Minnesota Nonprofit Employers in 2026: Paid Leave, ESST, and Secure Choice

Three systems, one employer, no shortcuts

Minnesota nonprofit employers are navigating three overlapping but legally distinct 2026 employment systems: the Minnesota Paid Leave program (active since January 2026), the Secure Choice retirement program (phasing in through 2028), and updated Earned Sick and Safe Time rules (effective July 6, 2026). Each has its own registration process, its own rate or threshold, and its own enforcement mechanism — none of the three substitutes for unemployment insurance, workers' compensation, or standard payroll withholding, and satisfying one does not satisfy another.

This article expands on the employment section of the main Minnesota Nonprofit Compliance Guide (/updates/minnesota-nonprofit-compliance-guide/) and on the state guide itself (/states/minnesota/). All of the facts referenced here are currently labeled SOURCE VERIFIED against current official Minnesota agency material.

Minnesota Paid Leave: joint account, premium rates, and job protection

Minnesota Paid Leave is not a standalone registration system — it runs through the same combined employer account already used for unemployment insurance reporting. An employer that is registered for UI reporting is registered for Paid Leave premium reporting through the same account and the same quarterly wage-detail process.

For 2026, the standard total premium rate is 0.88% of taxable wages, split into 0.61% for the medical-leave portion and 0.27% for the family-leave portion. An employer may deduct up to 0.44% from employee wages as the employee's share; the employer must cover at least the remaining 0.44% itself. A reduced rate applies to qualifying small employers: a 0.66% total premium, with the same 0.44% maximum employee deduction, which drops the employer's own minimum share to 0.22%.

Nonprofit organizations and religious employers are not categorically exempt from Paid Leave. The only way to opt out of the state plan is to obtain an approved equivalent private plan — medical, family, or both — that provides benefits equal to or better than the state plan and is approved through the state's application process. Paid Leave also includes job-protection and anti-retaliation provisions, and covered employers must give employees the required notice describing their Paid Leave rights.

Secure Choice: the 5-employee threshold and five phased deadlines

The Secure Choice retirement savings program applies to an employer with 5 or more Minnesota-based employees that does not already sponsor a qualifying employer retirement plan (such as a 401(k) or 403(b)). A covered employer must either offer its own qualifying plan or facilitate employee enrollment in the state-sponsored Secure Choice IRA program, including a standard payroll-deduction default that employees may opt out of.

Compliance deadlines are phased strictly by employer size: employers with 100 or more employees must comply by June 30, 2026; 50-99 employees by December 31, 2026; 25-49 employees by June 30, 2027; 10-24 employees by December 31, 2027; and 5-9 employees by June 30, 2028. An employer below the 5-employee threshold is outside the program's scope. Nonprofit status has no bearing on whether an employer is covered — the test is purely the employee-count threshold and the absence of a qualifying plan.

Earned Sick and Safe Time: the July 6, 2026 rule update

Updated Earned Sick and Safe Time administrative rules take effect July 6, 2026 and supersede earlier Minnesota Department of Labor and Industry guidance — any pre-July 6, 2026 interpretation should be checked against the current rule text before being relied on. The core structure carries forward: employees become eligible after 80 hours of work in Minnesota, and covered employers must provide ESST.

The baseline accrual formula is 1 hour of ESST for every 30 hours worked, up to a 48-hour annual accrual cap (employers may set a higher cap). As an alternative to accrual tracking, an employer may front-load the full annual ESST balance at the start of the year. Employers must give employees required notice of their ESST rights, include ESST balance information on pay statements, address ESST in an employee handbook if one exists, and retain the records the rules require.

Minneapolis and St. Paul each maintain their own earned sick and safe time ordinances. Where a local ordinance is more protective of the employee than the state ESST rule, the local ordinance applies instead of the state rule for employees working in that city — ESST compliance for a nonprofit operating in either city is not simply a matter of following the statewide rule.

A practical 2026 checklist for nonprofit employers

Confirm the combined UI/Paid Leave employer account is active and that quarterly wage detail reporting includes the correct Paid Leave premium calculation at the applicable 2026 rate (0.88% standard or 0.66% reduced small-employer rate), with no more than 0.44% deducted from employee wages.

Determine whether Secure Choice applies by counting Minnesota employees against the 5-employee threshold and checking for an existing qualifying retirement plan; if covered, confirm the applicable phased deadline for the organization's employee-count tier and register or facilitate enrollment by that date.

Update ESST policies, pay-statement fields, handbook language, and recordkeeping to reflect the rules effective July 6, 2026, confirm the 1-hour-per-30-hours accrual formula or a compliant front-loading policy is in place, and check whether a Minneapolis or St. Paul ordinance imposes more protective terms for employees working in those cities.

Treat Paid Leave, Secure Choice, ESST, unemployment insurance, workers' compensation, and withholding as five separate compliance tracks when assigning internal ownership and deadlines — do not assume that registering for one covers any of the others.