Minnesota Paid Leave for Small Employers: the 0.88% Premium, the 0.66% Small-Employer Rate, Wage Detail Reports and the November 2 Deadline

2026-10-10 · RKube Services

Minnesota Paid Leave for small employers: the 0.88% standard premium, the 0.66% small-employer rate, the 0.44% employee share, wage detail reports and the Monday, November 2 Q3 deadline.

Minnesota Paid Leave started on January 1, 2026, and for most small employers the third quarter is when the program stops feeling new and starts feeling like payroll. Your Q3 wage detail report and premium payment are due at the end of October. October 31, 2026 falls on a Saturday, so the filing moves to the next business day, Monday, November 2. Miss it and the late fee is $10 per employee on the report.

This is a working checklist for owners in Minneapolis, St. Paul, Rochester and the rest of the state who run payroll themselves or check what their payroll provider is doing. It covers the rate you should be paying, how much you can take from paychecks, the notices you owe your staff, the quarterly report, and the grant most small employers don't know about. The federal side of payroll (EIN, Form 941, W-2s) works the same everywhere; our first-employee payroll checklist covers it.

Step 1: Confirm which premium rate applies to you

The standard 2026 premium is 0.88% of each employee's wages, according to the Paid Leave premium rate page. It is made of two parts: 0.61% for medical leave and 0.27% for family leave. The premium applies to wages up to the Social Security wage base, so very high earners stop accruing premium partway through the year.

A smaller rate exists for small employers. Minn. Stat. 268B.14, subdivision 5a sets the small-employer premium at 75% of the standard rate, which works out to 0.66% for 2026. You qualify only if both tests are true:

• Headcount. You have 30 or fewer employees. The count comes from the basis period, which is the four quarters ending September 30 of the prior year, and the state uses the highest number of quarterly wage records you reported in any of those quarters. A seasonal spike to 34 people in one quarter can knock you out even if you averaged 20.
• Average wage. Your average wage is no more than 150% of the state's average wage in covered employment. Paid Leave currently publishes that ceiling as $27,745.88 per employee per quarter.

If you started covering Minnesota employees partway through the basis period, the count is based on your own estimate of how many people you'll employ in Minnesota the following year. The statute lets the department revisit that if your actual wage records come in 10% or more above the estimate, so estimate honestly.

Checklist for Step 1

• [ ] Pull your highest quarterly employee count from October 2024 through September 2025.
• [ ] Divide total wages by employee count for the same period and compare it to $27,745.88 per quarter.
• [ ] Log into your Paid Leave employer account and confirm the rate on your premium notice matches what you expect.
• [ ] If the rate looks wrong, contact Paid Leave before you file the Q3 report, not after.

Step 2: Decide how much to deduct from paychecks

Minnesota lets employers pass part of the premium to employees through payroll deductions, with a floor on what the employer must pay. This is where small employers can make a real cost decision.

At the standard rate, the employer must pay at least 50% of the premium. Employees can be charged the rest, which caps the employee share at 0.44% of wages.

At the small-employer rate, the employer must pay at least 25% of the standard rate, which is 0.22% of wages. Employees can be charged the remaining 0.44%. The statute is explicit that you cannot deduct from employees' pay to fund the employer's portion.

Notice what that means: the maximum employee deduction is 0.44% either way. The savings from the small-employer rate land on the employer side, cutting your floor from 0.44% to 0.22%.

You can choose to pay more than the minimum, including the whole premium. Some owners do this as a benefit, particularly in tight labor markets like healthcare support work in Rochester. Whatever you choose, apply it consistently and make sure your payroll software has the right deduction percentage set, because a deduction above the legal share is a wage problem, not just a reporting one.

Checklist for Step 2

• [ ] Decide your split: minimum employer share, a larger share, or the full premium.
• [ ] Set the employee deduction in payroll at no more than 0.44% of wages.
• [ ] Check one real pay stub to confirm the deduction shows up and matches the percentage.
• [ ] Write the decision down so the next payroll person doesn't change it by accident.

Step 3: Make sure your notices are done

Minn. Stat. 268B.26 has two notice rules, and new hires are where most small employers slip.

First, the workplace poster. Every premises needs the state's Paid Leave notice posted somewhere employees will see it. It must be in English and in any other language that is the primary language of five or more employees or contractors at that location, where the department has a version available.

Second, the individual written notice. Each employee must receive written information from the department within 30 days of their start date. It covers the benefits available, the premium deduction you're making, your premium obligations, your name, address and employer ID number, how to file a claim, and how to reach the department. Delivery counts when the employee gives written or electronic acknowledgment that they received it.

Checklist for Step 3

• [ ] Poster up at every location, in every required language.
• [ ] Written notice sent to everyone on staff, with acknowledgments saved.
• [ ] Notice added to your onboarding packet so every new hire gets it inside 30 days.
• [ ] Acknowledgments filed with personnel records, not in someone's inbox.

Step 4: File the quarterly wage detail report and pay the premium

Paid Leave runs on the same quarterly rhythm as unemployment insurance. Wage detail reports and premium payments are due April 30, July 31, October 31 and January 31, moving to the next business day when a due date lands on a weekend. The wage detail page has the filing details.

For Q3 2026, that means Monday, November 2. The late fee is $10 per employee, so a 15-person shop that files late pays $150 before anyone has looked at whether the premium itself was right.

The report lists each employee's wages for the quarter. If your payroll provider files UI wage detail for you, don't assume it also files Paid Leave. Some providers added it as a separate service, and some made it opt-in. Ask, and get the confirmation number for each quarter.

Checklist for Step 4

• [ ] Confirm who files: you or your payroll provider.
• [ ] Reconcile total Q3 wages on the Paid Leave report with your Q3 payroll register and your UI report.
• [ ] Pay the full premium (employer share plus what you deducted) by November 2.
• [ ] Save the confirmation and add the January 31 Q4 deadline to your calendar now. January 31, 2027 is a Sunday, so plan for Monday, February 1.

Step 5: Know about the small-employer grant

The same small employers who qualify for the reduced rate can apply for a grant when an employee takes leave. Under Minn. Stat. 268B.29, the department can approve up to $3,000 when you hire a temporary worker, or raise another worker's wages, to cover for someone on family or medical leave for seven days or more. The cap is $6,000 per employer per calendar year.

You have to attest that the costs come from the leave, that you're not asking for more than you spent, and that you meet the size test. Applications are processed each calendar year until the money runs out, so apply as soon as you have the costs documented.

Checklist for Step 5

• [ ] When an employee goes on leave for seven or more days, track the temp or extra wage costs separately.
• [ ] Keep invoices and payroll records that tie the cost to the leave dates.
• [ ] Apply early in the year when you can.

A worked example: two Minnesota employers, two different rates

Here is how the numbers play out for two businesses with the same Q3 payroll filing date.

A Rochester medical supply shop. 12 employees all year, total Q3 wages of $180,000. Average wage is $15,000 per employee for the quarter, well under $27,745.88, and the headcount never went above 12. It qualifies for 0.66%.

A Minneapolis creative agency. 22 employees, total Q3 wages of $704,000. Average wage is $32,000 per employee for the quarter, which is above the ceiling. Even though it has fewer than 30 people, it pays the standard rate.

If the Rochester shop had been charged the standard rate by mistake, its minimum employer cost for the quarter would have been $792 instead of $396. Over a year, that's about $1,584 of extra cost from one wrong rate. It's worth the five minutes to check your premium notice.

What might change in 2027 and beyond

The 0.88% rate is set for 2026 and 2027. The program's 2026 actuarial report models an alternate scenario where the rate rises to 0.93%, with the small-employer rate at 0.70%, in later years. That's a projection, not a decision. Treat 0.88% and 0.66% as your planning numbers for now, and check pl.mn.gov each fall for the following year's rate.

Minnesota Paid Leave (MN) quick reference

Common questions from Minnesota employers

Do I pay MN Paid Leave on a 1099 contractor? No. The premium is on employee wages. Contractors still count toward the poster language rule, though, so a crew of five Spanish-speaking contractors at one site means a Spanish poster.

What if I have one part-time employee? You're still covered. A single part-time employee in Minnesota puts you in the program, and you'll almost certainly qualify for the 0.66% small-employer rate.

Can I change my deduction split mid-year? Nothing in the statute locks you to one split, but changing it mid-year makes reconciliation harder and needs an updated notice to employees. Most small employers pick a split in January and keep it for the year.

Does the MN Paid Leave report replace my unemployment wage detail? No. They are separate reports with the same quarterly due dates. File both.

Want a second set of eyes on your Minnesota payroll?

RKube Services handles bookkeeping and payroll for small businesses across the US and Canada, including Minnesota employers working through their first year of Paid Leave. We can check your rate, your deductions and your quarterly filings, and keep them reconciled with your UI reports. Start with a free scoping call and a 30-day trial: call (984) 234-7030 or reach us through rkubeservices.com.