This post is the third part in a series on Minnesota Paid Leave. Feel free to check out Parts 1 and 2. The previous post talked about what types of leave are available under the program. This post focuses on the benefits. In other words, if I am an employee, and I am taking leave under the program, how much money am I getting? In short, it essentially depends on: 1) The State Average Weekly Wage, 2) the type of leave granted, and 3) how your employer’s benefits map onto the Minnesota Paid Leave program.
We can start with SAWW. This figure is determined by DEED every year, and it basically takes all of the wages reported in the 12-month period stated under the Minnesota Paid Leave wage reports and divides it by 52. As a quick aside, this is why DEED required paid leave account registration and reporting last year (see my earlier post). Right now, the SAWW is $1,423. From there, the baseline for weekly benefits are calculated based on how your wages relate to the SAWW. You get 90% of your wages that fall in between 0% and 50% of SAWW, 66% of your wages between 51% and 100% of SAWW, and 55% of your wages over 100% of SAWW. On top of that, your total weekly benefit cannot exceed SAWW. That means that the paid leave benefit will never replace 100% of your wages. However, if you have a lower income, the benefit will replace a larger percentage of your income than if you have a income.
Assuming not all our readers are math people (I know I am definitely not), some examples might be helpful. Let’s start with Sally, who has an annual salary of $50,000 ($961.40/week). Based on the law, calculating her weekly benefit would work like this:
That means that Sally’s baseline weekly benefit would be $805.37, which is about 84% of her weekly wages. Compare this with Jill, who has an annual salary of $115,000 ($2,211.54/week). Her weekly benefit would calculate like this:
That means that Jill’s baseline weekly benefit would be $1,423, which is SAWW. As mentioned earlier, weekly benefits cannot exceed SAWW, which had the effect of reducing Jill’s calculation in the 100+% box by about $120, bringing the baseline weekly benefit to about 64% of her weekly wages.
Alright, so the calculation is run to show how the employee’s wage compares with SAWW. Is that it? Not always. Sometimes the weekly benefit is prorated to account for other circumstances. For example, if the leave is intermittent/partial, then it is reduced by the actual number of work hours the benefit is meant to cover. For example, if the leave is meant to cover the 2 days per week the employee needs to receive treatment for a qualifying medical condition, and the employee normally works 5 days per week, the benefit is prorated by 60%. Additionally, employer-offered benefits have either a supplementing or prorating effect on weekly Minnesota Paid Leave benefits. Basically, employers are allowed to designate certain types of leave and other wage replacement programs as supplemental benefits to Minnesota Paid Leave. In those cases, those benefits have the effect of supplementing weekly Minnesota Paid Leave benefits, so long as the Minnesota Paid Leave benefits and the employer benefits together do not exceed 100% of employee’s wages. Otherwise, those benefits have a prorating effect. In other words, if the employer allows its employees to use sick days to help cover the gap between the Minnesota Paid Leave benefit and their normal wages, then it has a supplementing effect. However, if the employer doesn’t have that policy of supplementing Minnesota Paid Leave, and the employee takes a vacation day on a treatment day, then their Minnesota Paid Leave benefit is supposed to prorate by that vacation day taken.
Based on today’s post, I think there are a few takeaways:
1. For employees, understand that the Minnesota Paid Leave benefit will never replace 100% of your wages. Run the numbers to understand the benefits you can expect to receive from the program, check with your employer to see what supplemental benefits might be available, and budget accordingly.
2. For employers, the Minnesota Paid Leave program provides a solid baseline to provide benefits for your employees that are taking medical or family leave. Though employers can stop there, there is also the opportunity to think about what other benefits employers can also make available to employees to help cover the difference between Minnesota Paid Leave benefits and employee wages.
Thanks for reading, Sam