Minnesota: 2026 Legislative Update, Paid Leave, Reversal of the Biden-Overtime Rule, and EEO-1 Updates

By Martin D. Kappenman and Francis P. Rojas - Peters & Kappenman, P.A.

May 27, 2026

2026 Legislative Update

The Minnesota Legislature adjourned on Sunday, May 17, 2026.  Several bills were sent to Governor Walz for signature including, but not limited to, the following:

•    Minnesota Human Rights Act, S.F. No. 320: Amending Minnesota Statute Section 363A.02, subdivision 1, to include, “Failure to engage in the process to determine if a reasonable accommodation exists that would allow people with disabilities as defined in section 363.03, subdivision 12, to participate fully in employment, housing and real property, public accommodation, public services, and education may be an unfair discriminatory practice under this chapter.”

•    Worker’s Compensation, S.F. No. 3720:  Implementing the recommendations from the Minnesota Workers' Compensation Advisory Council. These changes include, but are not limited to:

      o    Increase in Permanent Partial Disability (PPD) Benefits.  For injuries that occur on or after October 1, 2026, the PPD compensation schedule base amount was increased.  This will result in higher benefits across all impairment tiers.   
      o    Attorney Fee Retainers.  Effective May 19, 2026, and for injuries that occurred on or after October 1, 2024, retainer agreements must clearly state that the maximum fee is 20% of the first $275,000 in compensation awarded (an increase from $130,000), subject to a maximum fee of $55,000 (an increase from $26,000). 
      o    Independent Medical Examination (IME) Witnesses.  Effective May 19, 2026, the statute was amended to state IME witnesses are “unpaid” and the party requesting the witness is responsible for defraying the cost of the witness.
      o    PTSD Diagnosis.  For injuries that occur on or after October 1, 2026, psychiatric mental heath nurse practitioners are now qualified to make a diagnosis of PTSD.  Prior to the amendment, only licensed psychiatrists and psychologists were able to make this diagnosis.

•    Bonding Bills, H.F. No. 719 and 2484:  The capital investment package provided funding directed to city infrastructure and earmarked projects.  The specific funding spreadsheet can be reviewed here.

Minnesota Paid Family Medical Leave 
The 2027 rate will be announced on July 31, 2026.

The Reversal of the Biden-era Overtime Rule 
On May 15, 2026, the United States Department of Labor (DOL) published an amendment to the Federal Register (2026-09839, 91 FR 27833) officially rescinding the Biden-era 2024 Overtime Rule. 
 
Under the Fair Labor Standards Act (FLSA) employees must meet certain duties tests and salaries in order to be considered overtime exempt.  The 2024 Overtime Rule sought to expand overtime eligibility by raising the minimum salary thresholds from $35,000 to $44,000 in 2024 and $59,000 in 2025.  The DOL announced this would extend overtime coverage to about 4 million additional workers.  In late 2024, the U.S. District Court for the Eastern District of Texas vacated that rule.  The judge said the rule impermissibly attempted to introduce “sweeping changes to the regulatory framework, designed on their face to effectively displace the FLSA’s duties test with a predominate – if not exclusive – salary-level test.” The judge held the DOL “simply does not have the authority to effectively displace the duties test with such a predominant salary-level test.”
 
This 2026 DOL amendment removes the Biden-era regulatory language and restores the language establishing the $35,000 threshold.  Wage and Hour Division Administrator Andrew Rogers said, “it is critical that each element of the section 13(a)(1) exemptions – duties, salary basis, and salary level requirements – be clearly framed for the benefit of both employees and employers.” 
 
What does this change mean to you? 

•    Employers should continue to abide by the $684 per week threshold requirement under the 2019 overtime rule.
•    Highly compensated employee exemption is currently set at $107,432 per year.
•    Contact us if you have questions about these exemptions and your company’s compliance with the DOL or state regulations.  Please note that some states might have more expansive requirements than FLSA.

EEO-1 Consolidated Report 
Since 1966, the Equal Employment Opportunity Commission (EEOC) required private companies with at least 100 employees and federal contractors with at least 50 employees meeting certain criteria to complete the EEO-1 Consolidated Report.  The EEO-1 Consolidated Report requires data collection of the employees’ job category, sex, race or ethnicity.  Other similar reports must be filed periodically by labor unions (EEO-3), state and local governments (EEO-4), and public and secondary schools (EEO-5).
 
On May 14, 2026, the EEOC submitted a proposed rule to the Office of Information and Regulatory Affairs (OIRA) titled, “Rescission of EEO-1, EEO-2, EEO-3, EEO-4. EEO-5, And Reporting Requirement Under Title VII, the ADA, GINA, and the PWFA”.  (Pending EO 12866 Regulatory Review).  OIRA is currently reviewing this proposed rule and is expected to approve for publication in the Federal Register, in no more than ninety (90) days. 
 
At this time there is no other publicly available information regarding the substance of the proposed rule other than the title. 
 
It is not clear if this proposal will affect employer’s duty to submit the EEO-1 this year.  At this time, the EEOC has not opened its portal for the 2026 EEO-1 report filing.  Last year, the EEOC launched the portal late in May 2025.  Nevertheless, employers should prepare to file the 2025 EEO-1 Consolidated Reports pending implementation of the final rule. 
 
During the first Trump administration, the EEOC sought to discontinue EEO-1 Component 2 reporting on pay and hours. 

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