Lake Elmo staff brief council on Minnesota paid family and medical leave, recommends private third‑party plan

Administrative Services Coordinator Miss Doyle briefed the Lake Elmo City Council workshop on Minnesota Paid Family and Medical Leave (PFML), explaining coverage, employer costs and next steps and recommending the city adopt a private third‑party plan that staff says would lower the city’s premium and offer administrative advantages.

The PFML program, established by the state in May 2023 and effective Jan. 1, 2026, provides job‑protected paid time for qualifying medical and family reasons, including bonding for a new child, care for a family member or safety leave related to domestic violence, assault or stalking. Miss Doyle told the council the program covers full‑time, part‑time, seasonal and intern employees who meet the state’s earnings threshold and that employees who primarily work in Minnesota are covered even if they live in Wisconsin.

Miss Doyle said the state plan premium for 2026 is 0.88 percent of payroll; she estimated that would equal roughly $35,500 for the City of Lake Elmo and explained Minnesota law allows employers to pass up to 50 percent of the premium to employees (a 50/50 split would make the city’s share about $17,750). Miss Doyle presented private‑market proposals that quoted a lower rate (0.76 percent) with a two‑year rate lock and administrative features the city’s broker recommended; staff said the private option could pay the employer’s FICA tax on leave payments and handle claims processing faster than the state plan.

Why it matters: PFML affects virtually all workers, changes payroll‑tax obligations for employers and employees, and contains employer notification and acknowledgment requirements the city must meet before the plan’s start date. Miss Doyle said Lake Elmo must notify employees and obtain signed acknowledgments showing the options available to them by Dec. 1, 2025; her plan is to provide that notice during the city’s October open‑enrollment events and at November training for part‑time firefighters and to offer additional sessions for employees who cannot attend those events.

Key program details and fiscal impacts

- Benefit length: employees may be eligible for 1 to 12 weeks of PFML for personal medical leave and 1 to 12 weeks for family leave, for a combined maximum that can reach about 20 weeks when both apply, Miss Doyle said. Intermittent leave is allowed but the qualifying condition generally must last more than seven days for PFML to apply (shorter absences remain eligible under ESST or PTO).

- Payment levels: Miss Doyle summarized the state formula: lower‑wage workers receive a higher replacement percentage (up to 90 percent for those at or below 50 percent of the state average weekly wage); workers closer to or above the state average receive a lower replacement percentage, subject to a weekly maximum. Miss Doyle said PFML payments are taxable and not treated as PERA‑eligible earnings; employees would need to purchase pension service credits for any covered leave.

- Employer cost estimates: staff used rough payroll figures to illustrate impacts. Under the state rate (0.88 percent), Miss Doyle estimated about $35,500 in premiums for 2026; a 50/50 split would lower the city’s direct premium cost to about $17,750. A private plan quoted at 0.76 percent would reduce both city and employee per‑paycheck costs, Miss Doyle said. She warned she would recheck some weekly‑wage calculations after council members pointed out apparent arithmetic inconsistencies in the presentation.

Council discussion and direction

Miss Doyle recommended the city contract with a private third‑party provider (the broker’s top proposal was Mutual of Omaha) to secure a two‑year rate lock and faster claims administration. Council members and staff debated several operational details: whether the city should permit employees to use accrued PTO or comp time to supplement PFML payments, how to treat firefighters and elected officials, and whether to adopt a 50/50 premium split. Several council members expressed support for allowing employees to use accrued time to supplement PFML payments and for splitting premiums 50/50; one council member asked staff to consult unions and, if required, sign a memorandum of understanding.

Miss Doyle said switching to a private vendor could allow the city to bundle other benefits with a single provider and that, after accounting for changes to short‑term disability and ancillary benefits, the city estimate showed approximately $10,000 in net savings across benefit lines. She also noted a $500 fee would apply to opt out of the state plan if the city ultimately uses a private plan.

No formal vote took place. Council members directed staff to proceed with outreach, to confirm premium and benefit calculations, and to bring a formal recommendation to the next benefits meeting or council agenda so the city can meet the employee notification and acknowledgment deadline (Dec. 1, 2025). Miss Doyle said staff will provide employee notifications during October open enrollment and at November training for part‑time firefighters and will follow up individually with employees who do not attend.

What’s next

Staff will recheck the wage‑replacement calculations Miss Doyle used, finalize cost comparisons between the state plan and private proposals, consult with unions on premium sharing, and return with a formal recommendation and draft notification materials for council review. No council action was taken at the workshop; Miss Doyle said the item will appear before the benefits council and on a future council agenda for formal adoption.