Small Business Braces For Minnesota House Vote On Paid Leave Mandate

Date: May 02, 2023

Government-Run Paid Family and Medical Leave Will Hurt Small Employers

The National Federation of Independent Business in Minnesota, or NFIB, is renewing its opposition to House File 2, which imposes a government-run Paid Family and Medical Leave (PFML) program on small business owners and their employees. On Tuesday May 6th, the House will take up the bill and small business owners are bracing for its impact.

The legislation exacerbates the financial, workforce, and regulatory challenges that most small businesses already face in Minnesota. Not only would the bill raise taxes on small business owners, but it also imposes a tax on their employees to pay for the program.

“This will be the most expensive and complicated paid family and medical leave mandate for small businesses and workers in the country,” said John Reynolds, NFIB State Director in Minnesota. “And the cost and compliance burden of this mandate are going to fall so much harder on small employers than large corporations. This is why a one-size-fits-all mandate with higher taxes is not the solution Minnesota small businesses need right now – or ever.”

Here’s what the legislation does:

  • $1.5 Billion Payroll Tax on small businesses, family farms, workers, and more.
  • As the cost of the new government-run program grows, so will the payroll tax. Another state’s payroll tax doubled in just three years.
  • Mandates that small businesses allow all employees to take up to nearly 6 months off per year for covered circumstances.
  • Sets up a massive new bureaucracy with over 400 government employees and a $75 million annual budget.
  • Upends the salary and benefit arrangement for every small business employee, making it harder to offer customized compensation plans to attract new employees.

Small business owners routinely report that labor quality and labor availability are among their biggest challenges. According to NFIB’s most recent monthly Jobs Report, 43% of owners reported job openings they couldn’t fill and 90% reported few or no qualified applicants for open positions.

“Despite what proponents claim, it’s clear from other states that a PFML mandate is not a silver bullet for attracting workers,” said Reynolds. “In California and New York, which have had PFML on the books for many years, hundreds of thousands of people left their workforces and their states in recent years. However, states like Florida and Texas saw enormous increases in their workforce – 450,000 in Florida and 650,000 in Texas – during the same period without PFML mandates.”

NFIB and its 10,000 members around the state, have been very vocal about how this legislation would impact their ability to operate and hire employees. You can hear their voices and find out more here.

Related Content: Small Business News | Minnesota

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