she said as she introduced the bill on the House floor Tuesday afternoon. “A recognition that at some point we or our loved ones are going to need time to bond, to heal, recover or navigate providing care for a loved one with a serious health condition.”

DFL majority leaders in the Legislature and Gov. Tim Walz say creating a state paid leave program is a priority. If Walz signs the bill into law, Minnesota will join 11 states and the District of Columbia in requiring employers to offer the benefit.

In the House bill, Minnesota’s program would be seeded by $668 million from the record $17.5 billion budget surplus. Ongoing funding would come from a new 0.7% payroll tax split between employers and employees. It’s initially expected to create an additional $1.5 billion a year in taxes. Past estimates found workers would pay about $3 extra in taxes each week.

Business concerns

Critics say that with a record surplus, the state should focus on tax relief rather than creating new tax-funded mandates. Groups like the National Federation of Independent Business and the Minnesota Chamber of Commerce worry the costs could end up being much higher than initially estimated.

New taxes are just one potential problem opponents raise. There’d also be growth in state government and added regulations. To administer the program, Minnesota would create a new agency and hire hundreds of employees.

The startup cost would be about $1.7 billion — much higher than the $668 million appropriated in the House bill, according to a fiscal analysis from nonpartisan House staff. A Senate companion bill appropriates $1.7 billion.

Republicans and the Minnesota Chamber of Commerce also worry about a “one-size-fits-all” approach to paid leave for businesses ranging from mom-and-pops to Fortune 500 companies. Businesses that do not offer paid leave through the Minnesota program can opt out if they offer the same or better benefits. There is also a reduced premium for businesses with 30 or fewer employees.

GOP lawmakers acknowledge that many Minnesotans want paid family and medical leave, but they oppose a mandate or program run by the state. In response, they’ve floated an alternative that would create a private option for paid leave.

That proposal would allow insurers to sell leave plans to businesses, which the state doesn’t allow. Proponents argue the arrangement would allow businesses to provide paid leave while avoiding higher taxes and administrative costs.

GOP lawmakers promoted the proposal at a Tuesday news conference ahead of the House debate.

“The government needs to give choices and options,” said Rep. Dave Baker, R-Willmar. “If these programs have to be altered or changed that comes with premiums, it comes with discussions, but it doesn’t come with a payroll tax that has no cap on it.”

Republicans are in the minority in both the Senate and the House, and DFLers have not expressed interest in adopting the plan in the past.

Supporters of the state-run option say the private program backed by Republicans and the Chamber of Commerce would not provide a wide enough social safety net and would continue to create unequal outcomes for workers, Richardson said.

Senate bill

A companion paid family and medical leave bill sponsored by Sen. Alice Mann, DFL-Edina, awaits a vote of the full Senate. The House moves first on bills that contain taxes.

Mann’s bill differs from the House bill in several ways, including a 20-week cap on total paid time off in a year. The House version will have a cap of 18, Richardson said. In previous versions of the bill, an employee would be able to take up to 24 full weeks off with pay.

Those differences and the appropriation discrepancy — $668 million in the House and $1.7 billion in the Senate version — would have to get ironed out in a conference committee.

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