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Senate Report by Gene Dornink

Small businesses are the engine driving communities like ours. They provide goods and services to their neighbors and quality jobs across the state. It takes a special drive to put in the long hours to keep a small business afloat. There are sleepless nights thinking about how to make additional investments, how to balance your payroll and where the next contract or project might come from. Main street businesses are critical to the fabric of our country, driven by an entrepreneurial spirit we should embrace and support. Unfortunately, the state of Minnesota is just going to make it harder for small business owners and push them to do more.

Quite a bit more. And this “quite a bit more” is going to impact the stability of small businesses across the state. Some of the additional things the state wants these small businesses to do are assist in the administration of a state retirement program for employees without one; unilaterally pay for and administer an “Earned Sick and Safe Time” program for their employees; and participate in a costly and rigid Paid Family and Medical Leave program.

Businesses aren’t alone in bearing these new responsibilities. The burdens will apply to farms, nonprofits and local governments. This means they, too, will need more revenue to continue to operate. That may mean higher local taxes so local governments can meet the financial costs of the tax. The new mandates can be overwhelming, so let’s consider just one, the Paid Family and Medical Leave mandate.

Effective Jan. 1, 2026, employers will begin paying the state a 0.7% premium for the leave program. Employers may deduct up to half (0.35%) of this premium from employee paychecks. The maximum the premium can be under the law is 1.2%, although the increase is only made if the program isn’t bringing in enough money. They might be trying to use the nice term “premium,” but it is really a payroll tax that will hit every employee and employer in the state. It will raise billions of dollars to pay for a state-designed program to deliver leave. Even if employers already offer leave, they will be pushed to fall in with the state program that may not work as well for their business or their employees.

Minnesota workers will then be eligible for 12 weeks of paid leave for serious health conditions and up to 12 weeks for bonding with a new child, family care or a qualifying emergency. It is important to note this benefit is capped at no more than 20 weeks in one year.

Detailed definitions related to who is a family member, what is an eligible health condition, how employees who live or work in Minnesota part-time are treated, how an employee claims the leave–as well as provisions related to employee job protections, substitutions, exceptions and appeals are all covered within the new law and at mn.gov/deed/programs-services/paid-family.

There will be instances in which this new leave will be very helpful for people. There are employment relationships where job flexibility is not sufficient to meet the family needs of all employees. Republicans have consistently supported helping more businesses offer leave to their employees without taking away benefits that people already have and like.

We offered an alternative to the DFL plan that would have allowed more flexibility and easier administration for small businesses, but Democrats were absolutely uninterested in anything but a state-administered benefit. Their headlong rush into this state-based “solution” even caused them to hurry through the passage of this imperfect law — though it doesn’t take effect until 2026.

Government-sized solutions do not promote dynamic, healthy, small businesses that form the economic basis of our communities. Rather, they promote large, centralized businesses that can meet all the state government’s demands. At the end of the day, more mandates and tax increases will cause some businesses to go to border states or simply close up shop. This would be devastating for many families and the increase of goods and services would continue to rise.

Contact me

As always, please do not hesitate to contact me. Feel free to email me at sen.gene.dornink@senate.mn or give me a call at 651-296-5240.

Gene Dornink, R-Brownsdale, is the District 23 senator.