General Summary

Senate File No. 2558 (“the bill”) creates a mandatory 12-week unpaid leave to care for sick relatives for employees working for employers of 21 or more employees.  The leave is modeled after the Federal Family and Medical Leave Act and is subject to most of the same rules as currently existing state leave for pregnancy and bonding leave. The bill also establishes an insurance benefit program for employees that is modeled in many ways after the state’s unemployment insurance program.  There are three types of benefits available.  Those benefits are pregnancy benefits, bonding benefits, and family care benefits.  Pregnancy benefits are paid for periods of medical conditions related to pregnancy.  Bonding benefits are paid to adoptive, birth, and foster parents for periods of bonding with a child.  Family care benefits are paid for periods of care for a family member with a serious health condition. Pregnancy benefits are defined as medical benefits, and family care and bonding benefits are defined as family benefits.

Employers of 21 or more employees and wages earned by their employees are covered by the paid benefit program.  An employer of less than 21 employees may opt into the program.

Benefits are capped at a weekly amount equal to the annual statewide average weekly wage as defined under the unemployment law.  That average wage is calculated annually and is currently $988.   Benefit duration is capped at 12 weeks total for family benefits and medical benefits during a 52-week period.

To be eligible for benefits an employee must have earned approximately $2,700 in wages subject to unemployment taxes during the same time frame as necessary to qualify for unemployment benefits.  The $2,700 threshold is indexed to state wage inflation.

Employees and employers will fund the benefits by paying taxes through the unemployment compensation tax collection structure.  All employers with 21 or more employees subject to the unemployment law must pay taxes, as must employers  who reimburse for unemployment benefits paid. The tax will be on the amount of wages that is subject to the FICA old age tax, which currently is $118,500.  The maximum combined tax is 1.5 percent and the minimum tax is .1 percent.  Taxes will be adjusted annually based on the level of revenue needed to pay benefits and to administer the program.  The original tax rates are currently left blank in the bill.

There is a process provided for employers who provide benefits at least as good as those provided under the bill to opt out of the program.  Those opting out will have to pay a smaller tax for administrative purposes.  Self-employed individuals are permitted to opt in to the program.

The program is to be administered by the Department of Employment and Economic Development under a new division created for that purpose.  Much of the process for operating the program is identical to or based on the unemployment compensation system.

There is an appropriation for start-up costs.  The program is scheduled to be operational beginning January 1, 2020.

ARTICLE 1 - FAMILY AND MEDICAL LEAVE BENEFITS

Section 1 provides for the classification of data under the family and medical benefit insurance program

Section 2 authorizes the sharing of unemployment insurance data with the program.

Section 3 provides for definitions. 

Subdivision 7 defines “employee" (those eligible for benefits) as those employees for whom taxes are paid under the program.  

Subdivision 8 defines “employer" as employers with 21 or more employees who are subject to pay unemployment taxes or reimbursements are included.

Subdivisions 10 to 12 define the three types of insured benefits that can be paid under the program.  These include benefits for pregnancy, bonding, and family care.

Section 4 assigns administration of the program to a newly created division in the Department of Employment and Economic Development.

Section 5 specifies benefit eligibility requirements.  An applicant must have sufficient wage credits to qualify for the establishment of an unemployment insurance benefit account and must establish a need for one of the benefits.

Section 6 regulates applications for benefits.  Considerable detail is required in applications to assist the commissioner in determining eligibility.

Section 7 creates a process for determining benefit amounts and eligibility.

Section 8 provides for employer notification of benefit determinations.

Section 9 creates an appeal process modeled after the unemployment compensation appeal process but not identical to it.

Section 10 regulates the amount and payment of benefits.

Section 11 provides certain employment protections for employees seeking and obtaining benefits. Specifies that no employment leave rights nor job protection is independently provided under the paid benefit program.

Section 12 creates a process and requirements for employers to opt out of the program by providing a qualifying employer benefit plan.

Section 13 provides a process and requirements for a self-employed individual to opt in to the program.

Section 14 creates an opt-in process for employers with under 21 employees.

Section 15 provides a tax to fund the program.  Taxes are imposed in an equal amount on employers and employees.  The tax base is the FICA old age tax base, which is currently $118,500.  The tax will be collected through the unemployment insurance tax system.

Section 16 provides for tax collection procedures and rules.

Section 17 provides for a maximum administrative cost ceiling of seven percent of benefits paid.

Section 18 authorizes public outreach about the benefit program.

Section 19 provides for penalties for certain applicant behavior.

Section 20 provides penalties for certain employer behavior.

Section 21 authorizes enforcement audits and requires certain record keepings.

Section 22 authorizes administrative subpoenas and the imposition of sworn testimony.

Section 23 authorizes mediation and conciliation services by the department.

Section 24 adds references to the new family and medical leave benefit program chapter for purposes of information disclosure from the Department of Revenue to DEED.

Section 25 is an effective date.

ARTICLE 2 - EMPLOYMENT LEAVE

Section 1 amends the period for which an employee must work to qualify for pregnancy, bonding leave to six months from 12 months for consistency with the requirements for benefits under article 1.  The family care leave created by section 4 is subject to the same six-month requirement.

Section 2 provides that the definition of “child” for the purpose of family care leave shall be that in the family care leave section, which is section 4.

Section 3 amends an employer’s obligation for continuing insurance coverage for an employee on state required bonding and parenting leave.

Section 4 creates an unpaid 12-week family care leave subject to the same requirements that exist for state mandated unpaid pregnancy and bonding leave.

Section 5 provides the same job protection rights to an employee on family care leave as is provided to employees on pregnancy and bonding leave.

Section 6 regulates how mandated state unpaid leave will interact with paid employer leave and periods for which paid benefits are provided under the new chapter 268B.

ARTICLE 3 - TEMPORARY PROVISIONS AND APPROPRIATIONS

Section 1 sets blank tax rates for calendar years 2017, 2018, and 2019, for the purpose of creating program infrastructure.

Section 2 provides a general fund appropriation for fiscal year 2017 for program start-up.

ARTICLE 4 - FAMILY AND MEDICAL LEAVE BENEFIT AS EARNINGS

Article 4 was added to the bill in Finance Committee at the request of the Department of Human Services.  The article amends various statutes under the department’s jurisdiction to account for the receipt of family or medical leave benefits (“benefits”).

Section 1 exempts parents receiving benefits from certain MFIP employment services requirement.

Section 2 exempts certain benefit recipients from diversionary work requirements under MFIP.

Section 3 exempts certain benefit recipient from an MFIP requirement to have an employment plan.

Section 4 includes benefits as earned income under the general assistance and Minnesota supplement aid programs as well as programs governed by chapters 256L and 256J.