Minnesota CropCast

Dave: 00:00

Good day, and welcome to the University of Minnesota Extension and CFANS podcast, Minnesota CropCast. I'm Dave Nicolai, University of Minnesota Extension crops educator, along with my co host Doctor. Seth Nave, University of Minnesota Extension soybean specialist. Well welcome back we're here with Rob Holcomb who is our Regional Extension Educator in Farm Business Management. Rob is located out at the Marshall Regional Office which is out in Western Minnesota.

Dave: 00:35

And Rob wanted to stop by and talk to us a little bit about an important program, Seth, that is affecting agriculture producers. A lot of farmers particularly may not be as used to it and that is our paid leave program here in the state of Minnesota which is a recent program for a lot of employers in the state of Minnesota. And certainly Rob, when it comes to farmers, this is something that in their normal course of events they just haven't dealt with. And there's important things to keep in mind in terms of that situation. Folks that are receiving or giving out W-2s and farmers do that often in terms of the help that they're hiring throughout the farming operation, whether they're in crops or livestock, all depends on situations when they're dealing with labor.

Dave: 01:20

So Rob, do you wanna bring us up to date a little bit about this program? What it entails briefly here? And maybe we can dive into what are some of the timetables and things that they need to keep in mind.

Rob: 01:33

Sure. Sure, Dave. Thanks for inviting me today, and I I appreciate the opportunity to visit about this. The the Minnesota paid leave program that was set up by the legislature, from a couple years ago, it it went into effect January 1. And this Dave, this affects everybody that is issuing a w two to an employee.

Rob: 02:00

And one thing that I wanna point out from the very beginning is, you know, I've I've had folk folks call me at the office here and they say, well, we're just gonna quit giving w twos. We're just gonna give ten ninety nines to everybody. Folks, that is not a solution. The you know, the state's gonna be all over that and in fact, the federal has been all over that for for several years. So so that that's really not an option.

Rob: 02:26

But but the the main thing that really is the hot plate on the burner right now is that employers are obligated to file quarterly reports or this program and the first quarter report is due at the April here. April 30 is the deadline for this for this first quarter report.

Dave: 02:49

So how do they go about filing this report? Is it online, a website if they've never done it before? Do they need they need help? Or are there different things that they can walk them through there in terms of tutorials?

Rob: 03:06

Well, first of all, I I always encourage folks to involve their tax professional or if they're working with a payroll administrator, they should be involving all those folks in this in this process. The all employers are going to have to set up an account on the Minnesota Paid Leave website. If you just Google the Minnesota Paid Leave website, it's you know, the website is pl.mn.gov. But if you just Google Minnesota Paid Leave on your browser, it's gonna take you there. You click on the employer button and then that's gonna populate all the stuff that employers have to have.

Rob: 03:53

You all employers have to set up an account and when they access that account, that's where they're gonna be filing these quarterly reports. The the real key nuance to to this program that that is very confusing to folks is that farmers let me state this again, most farm employers are not obligated to file quarterly unemployment reports. And these reports are all submitted or are getting submitted through the state unemployment insurance portal. And that's confusing everybody because, you know, unless typically, unless a farmer's got $20,000 worth of wages paid in any calendar quarter, they're not obligated to do unemployment for their for their employees. Since farmers are all exempt from that or most farmers are exempt from that, farmers have to create what's known as a paid leave only account.

Rob: 04:58

And that's going to be only for reporting paid leave, hours, premiums, etcetera. But it's not gonna trigger tax obligations for unemployment insurance.

Dave: 05:12

So is this going to affect folks that are when employ what I would say traditionally, we call them seasonal employees, as well as someone that's, you know, full time at the farm. But oftentimes, there are seasonal activities, particularly in crops and so forth. Are they involved with this as as well?

Rob: 05:31

Essentially, anyone that was given a w two is on the hook for this. The only the only individuals that are really going to be applicable for exclusion are going to be seasonal hospitality workers, have a have a special carve out in the legislation or somebody that's getting a government paycheck or a go on the government payroll, I should say. And, you know, our farm our farm labor is not going to be covered under the under those umbrellas.

Seth: 06:00

So from a practical standpoint, when farmers they'll what what kinds of information just so that they kind of have a feeling for what they're gonna see when they open this to fill out that quarterly report. They probably haven't provided any leave for any of their employees during this quarter if they're if they're just hearing about it now. So will they just probably enter some very basic information, just say none no quarterly or no no paid leave required during this period, and that will be it? Or is there is it a pretty thorough, report that they'll have to fill out?

Rob: 06:38

Well, Seth, and that that's a very good a very good point because this this is just for the clarification. When when an employee files for a leave, that is done through the state and they're and they're paid through the state. The employer beyond just helping with the administration of the reporting or turning in turning in for an approved leave that really is not gonna be affected by this quarterly report. This quarterly report is essentially going to be, they're gonna have to put down on the quarterly report, they're going to have to report the employee's full name, the employee's social security number, the total hours worked for the first calendar quarter and also the gross wages that were paid during that first calendar quarter. That essentially is what's gonna go into this report.

Rob: 07:36

Now there there is a premium that's going to be due. There's a large employer premium and a small employer employer premium. To qualify for the small employer, they typically need to be 30 employees or less, that that needs to be on the payroll. The confusing part about this that that that a lot of producers are just now finding out about, and and this this podcast is gonna help communicate that to some extent. When this program was originally conceived, the state was asking folks to file, quarterly reports going back to October 2024.

Rob: 08:16

Now part of the purpose of that was to establish who is a small employer, who is a large employer. Right? If somebody's setting up an account right now in the latter part of in the latter part of April twenty twenty six, you're going to be considered even though you might only have a couple of employees, you're going to be considered a large employer when you file this report until you get several reports in the books and the state deems you to be a small employer.

Seth: 08:48

Very interesting. So if we back up just a little bit, I'm I'm getting my head around this a little bit as we as we talk. From a very large perspective, most of the farmers that are having their taxes done by by any kind of a tax professional would have would have been receiving quite a bit of this information in this last tax year. And when they filed, they probably got prompted about some of these things. Can we assume that most farmers would receive that from their tax professional?

Seth: 09:17

Because this is gonna this the the payments are gonna be under under some sort of a of a tax umbrella. Correct?

Rob: 09:27

Well, yes. The the pre the premiums are the there there's two portions to the premium. There's the employee portion because the the the law states that the premium can be shared between the employee and the employer. As far as the employee goes, you know, the farmers not, you know, no tax implications at all on that on that employee portion that gets withheld from the paycheck. The employer's portion is considered an excise tax deductible on the tax return.

Rob: 10:02

Now, the the the fact of the matter is Seth, you know, today that we're recording this is the April 23. April 15 was the, you know, the big day for tax returns due and everything. The part of the problem is tax professionals have been just going night and day trying to get all those tax returns filed and everything. So many of them really have not had a lot of time to focus on this until we were post April 15, which gives us a very narrow window to to get all this stuff filed.

Seth: 10:37

Okay. And then the one thing I wanted to emphasize, though, is that those farmers that may have been pretty good with their taxes themselves and doing their own may have had more simple taxes than most and were able to to do some of those taxes themselves without a tax professional, they may be completely unaware of this. So that's the really important part here is that we gotta work and and reach all those folks.

Dave: 11:01

So so, Rob, I wanted to step back a little bit and say, right, one of these employees or their seasonal or or full time. But if they are opting for this, the paid leave, maybe you can help us trace where is that actual in 2026 money coming from in a pool at the state level till that gets fully funded? And and then how does a farmer figure back into contributions on there? Can you can you trace the the dollar here a little bit back and forth?

Rob: 11:31

Well, as far as the dollar goes, mean, the premiums are going to a fund at the state and that's determined by actuaries as far as what that premium rate is going to be. If the farmer has not withheld any paid leave premium from the employee's paycheck since the beginning of the year, The law does provide that the employer can pay both halves of the paid leave premium. Now, the tax consequence of that is when the employer pays the employee's portion of that premium that becomes taxable income to the employee. So no immediate tax consequence on that, but the farmer needs to talk with the hopefully the either the accountant or payroll administrator to make sure that they get those payroll entries entered in entered into their system properly because this is going to affect the w two amounts that get reflected on the employees w two at the end of the year, but this is also going to add compensation. So this is gonna mess with the payroll liability that the employer is gonna have.

Rob: 12:50

Because there's gonna be there's gonna be more there's gonna be more money on there, so they they don't wanna end up being short on their payroll deposits.

Seth: 12:59

So I'm I get mentally overwhelmed very easily, and so this is one of these cases why it's a good good example why I didn't stay on the farm with my brothers and and and work with those guys. And so to take this in pieces, if we if we I the best way to eat an elephant is, you know, one bite at a time. Right? So we gotta get these we gotta get in and get an account. And, again, that's pl.mn.gov.

Seth: 13:24

Is that the correct URL?

Rob: 13:26

That's going to get you to the main website. Okay. And what what you're gonna have to do is you're they're looking for an a a for employers. And then and then they're gonna they're gonna go to that and then that's gonna populate with all the information that they need for for, employers. One of which is gonna be creating an account.

Seth: 13:48

K. So they can create an account first, and then they can populate that quarterly report with the payroll information for their employees for the past quarter, and that'll at least get them through April 30. So then we're good for now. And then anybody that's just hearing this now and was relatively unaware of this, they will need to now go back and make sure all those payrolls were were appropriately made for those those individuals. And then probably that's probably the second step in this probably, right, is to make sure that they've they're they're withholding correctly and and and then start communicating with with even their employees about, what their paycheck's looking like and who's paying for what and some of those kind of things.

Rob: 14:35

I I yes. I concur with that.

Seth: 14:37

And then will will there be some will the the Minnesota the p the paid leave website, will that have some kind of fact sheets or things that the farmers could just print off and have some high level information for them that they could hand to their employer employees as well? Because I know, you know, I've received things from the University of Minnesota that have have given some information about paid leave and some things like that. And I'm knowing most farmers, they probably haven't, you know, these aren't the top of things of mind that they're they're talking with all their employees about. So are there some things that they need to talk with their employees to make that sure that they're square with them?

Rob: 15:17

Absolutely. On on that on that paid leave website with the state, under the employee page, there there are also there there's several required posters much much like, you know, normal employers. You you have to you have to post a poster. You're required to post a little poster on minimum wage Yep. And discrimination and all that.

Rob: 15:44

Well, there's there's two or three posters from the state that we're required to hang up in the you know, a lot a lot of folks have a bulletin board in the in the break room. You just thumbtack those things up and you're compliant. But but yeah. The post the posters are available on the website for download, and they print on an eight and a half by 11 sheet of sheet of paper.

Seth: 16:06

Perfect. That'll get things started and so that they at least some there's some awareness on both the employer and the employee side.

Dave: 16:12

So Yes. Rob, you mentioned about the premium. What are some averages here? I mean, when we talk a premium, any ballpark figures? What is it costing?

Dave: 16:24

Say for example, a full time. I mean, I'm I know there's actuaries involved in here, but a typical amount of premium money that that farmers have to be concerned about.

Rob: 16:36

Well, the the large employer premium is is 88 hundredths of 1%. Small employer premium is point six six instead of the point eight eight. The the employee Of

Dave: 16:51

of what now? Of?

Rob: 16:52

Of the of the gross wage.

Dave: 16:53

Okay.

Rob: 16:54

That's that that's a percent of the gross wage. The the difference with the large and the small employer is the employee is always gonna be on the hook for the point four four. 44 hundredths of a percent of the gross wage, that's gonna be the employee's portion they're responsible for. In the case of the small employer, they're only gonna be on the hook for 0.22 whereas the large employer is gonna be on the hook for the 0.44. So it is a significant difference but but the the difference is say for instance, you know, I did I did some payroll examples earlier this week for for another program I'm doing.

Rob: 17:36

Thousand dollar check, you know, 44 hundredths of a percent, the premium withheld from the employee would be $4.40.

Dave: 17:45

Okay.

Rob: 17:45

Alright. For for a thousand dollar paycheck. Alright. And large employer would be on the hook for that same $4.40. If it's a small employer, it'd be $2.20 for that particular paycheck.

Dave: 17:58

It's it sounds like there's an incentive though to get yourself classified as a small employer if possible, even if you're starting now and going through those procedures. Is there anything that Rob that you have had in writing? I'm going back to the old fashioned thing. A fact sheet or anything that you can point to to people if they want to quote read up a little bit more that Center for Farm Financial Management or yourself have have published or put out a little bit more comprehensive?

Rob: 18:29

What once you mean the the website itself is it the pop the population of fact sheets and quality information is getting better. Now as we speak, I I we our our department has done a number of videos that are gonna be posted to our YouTube page. I cannot tell you right now where those you know, the web address to find those. I expect those to be posted probably early next week and, we will. But but if you but my experience is if you Google this stuff once it's once it's, posted, it's gonna be available.

Rob: 19:11

I expect it to be available probably by the by the middle of next week.

Dave: 19:14

So the website again would be the Center for Farm Financial Management. Is that where they need to go?

Rob: 19:18

No. It's gonna it's gonna be on the it's gonna be a part of the ag business management Okay.

Dave: 19:23

So that's in searching that website, ag business management, University of Minnesota. Mhmm. Okay. We'll get you to some of those.

Seth: 19:30

And then and then if they're just if someone's just googling, I think if we do center for ag business management and then and then on top of that, they add paid leave onto that. That'll that'll rein in some other things if they're looking for really specific things later.

Rob: 19:45

It should. And the ag business management page is on the on the extension website is labeled managing a farm. So if you if you go to extension managing a farm, that's gonna take you to our page.

Seth: 19:57

K. Throwing out a lot of things, but I know that, you know, it's it seems like most people end up googling things. It's a little more efficient than giving those straight URLs. So any last things? I think I'd really love to have you on again in a in a couple months, and we can talk about some of the practical aspects of this and and maybe how farmers are utilizing this within their own within their own businesses.

Seth: 20:22

And if there if there's a way to communicate with, you know, know, how how farmers should be communicating with with their employees about how to use paid leave relative to just taking time off and things like that. I think maybe there are some small things that we could probably discuss at another time. So

Rob: 20:44

Absolutely. Absolutely.

Seth: 20:46

That'd be great.

Rob: 20:46

Our our first our first year focus because the the the university was was, you know, issued a grant from from the state for educational delivery. The focus this first year is on employers, and the step step two is a more intensive educational effort for the employees to understand what the components of the program.

Seth: 21:11

Okay. So I'm reading between the lines here. It sounds like, this program, you know, was fraught with some challenges and timing and pushing out. And so it sounds like there's gonna be some grace involved here. And so I I guess I'm I'm I don't I don't wanna hold you to this, but I'm I'm getting the feeling that farmers should not necessarily freak out about this.

Seth: 21:34

They need to think about being prepared to be compliant, but it shouldn't be something that they need to set their hair on fire about at this point.

Rob: 21:43

I listen. Farm this is the time of the year where everybody's thinking about getting into the field. And setting their hair on fire, I think that's a that's a very good analogy. I I've the impression that I've gotten from this is that the state's number one goal is not to go out and penalize everybody. They're trying to move everybody into the direction of compliance.

Rob: 22:06

So I I I think farmers need to take need to be proactive in getting an account set up, you know, they're able to do that, get an account set up, get caught up on the reports. Someone that goes to January and hasn't done a thing, that might be pushing the envelope a little too far. But, but but we have we have no official rules on when when the state's gonna actually clamp down on this.

Seth: 22:39

And certainly, just just from a practical standpoint, again, just getting on top of things as early as we can, I think, is better for everybody so they don't they don't owe? They don't have to work backwards and and do a lot of back backward accounting on things. So being on top of payroll now and being able to put that into these quarterly reports is pretty good. So anything else that you'd like to add, Rob?

Rob: 23:05

I think that pretty much hits it. Go folks, guys. I I appreciate the opportunity.

Seth: 23:09

If you have very specific questions that you think that Rob could could and needs to hear, I think you could contact him through University of Minnesota or University of Minnesota Extension's websites, and you could find him by doing a search. I think that would be fine. Is there anything, Dave or Rob, you'd like to add?

Dave: 23:30

I thank Rob for stopping by and and getting us updated on this. Very important. So Rob, we'll let you go. Thank you for stopping by. And again, we'll talk about this more in the future and people can check the websites and find out a little bit more information.

Dave: 23:46

So Rob Holcomb, University of Minnesota Extension Farm Management. So appreciate Rob and we'll talk to you later.

Rob: 23:54

Alright. Thank you.

Dave: 23:55

Yep.