Committee holds over bill to exempt some S‑corp owners from Minnesota paid leave after close vote

Representative Rip Mueller introduced House File 3597 to exempt S‑corp officers and owners who hold 25% or more of their employer from mandatory participation in the Minnesota Paid Family and Medical Leave (PFML) program, saying the change would align PFML coverage with unemployment statute definitions and reduce confusion for small business owners.

Two small‑business owners testified against the bill. Amy Carlson, owner of Amy Carlson Hero Studio in West St. Paul, said private disability plans she carried were insufficient and that PFML is the most affordable and comprehensive option for herself and her clients. "I urge you, do not pass this bill," Carlson said. Kelly Martinson, owner and CEO of Ksquare Writing Inc., described years of family medical hardship and said PFML had been crucial; she told the committee she was "ecstatic to be part of Minnesota's paid family and medical leave program." Both testified they want the coverage available to all Minnesotans.

Members questioned the bill's fiscal and actuarial impact. Representative Paul Frazier (chair pro tempore asked whether excluding S‑corps would reduce the pool and raise premiums; Deputy Commissioner Evan Roe of the Department of Employment and Economic Development (DEED) said the agency was still completing an analysis and a fiscal note and cautioned against speculating on the exact fiscal effects. "We still need to do some analysis to see exactly how many S‑corps would be affected," Roe said.

Supporters of the bill, including Representative Mueller, argued that some small business owners cannot realistically use PFML — if an owner steps away the business can fold — and should have the option to opt in rather than be mandated. Opponents warned that allowing carve‑outs or opt‑ins risks adverse selection and could weaken the social‑insurance pool that keeps premiums low for everyone. "If you continue to carve people out, you do destabilize the program," Representative Pinto said.

Representative Mueller renewed a motion to move HF3597 to the general register and requested a roll call. After members recorded their votes, the motion failed on a 6–7 roll call and the bill was held over for further consideration.

The committee did not adopt policy changes today; members asked DEED to complete the fiscal note and to return with further analysis before the Legislature takes additional action.