Stay informed on the latest HR compliance updates for Minnesota and Illinois as Q4 begins.

From new paid leave programs and updated wage laws in Minnesota to expanded discrimination protections and employee leave requirements in Illinois, employers need to take action now to stay compliant and prepare for 2026.

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Quarterly HR Compliance Update: Minnesota and Illinois

Minnesota State Quarterly HR Compliance Update

As we enter Q4, Minnesota employers face a critical window to finalize compliance efforts for several regulatory changes that took effect or gained momentum in Q3. Lakeside HR Group continues to monitor these developments and provide strategic guidance to help organizations stay compliant, informed, and ready for 2026.

Ask us about our HR Year-End Planning Checklist, a practical tool to help you wrap up 2025 with confidence and ensure a smooth transition into the new year.

Minnesota Paid Leave – Countdown to Launch

Minnesota’s Paid Leave program remains on track for its January 1, 2026, rollout. Q4 is the time for employers to finalize preparation.

Updates:

  • The total premium rate for Paid Leave is set at 0.88% of an employee’s taxable wages in 2026, split evenly between employer and employee. Employers are required to pay at least 50% of the total premium, with the remainder (up to 50%) deductible from employee wages.
  • Employers with 30 or fewer employees and lower average wages may qualify for a reduced employer contribution rate of 0.22%, while employees will still contribute the standard 0.44%*
  • Employers will continue submitting quarterly wage detail reports through the state’s Unemployment Insurance (UI) system, which will also be used to calculate Paid Leave premiums and benefit eligibility. Employers approved for a state-certified equivalent (private) plan, however, will not pay premiums through the UI account, though they must still meet wage reporting and posting requirements.
  • Employers may begin deducting the employee share on January 1, 2026. For those participating in the state plan, the first premium payment (covering Q1 wages) is due April 30, 2026. Employers with a state approved private plan may have different premium payment schedules depending on their plan terms.
  • By December 1, 2025, employers must both post required workplace notices and distribute written notices to employees.

Lakeside’s Guidance:

  • Configure payroll systems to calculate and withhold Paid Leave premiums accurately.
  • Review leave policies to ensure alignment with Paid Leave eligibility and job protection rules.
  • If considering a private plan, prepare application materials for DEED approval.
  • Plan your employee communication and rollout strategy, including required workplace postings and written notices, to be completed by December 1, 2025.

Earned Sick and Safe Time (ESST) Enforcement and Expansion

Q3 brought increased attention to enforcement and important clarifications to Minnesota’s ESST law that affect how PTO policies must be structured.

Updates:

  • Employers may use a general PTO policy to satisfy ESST requirements, but only if the policy meets or exceeds ESST standards. This includes making leave available for all ESST-qualifying reasons, and following ESST rules on accrual, carryover, notice, and documentation.
  • Employees may now use ESST for making funeral or memorial arrangements, attending services, or addressing related legal and financial matters after the death of a family member.
  • ESST also covers school or childcare facility closures due to weather or other public emergencies.
  • For foreseeable leave, employers may require employees to provide no more than seven days’ advance notice.
  • Employers may now request reasonable documentation if an employee is absent for more than two consecutive scheduled workdays (reduced from three).

Lakeside’s Guidance:

  • Audit PTO policies to ensure they align with ESST standards.
  • Update handbooks, pay stubs, and time-off request forms as needed.
  • Train managers on appropriate documentation requests and notice procedures.

Minimum Wage – Local Adjustments in Effect

Q3 saw new minimum wage rates take effect in St. Paul and continued enforcement in Minneapolis.

Updates:

  • In St. Paul, as of July 1, 2025, micro-businesses (5 or fewer employees) must pay at least $13.25/hr, small businesses (6–100 employees) must pay $15.00/hr.
  • In Minneapolis, starting January 1, 2025, all employers must pay a minimum wage of $15.97/hr, regardless of size.
  • Employers in both cities need to post updated wage notices and make sure payroll systems reflect the new rates.

Lakeside’s Guidance:

  • Go through your pay scales and watch out for wage compression.
  • Let managers and employees know about rate changes. If you have remote or hybrid workers who do any work within city limits, ensure they receive the correct local rate.

Break Time and Meal Period Updates

Q3 brought new rest and meal break requirements under Minnesota law that take effect January 1, 2026.

Updates:

  • Employers must give each employee a rest break of at least 15 minutes (or enough time to use the nearest convenient restroom, whichever is longer) during every four consecutive hours of work.
  • Employees working six or more consecutive hours must receive a meal break of at least 30 minutes. The meal break may be unpaid if the employee is fully relieved from duty.
  • If required breaks are not provided, employers are liable to pay the employee for the missed break time at their regular rate of pay, plus an equal amount as liquidated damages.

Lakeside’s Guidance:

  • Adjust scheduling and time-keeping tools now so they support the new rest and meal break rules.
  • Make sure supervisors understand what “relieved from duty” means for meal breaks, and audit practices to avoid unintentional violations ahead of the change.

Minnesota Secure Choice Retirement Program

The Minnesota Secure Choice Retirement Program is set to launch in early 2026, providing a state-facilitated retirement savings option for employees whose employers do not offer a qualified retirement plan.

Updates:

  • Employers with five or more employees, who do not already provide access to an employer sponsored retirement savings plan, must facilitate employee enrollment, deduct contributions from paychecks, and remit them to the program. Employers are not required to contribute.
  • Employees are automatically enrolled but can adjust contributions or opt out. Funds go into individual Roth or traditional IRAs.
  • The program will roll out between January 1 and March 30, 2026, with phased implementation by employer size.

Lakeside’s Guidance:

  • Review your retirement plan options to decide whether Secure Choice or a private plan is the best fit for your organization.
  • Start educating employees about the program and how contributions work and ensure your payroll and administrative systems are ready to handle deductions, reporting, and compliance.

Stay Proactive, Stay Prepared

Minnesota employers must act now to ensure compliance with new wage, leave, and transparency laws. Lakeside HR Group recommends taking action now through policy audits, workforce training, and cross functional planning to stay ahead of change.

For support with Minnesota Paid Leave readiness, ESST audits, wage compliance, or other HR priorities, the Lakeside HR Consulting team is here to help you navigate changes and prepare for a successful 2026.

Illinois Labor Law Compliance Update

Illinois employers should be prepared for a wave of new and expanded requirements through 2025 and into 2026. Below is a summary of key confirmed changes along with Lakeside’s guidance.

Expanded Discrimination Protections (IHRA / Human Rights Act)

Updates:

Lakeside’s Guidance:

  • Employers should update anti-discrimination policies and employee handbooks to incorporate the expanded protections.
  • Complaint and appeals processes should be revised to reflect the extended filing timeline.
  • Any AI tools in use should be audited to ensure compliance with disclosure and non-discrimination requirements.
  • Employers should also develop transparent notice language for when AI is used in employment decisions and train HR and hiring teams on the new IHRA requirements and AI restrictions.

Leave, Accommodation & Employee Rights

Military Funeral Honors Leave

Update:

Lakeside’s Guidance:

  • Employers should update leave policies to include military funeral leave and train supervisors on eligibility, scheduling, and documentation requirements.

Nursing Mothers / Lactation Breaks

Update:

Lakeside’s Guidance:

  • Employers should update leave policies to reflect paid lactation breaks, provide private, non-bathroom spaces for lactation, and communicate lactation break rights and scheduling procedures to employees.

NICU Leave / Neonatal Intensive Care Leave Act

Update:

Lakeside’s Guidance:

  • Employers should update HR systems and leave tracking processes to accommodate NICU leave and amend employee handbooks and leave policies to incorporate NICU leave rights.

Personnel Records Review Act (PRRA / IPRRA)

Updates:

Lakeside’s Guidance

  • Review and update procedures for personnel record access.
  • Implement a straightforward process for submitting record requests.
  • Maintain documentation to demonstrate compliance.

Worker Protections & Other Areas

Updates:

Lakeside’s Guidance:

  • Employers should review warehouse policies for clarity and compliance with documentation requirements and monitor changes to the Fair Workweek Ordinance so they can prepare for necessary policy adjustments.

Communication & Rollout

Lakeside’s Guidance:

  • Draft employee notices and training materials in advance to ensure required changes (e.g., lactation breaks, military funeral leave, personnel record rights) are effectively rolled out in time for their effective dates.

Talk to an HR Expert

We’d love to connect and learn more about how Lakeside HR Group can support you or your organization! Email us to learn more and schedule a meeting.

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