Minnesota employers need to prepare for a number of changes beginning this fall, including increased financial penalties for misrepresenting unemployment benefits information.
The changes are the result of amendments to numerous employment laws passed by the state Legislature. Although the legislative session, which ended May 19, did not produce as many significant pieces of employment legislation as in recent years, the Legislature passed amendments that impact employee rights and employer obligations.
A summary of the most critical developments that apply to Minnesota employers and what they mean for employer practices and operations follows.
Unemployment Insurance Amendments
Starting Oct. 1, 2025, Minnesota employers will face increased financial penalties for misrepresenting information related to unemployment benefits. The changes to Minnesota’s unemployment insurance law aim to curb fraudulent practices and ensure greater integrity in the state’s unemployment system.
Under the updated law, if an employer knowingly provides false information — or omits key facts — without a good faith belief in its accuracy, they may be penalized. This includes situations where an employer:
- Assists an applicant in fraudulently obtaining unemployment benefit.
- Attempts to block or reduce benefits that an applicant is rightfully owed.
- Tries to avoid paying required unemployment insurance taxes.
The financial penalty for such violations is doubling. Employers will now owe the greater of $500 or 100% of the value tied to the violation — up from the previous 50% penalty. This applies to unemployment benefits wrongfully paid or withheld, employer contributions unlawfully avoided, and other related losses to the Minnesota Unemployment Insurance Program or the Workforce Development Fund.
Employers should take care to review their reporting practices before the October deadline to avoid costly consequences.
Amendments to Minnesota Meal and Rest Break Requirements
he Minnesota Legislature amended Minnesota’s existing laws regarding meal and rest breaks, providing for more specific obligations and increased penalties for violations.
Effective Jan. 1, 2026, employers must allow employees “a rest break of at least 15 minutes or enough time to utilize the nearest convenient restroom, whichever is longer” within every four hours of consecutive work. This is a change from the previous standard which only required “adequate time to utilize the nearest convenient restroom” each four consecutive work hours.
Also, effective Jan. 1, 2026, an employer must “allow” employees working for “six or more consecutive hours a meal break of at least 30 minutes.” This is a change from the previous standard which generally required employers to “permit” employees working eight or more consecutive hours “sufficient time to eat a meal.”
Employers that do not allow employees to take the aforementioned meal and rest breaks are liable to the employee for the rest or meal break time that should have been allowed at the employee’s regular rate of pay, plus an additional amount as liquidated damages. It is anticipated that the Minnesota Department of Labor and Industry may issue regulations or guidance related to these new rest and meal break requirements before the requirements go into effect.
Amendments to Minnesota Earned Sick and Safe Time
Minnesota’s Earned Sick and Safe Time Law, which went into effect January 1, 2024, was amended by the Legislature again this year in the following key ways:
Updated Notice Requirements: Employers may now require employees who have an unforeseeable need for the use of earned sick and safe time (ESST) to give notice for the need “as reasonably required by the employer.” Previously, employers could require notice in this scenario “as soon as practicable.”
Updated Documentation Requirements: When employees use ESST for more than two consecutive scheduled workdays, employers may require reasonable documentation that the time is covered by the statute. Previously, the threshold for triggering the ability to request reasonable documentation was three consecutive scheduled workdays.
Replacement Worker Provisions: While employers still cannot require employees to find a replacement worker as a condition of using ESST, the amendments clarify that the law “does not prohibit an employee from voluntarily seeking or trading shifts with a replacement worker to cover the hours the employee uses as earned sick and safe time.”
Front-loading Hours: Effective January 1, 2026, the provision permitting front loading of ESST will permit employers to advance earned sick and safe time to an employee based on the number of hours the employee is anticipated to work for the remaining portion of the accrual year, subject to a requirement that the employer reconcile any shortfall if the employee works more hours than expected.
Minnesota Updates Paid Family Medical Leave Law Ahead of 2026 Launch
In 2023, the state legislature passed a law creating a statewide paid family and medical program. Minnesota’s new Paid Family and Medical Leave program is set to go into effect on Jan. 1, 2026, but recent legislative action is already shaping how the program will operate. On June 15, 2025, amendments to Minn. Stat. § 268B.14, Subd. 7 took effect, providing important updates ahead of the law’s complete implementation.
While the changes are relatively minor, they carry meaningful implications for employers and agencies responsible for implementing the program. Here's a breakdown of the updates:
- The Legislature voted to reduce the annual payroll premium rate cap from 1.2% to 1.1% of taxable wages paid to each employee. This premium, collected by the Minnesota Department of Employment and Economic Development, helps fund the state’s paid leave benefits.
- The amendments also expand how program-related data can be shared. Under the updated statute, certain government agencies — including the Department of Commerce and the Bureau of Criminal Apprehension — will now have access to relevant information for official purposes.
These updates demonstrate Minnesota’s continued work to fine-tune the foundation of its paid leave program ahead of the full launch in January 2026. Employers should continue monitoring developments to ensure compliance and budget accordingly for any changes to their payroll premiums.
Additionally, by Dec. 1, 2025, employers must post a notice — provided by the Commissioner of the Department of Employment and Economic Development — in a clearly visible location. They must also give employees written information about Paid Family and Medical Leave benefits by that date, or within 30 days of their start date.
Employee Misclassification Fraud Impact Reporting Requirement
In recent years, the Minnesota Legislature has taken a closer look at how employers classify their workers — and the pressure is only increasing. In 2024, lawmakers passed amendments to the state’s misclassification laws, expanding employer obligations and strengthening penalties for violations.
In an effort to better understand and combat the issue of worker misclassification, a new interagency reporting requirement has been introduced in Minnesota. This mandate requires three key state agencies — the Minnesota Department of Revenue, the Department of Employment and Economic Development, and the Minnesota Department of Labor and Industry — to work together in analyzing the impact of misclassified workers across the state. The first comprehensive report is due on Jan. 15, 2027, with follow-up reports scheduled every six years thereafter.
This new requirement is expected to increase transparency and strengthen coordination among agencies tasked with enforcement and policy development. The findings of these reports may shape future policy decisions, enforcement strategies, and potentially new penalties, particularly in industries where misclassification is found to be prevalent.
As the agencies begin preparations for the inaugural report, employers across Minnesota should take note: Enhanced scrutiny and regulatory action may be on the horizon.
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