Senate GOP moves forward with proposals for family leave tax credits and insurance products

The Minnesota Senate on Tuesday passed a bill that the GOP majority describes as a “free market solution” to ensure more Minnesotans have access to paid family leave.

The bill, introduced by Sen. Julia Coleman, R-Waconia, would allow insurance companies to offer paid family leave benefits in Minnesota, which state law currently prohibits. The Senate is expected to approve another bill on Wednesday to create a tax credit for small businesses that provide paid time off.

“We heard from Minnesotans talking about the need for greater access to paid family leave. Companies want to offer more to their employees and families need more help. My bill meets both needs,” Coleman said in a statement.

The DFL-controlled House, which favors a more robust family leave program backed by taxes and mandates, is unlikely to follow the Senate’s lead. Minnesota Democrats called the proposals ineffective, especially for low-income workers.

“This is a classist attempt by Republicans to push a paid leave option that is only available to people who can afford it,” the Minnesota Senate DFL Caucus tweeted. “Paid family leave should not be kept behind a paywall.”

Under the Senate insurance bill, paid vacation would remain an optional benefit and employers or employees would have to cover premiums. In other states, high-wage workers who already receive full benefits are most likely to have access to private paid vacation insurance, experts say.

The tax credit would be capped at $3,000 per employee. It would be open to businesses with fewer than 50 employees, which employ about 38% of Minnesota’s workforce.

The House DFL family leave proposal would create a state-run program similar to unemployment benefits, to which employees and employers would contribute. Workers would be entitled to a maximum of 12 weeks of paid leave.

Minnesota is one of 40 states where workers are not guaranteed paid family leave. Nationally, fewer than one in four workers had access to paid family leave in 2021, according to the Bureau of Labor Statistics.

Paid family leave is linked to better health outcomes for adults and children, greater financial security for employees, and a greater likelihood that caregivers, especially women, will stay in the workforce.