The Minnesota Paid Leave Law applies to nearly every type of employer (including churches) and employment in Minnesota. Earlier this year, there was a proposed amendment to exempt clergy, but it failed to pass. Practically, this law creates a family and medical benefit insurance program administered by the Minnesota Department of Employment and Economic Development (Minnesota DEED).

Some aspects of this law are in effect right now, such as the wage reports discussed below, but most aspects, such as leave entitlements, begin January 1, 2026. Benefits paid under program are funded by both employers and employees. In order to establish premiums owed by both employer and employees, all employers must submit quarterly wage reports detailing wages paid to all employees (starting October 31, 2024). Currently, these reports are being used to calculate premiums owed starting on January 1 and will continue thereafter.

It is highly likely that most churches reported pastors as employees for purposes of their quarterly wage reports. As a general rule, pastors have dual tax status, meaning, they are considered common law employees and self-employed for federal tax purposes (Social Security and Medicare). Internal Revenue Code, Section 1402, requires that any compensation paid to a minister for the performance of ministerial duties/services must be considered wages for the Self Employment Contributions Act (SECA) and cannot be considered wages for Federal Insurance Contributions Act taxes (or FICA). For further information, see Self-Employment Contributions Act.

According to the law, "covered employment" does not include a self-employed individual. See Minn. Stat. Section 268B.01, Subd. 15. Recently, Minnesota DEED communicated to me (in writing) that any pastor taxed under SECA is considered to be “self-employed” under the Minnesota Paid Leave Law, and therefore, by definition, is not covered employment under the law and should not be included in the quarterly wage reports. Any self-employed individuals, including pastors, will be able to "opt-in" to the program under the same conditions as other self-employed individuals.

In moving forward, it is important for Minnesota churches to (a) understand their obligations under the Minnesota Paid Leave Law, (b) review pay practices and taxes status of pastors, (c) review submitted and current wage reports, and (d) consult with trusted professionals, such as attorneys and accountants, regarding specific advice regarding the Minnesota Paid Leave law.