Agenda - Council Work Session - 07/08/2025

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• Coordinate paid leave with other city benefits. • Budget impact in fiscal year 2025 for the premiums beginning on Jan. 1, 2026. • Bargaining with unions with multiple year contracts, especially for employee cost sharing of premiums, and if the city wishes to establish a private plan or come to agreement on how to handle other aspects of the law. • Consult with providers and prepare payroll and other computer systems for any additional tracking required to report to DEED under the new law. • Outline an internal communication plan to employees, which should include posting the required DEED poster and providing the required detailed information about the program to employees. See Q. Prepare to implement wage theft notification requirement changes, effective Jan. 1, 2026, by beginning to follow the new requirements added for keeping statements for three years and preparing to include payroll systems for reporting premium employee deductions and contributions by the employer on wage statements. Return to top of nage Q23. Will the state paid leave/wages that employees receive under the new family and medical leave state program administered by DEED be subject to PERA withholding? A23: Per PERA, state paid family and medical leave program payments are not eligible salary for PERA contributions or service credit. However, employer -paid leave, including sick and vacation, used to supplement paid family and medical leave is eligible salary for PERA contributions and reporting provided the employee is on medical leave and the employer -paid leave represents at least 50% of the average earnings that the person had received during the first six -months immediately prior to the medical leave. On the other hand, if the employee's medical leave paid time off is less than one-half of the average earnings the individual received in the six months of covered employment prior to the leave, then the pay is not eligible salary for pension purposes and may not be reported to PERA. PERA members may purchase salary and service credit lost during a period of authorized leave. Keep in mind, cities are required to complete an annual leave report listing authorized leaves taken during the prior year that resulted in any unpaid time. Refer to Chanter 5 of the PERA Employer Manual (pdf), pages 5-9 through 5-10. Return to top of page Q24. How will premiums be treated on an employee's W-2? A24: On Jan. 15, 2025, the Internal Revenue Service (IRS) issued Revenue Ruling 2025-4. which explains how the federal government will approach income taxes for premiums and benefits received from a program like Minnesota Paid Leave. Minnesota follows federal law to determine when income is included or excluded from a taxpayer's gross income. This means Minnesota will generally conform to the IRS conclusions about federal gross income. For cities paying the minimum employer contribution (i.e., generally in 2026, .44 % of the total premium rate of .88%) and collect premiums from employees, the employee portion of the