House passes bill on paid family and medical benefits

Employees needing to take time off work to deal with a family or medical issue, but can’t afford an unpaid leave, may no longer have to face this difficult choice.

Passed, as amended, 70-59 Thursday night by the House, HF5 would establish a state-run insurance program to partially reimburse lost wages for workers taking medical or family leave.

“Minnesotans deserve economic security,” said Rep. Laurie Halverson (DFL-Eagan), the bill’s sponsor.

HF5 was one of the first bills introduced at the start of the 2019 session as part of the “Minnesota Values Agenda” DFL leaders created after conversations around the state prior to the session.

The bill now heads to the Senate where Senate Minority Leader Susan Kent (DFL-Woodbury) is the sponsor.

Direct tax on employers, indirect tax on employees

The bill would establish an insurance program modeled on Minnesota’s unemployment insurance program and be funded through taxes paid by employers and employees. For employers participating in both family and medical benefit programs, the annual premium would be 0.6 percent of wages paid to employees. Employers would have an “employee charge back” option allowing them to deduct from employee wages up to 50% of their annual premiums.

Premiums collected would be paid to an account administered by a new division within the Department of Employment and Economic Development, which would then pay out benefits to employees taking leave for qualifying family and medical situations.

Eligibility for benefits

Employees would be eligible to take paid leave from work for family and medical situations such as:

• dealing with a serious health condition;
• taking a safety leave to address domestic abuse, sexual assault, or stalking;
• preparing for a military member’s active duty or call up to active duty;
• caring for a family member with health issues;
• bonding with a new biological, adopted, or foster child;
• being pregnant; or
• recovering from pregnancy.

Opt out for private benefit plans

Employers would be permitted to administer private plans that provide equal or better benefits than those required by the bill. Employers using self-administered private plans would be required to have those plans approved by DEED, and pay a one-time “oversight and administration fee” into the department’s account:

• $250 for employers with fewer than 50 employees;
• $500 for employers with 50 to 499 employees; and
• $1,000 for employers with 500 or more employees.

Employers opting out of the state program could set up private benefit plans for medical leave and family leave separately.

Republican objections focus on burden for businesses

Several Republican lawmakers said the proposed premiums would cause unnecessary hardship and make them less competitive with out-of-state businesses.

“This is not a job-creating job, this is a job-killing bill,” said Rep. Barb Haley (R-Red Wing), who said the bill would put an undue burden on employers who are already trying to do the right thing to protect their employees.

“Don’t shut down my Main Street businesses, don’t close the businesses that support rural Minnesota,” she said.

Rep. Jamie Long (DFL-Mpls) disagreed, saying that HF5 would help small, family-owned businesses be competitive with large corporations who can afford to offer these employee leave plans.

Long described how a small business owner in his district fell behind in her mortgage when she decided to help an employee get through a medical setback.

“Big businesses don’t have to decide whether or not they are going to eat into their personal budgets … to care for their employees,” he said.

The bill faces an uphill battle in the Republican-controlled Senate.

In a statement, Senate Majority Leader Paul Gazelka (R-Nisswa) said the proposed paid family leave plan “is simply a tax on every business, every employee, and every employer in the state … and is just a one-size-fits-all option with a huge price tag.”