Critics slam Tim Walz’s paid leave law over Minnesota business impacts

As Minnesota’s fraud scandal continues to dominate headlines, the law signed by Gov. Tim Walz extending the amount of paid leave for Minnesota workers is already causing major headaches and worrying critics worried about the potential misuse of even more money.

The legislation, which took effect Jan. 1, allows Minnesota workers up to 12 weeks of leave per year with partial pay to care for a newborn or sick family member, and up to 12 weeks to recover from a serious illness. Benefits are capped at 20 weeks per year for employees who take advantage of both.

Two months later, the legislation is already facing resistance, including from the state’s largest nonpartisan business advocacy organization.

“Beyond anti-fraud sentiments, employers are reporting some worrying trends,” said Lauryn Schothorst of the Minnesota Chamber of Commerce. told Fox 9 Minneapolis.

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Minnesota Governor Tim Walz testifies during a House Oversight and Government Reform Committee hearing at the U.S. Capitol, March 4, 2026, in Washington, DC. (Anna Moneymaker/Getty Images)

“Providers face pressure from patients for the full 12 weeks of leave, even if their medical condition does not require it. A number of respondents shared that their employees earn more on paid leave than the salary replacement thresholds provided by law. Employees go on vacation or to music festivals when they are supposed to be on leave. These anecdotes do not necessarily indicate fraud or a lack of oversight by the department. They highlight concerns about broad eligibility and limited employer remedy elements of the law For employers, overuse is an abuse.”

Two Republican lawmakers who spoke to Fox News Digital agreed with that assessment.

“The House is right,” said State Sen. Michael Holmstrom. “Minnesota is not a business-friendly state. Employers were already offering this benefit, and then the state came between the employers and their employees, which has nothing to do with them.”

Holmstrom says a major employer in his district has seen a 700 percent increase in the use of paid leave since the law took effect and that the company is unable to fill those positions with qualified workers to compensate.

The result, Holmstrom explained, is to continue business as usual, without replacement and providing a lower level of service.

State Sen. Mark Koran told Fox News Digital he also agreed with the chamber and suggested fraud concerns were valid, saying there would be “no real enforcement” because “the state has removed the employer from oversight and administration of the program.”

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Coran explained: “The program is not being used as intended, as Republicans predicted. It was sold as a replacement for short and long term leave. It is now a complex sick leave program with an effective date on the first day, not the traditional seventh day of injury or illness. »

“Liberal use guidelines mean employees can take one day off each week, or every Monday and Friday during a long weekend. This has a huge negative impact on employers’ ability to find replacement labor and places Minnesota at the bottom of the business competitiveness ladder.”

Ultimately, the Quran asserts that the law will result in fewer jobs, lower wages, fewer benefits, and a “continued exodus of business creation and expansion out of Minnesota.”

On social media, critics echoed similar sentiments, with some pointing out that most Minnesota businesses already offer paid leave, making state intervention unnecessary.

“No way,” Brian McClung, a former spokesman for former Minnesota Republican Gov. Tim Pawlenty, posted on. “I’m shocked – shocked! If only someone had warned the MN Democratic trio that creating a costly and cumbersome bureaucratic system could go wrong (when the vast majority of companies already offered paid leave without a mandate).”

Fox News Digital has reached out to Walz’s office for comment.

The state’s new paid leave program is administered by a new government agency called the Minnesota Department of Employment and Economic Development, with more than 400 full-time employees overseeing the process, raising concern among some given the multiple state agency bureaucracies that oversaw the massive fraud scandal.

Earlier this year, as the law was about to go into effect, Fox News Digital expressed his concerns that the bill could open the door to even more fraud, with Bill Glahn, a policy researcher at the Center of the American Experiment, describing the legislation at the time as “the next billion-dollar fraud.”

Minnesota Democratic Governor Tim Walz speaks to reporters after announcing he will not run for re-election, at the Minnesota State Capitol in St. Paul, Minnesota, U.S., January 5, 2026. (Reuters/Tim Evans)

“When you build a multibillion-dollar public benefits program with weak oversight, the fraudsters line up,” Dustin Grage, a town hall columnist and Minnesota resident, told Fox News Digital in January. “We’ve already seen what’s happening in Minnesota. The paid family leave system will be a magnet for abuse.”

In a statement to Fox News Digital, a spokesperson for the Minnesota Department of Employment and Economic Development defended the program.

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“Minnesota is not alone in adopting a national paid family and medical leave program – we are one of 13 states, plus the District of Columbia, to have done so. The United States is an exception – it is one of seven countries in the world that does not have a national paid family and medical leave program. The federal Bureau of Labor Statistics noted in 2023 that 73% of U.S. civilian workers do not have access to paid family leave,” the release said.

“We recognize that paid leave represents a big change for Minnesota employers. That’s why we have worked closely with employers across the state, as well as many employer advocacy groups, to develop tools and materials to make paid leave administration as seamless as possible. We have received positive feedback from many employers and are constantly improving our service offerings.”

The spokesperson added that the department “takes program integrity seriously.”

“Although the Minnesota Chamber of Commerce has not shared the data underlying its survey, the Chamber has presented its objections to paid family and medical leave programs for years to the Minnesota Legislature. Despite these objections, the Chamber has been a good partner in helping educate employers about paid leave.”