Committee report: Paid Family Medical Leave
Source: Minnesota House Fraud Prevention & State Agency Oversight Committee · original.
Root source: https://www.house.leg.state.mn.us/comm/docs/PBkehwf-FEOo19Pitj0Z8A.pdf#page=67
- What it establishes
- The chapter covers the committee's November 19, 2025 hearing on Minnesota's Paid Family and Medical Leave program, held before the program took effect on January 1, 2026. The committee says it sought to tighten internal controls before launch, and states that DEED, which oversees the program, refused to acknowledge potential issues. Its findings concern the removal of employers from leave approval, limited means to verify outside employment and income, unclear auditing and overpayment recovery, broad medical eligibility and certification, and limited verification of caregivers and of providers outside Minnesota or the United States. The report says DEED testified it would usually deduct overpayments from the next year's benefits rather than seek recovery. It reports that about 13,000 applications were approved in the first 40 days, as of February 9, 2026, which the committee says increases the risk of fraud. The committee says it remains concerned that statutory definitions are too broad and will seek additional statutory authority as warranted.
The chapter covers the committee's November 19, 2025 hearing on Minnesota's Paid Family and Medical Leave program, held before the program took effect on January 1, 2026. The committee says it sought to tighten internal controls before launch, and states that DEED, which oversees the program, refused to acknowledge potential issues. Its findings concern the removal of employers from leave approval, limited means to verify outside employment and income, unclear auditing and overpayment recovery, broad medical eligibility and certification, and limited verification of caregivers and of providers outside Minnesota or the United States. The report says DEED testified it would usually deduct overpayments from the next year's benefits rather than seek recovery. It reports that about 13,000 applications were approved in the first 40 days, as of February 9, 2026, which the committee says increases the risk of fraud. The committee says it remains concerned that statutory definitions are too broad and will seek additional statutory authority as warranted.
Findings the committee states
- Committee finding: under PFML employees apply to the state, which approves leave, while employers must track leave, flag potential fraud and pay at least 50% of premiums; the committee says this may reduce employer visibility, and that employers may lack a formal way to report suspected misuse. p. 67
Removal of employers from the leave approval process may limit oversight.
- Committee finding: the program may have limited ability to verify or cross-check second jobs, out-of-state earnings or self-employment, which could let people collect benefits while earning wages or take paid leave from multiple employers at once. p. 67
Limited mechanisms to verify outside employment and income
- Committee finding: questions remain on how often claims are audited and overpayments recovered, and on distinguishing good-faith errors from intentional misrepresentation. p. 68
Questions remain regarding fraud detection, auditing, and repayment processes
- According to the report, DEED testified it would not usually seek to recover overpayments but would deduct them from next year's benefits; members questioned the deterrent effect, and DEED said this was easier to administer. p. 68
DEED testified that they wouldn’t usually seek to recover overpayments
- Committee finding: some qualifying conditions are hard to verify objectively, limits on repeated or extended leave are unclear, and heavy reliance on medical certification may produce inconsistent eligibility decisions. p. 68
Broad eligibility criteria and reliance on medical certification may present vulnerabilities
- Committee finding: gaps in verifying caregiver identity, qualifications and the need for care; no cap on how many people may take leave to care for the same individual; and DEED did not seem to have a way to verify providers outside the U.S. p. 68
Oversight of caregivers and service providers may be limited
- Committee finding: about 13,000 approvals in the first 40 days (about 325 a day) may limit DEED's ability to verify each claim and increases fraud risk. p. 69
Rapid program rollout may limit early-stage verification capacity
- Committee characterization: DEED refused to acknowledge potential issues and assured the committee it had considered all contingencies. p. 67
refused to acknowledge any potential issues and repeatedly assured us they had thought of all contingencies
- Committee summary conclusion: statutory definitions are too broad and DEED lacks sufficient tools to detect fraud, particularly when leave is taken to care for someone else. p. 69
the definitions in statute are too broad and that DEED does not have sufficient oversight tools in place to detect fraud
Figures
| first 12 months | Window after a child's birth for bonding leave, given as an example qualifying event | p. 67 |
| at least 50% | Share of the PFML premium cost employers must pay | p. 67 |
| approximately 13,000 | Applications approved in the first 40 days of the program, as of February 9, 2026 | p. 69 |
| roughly 325 per day | Average approvals per day over the first 40 days | p. 69 |
Witnesses
- Business owners (not named in report), Testified about government interference in the employer-employee relationship p. 67
- DEED (officials not named in report), Agency testimony p. 68
Recommendations
- Committee: will follow first-year implementation updates and seek additional statutory authority to close loopholes as warranted. p. 69
- Committee: stressed the importance of strong oversight and ongoing evaluation of program integrity safeguards during the rapid rollout. p. 69
What it establishes. The committee held a pre-launch PFML hearing on November 19, 2025; under the program the state rather than the employer approves leave, DEED testified it would generally offset overpayments against the next year's benefits instead of pursuing recovery, and about 13,000 applications were approved in the first 40 days.
What it does not. The chapter does not document any actual instance or amount of PFML fraud; its findings describe potential vulnerabilities and open questions, and its statements about other states' fraud and tax increases are made without specifics or sources.
Read this chapter in the searchable report
Full text, pages 67–69
Paid Family Medical Leave105 Hearing Date: November 19, 2025
Background:
Minnesota’s Paid Family and Medical Leave Program (PFML) is designed to provide partial wage replacement to eligible individuals who are unable to work due to qualifying events, such as bonding with a child in their first 12 months of life. The program relies on accurate reporting of work status and income to ensure benefits are distributed properly.
During a preliminary review of the potential vulnerabilities within the PFML program, the committee identified serious concerns regarding potential misuses, vague definitions and loopholes that could affect program integrity.
Minnesota’s program has more expansive definitions and a larger benefit set than other states and those states are already having to increase the payroll tax and/or decrease the benefit set to make it work. Other states have also experienced fraud.
The Committee held a hearing to try to get ahead of this issue and look at potential changes that would help tighten internal controls so we could stop fraud before the program went into effect on January 1, 2026. Unfortunately, The Department of Employment and Economic Development (DEED), which oversees the program, refused to acknowledge any potential issues and repeatedly assured us they had thought of all contingencies.
Finding: Removal of employers from the leave approval process may limit oversight.
Testimony from business owners indicated concerns about the ramifications of government interference in the employee/employer relationship. Under PFML, the employees now apply to the state for leave and the state, not the employer, approves the leave, yet the employer is required to track everything, including flagging potential fraud, and must pay at least 50% of the premium cost.
The Committee observed that this structural change may reduce employer visibility into employee leave claims and limit the ability of employers to identify inconsistencies between reported leave and actual work activity. Additionally, concerns were raised that employers may lack a clear or formal mechanism to report suspected misuse or raise questions regarding the integrity of claims. The absence of employer involvement removes a traditional layer of oversight that has historically played a role in monitoring leave usage.
Finding: Limited mechanisms to verify outside employment and income
During the hearing, members raised concerns regarding how the program accounts for individuals who may continue working outside of their primary employment while receiving benefits. This includes individuals working second jobs within Minnesota, earning income in another state, or engaging in independent or self-employed work. The committee identified
105 YouTube video, House Fraud Prevention and State Agency Oversight Policy Committee 11/19/2026.
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uncertainty around how such income is tracked or verified, particularly in real time. Testimony suggested that the program may have limited ability to cross-check earnings across multiple employers or jurisdictions, creating potential gaps in detecting unreported income or enabling employees to receive paid leave from multiple employers at the same time. These limitations may allow individuals to receive benefits from the PFML program while continuing to earn wages.
Finding: Questions remain regarding fraud detection, auditing, and repayment processes
Testimony highlighted several concerns regarding the enforcement mechanisms within PFML, including how frequently claims are audited and how overpayments are identified and recovered. The committee discussed the processes used to distinguish between good faith errors and intentional misrepresentation, noting that this distinction may be difficult to consistently apply.
While penalties for misuse may include repayment of benefits along with an additional percentage of the overpaid amount, questions remain regarding how often overpayments are pursued and successfully recovered. DEED testified that they wouldn’t usually seek to recover overpayments – they would simply deduct any overpayments from next year’s benefits. Committee members expressed concern about this lack of deterrence, but DEED assured the Committee it was easier to administer.
Members were concerned that state employees may not be motivated to pursue overpayments and track the money down. The Committee also noted that detection of improper payments may occur only after benefits have already been distributed, raising concerns about the effectiveness of current audit and enforcement practices.
Finding: Broad eligibility criteria and reliance on medical certification may present vulnerabilities
The committee discussed concerns related to medical eligibility and certification requirements under the program. Testimony suggested that certain qualifying conditions may be difficult to objectively verify, particularly those that are intermittent or recurring in nature.
The Committee raised questions about the extent to which individuals may take repeated or extended leave based on such conditions, and whether clear limits exist on the duration or frequency of absences. Additionally, the program relies heavily on medical providers to certify the need for leave, which may create inconsistencies in how eligibility is determined. Concerns were raised about whether standardized validation mechanisms are in place to ensure that certifications are accurate and applied consistently across providers.
Finding: Oversight of caregivers and service providers may be limited
Testimony also raised concerns regarding the verification of caregivers associated with leave claims. The committee identified potential gaps in requirements for verifying caregiver identity, qualifications, and the necessity of care being provided.
Questions were also raised about how the program confirms that caregiving services are actually being delivered, the lack of caps on the number of people who could take leave to care for the same individual, and whether sufficient documentation is required to support caregiver claims.
Additional concerns were discussed regarding providers located outside of Minnesota or outside the United States, and how the program verifies the legitimacy of those determining of the need for care, if they are not licensed practitioners in Minnesota or in the United States. The committee noted that a significant burden of verification appears to fall on medical providers, which may limit the program’s ability to independently validate caregiving claims. DEED did not seem to have a mechanism for verifying providers outside the U.S.
Finding: Rapid program rollout may limit early-stage verification capacity
As of February 9, 2026, approximately 13,000 applications had been approved within the first 40 days of program implementation, averaging roughly 325 approvals per day.
The Committee observed that the speed and scale of approvals may limit the ability of DEED to conduct thorough verification of each claim. Testimony suggested that early implementation may rely more heavily on self-reported information, while verification systems and enforcement mechanisms continue to develop. This rapid rollout increases the risk of fraud and the Committee stressed the importance of strong oversight and ongoing evaluation of program integrity safeguards.
Summary:
The Committee has repeatedly stressed the importance of “stopping fraud on the front end,” before taxpayer dollars are stolen, as it is very difficult to recover the full value once the money has been used for vacations, luxury homes and cars, jewelry, and property overseas.
The Committee decided to hold a hearing on PFML before the program went into effect to better understand the internal controls DEED had in place and try to flag concerns ahead of implementation. Unfortunately, DEED officials seemed largely unconcerned about the issues raised by the Committee and kept assuring the Committee that they had already taken these concerns into account and had robust plans for quickly identifying and stopping fraud.
The Committee remains concerned that the definitions in statute are too broad and that DEED does not have sufficient oversight tools in place to detect fraud, particularly when leave is taken to care for someone else. The Committee will continue to follow updates from the first year of implementation and seek additional statutory authority to close loopholes as warranted.