First on the Legislative Agenda: Memorial for Speaker Emerita Melissa Hortman

The Minnesota Legislature returned to St. Paul on Tuesday to begin the 2026 Legislative Session. Official actions were very limited as both the House and Senate only met for about 15 minutes. Following that official action, they gathered together in the House Chamber to remember Speaker Emerita Melissa Hortman, her husband Mark, and their dog Gilbert, who were slain in an attack last June. The Governor and members of the House and Senate, Democrat and Republican, shared memories and words of wisdom from Melissa. Following the touching ceremony, legislators, staff, and members of the public mingled at a reception featuring homemade cakes and bread, favorites of Melissa and Mark.

Legislature (and Politics) are Back!

By Wednesday morning, committees were meeting, lobbyists and interested members of the public were filling halls and meeting with legislators, and politics were back in full force. After only two days of hearings, there are already several instances of legislators’ comments getting a little spicy. Usually this happens when legislators are discussing a bill but then reference a hot political topic. Without a doubt, both parties are guilty of this transgression. However, perhaps the testiest event so far occurred when a Republican in the House Public Safety Committee brought up a bill that would impose harsher penalties on felonies involving firearms. Democrats used the opportunity to try to amend the bill to include a prohibition on assault weapons. The Chair ruled the amendment out of order (this is a procedure used commonly on the floor, but not in committee), committee members questioned the ruling and rather than continue to discuss, the Chair quickly adjourned the hearing.

DFL Session Priorities

Senate Majority Leader Erin Murphy, House DFL Caucus Leader Zack Stephenson, and other DFLers have made it clear that their 2026 priorities focus on responding to federal immigration enforcement in the state, strengthening public safety, and addressing concerns around guns, fraud, and community security. Murphy and Stephenson have both indicated that DFLers will advance legislation aimed at regulating the conduct of federal immigration agents operating in Minnesota and increasing accountability for law enforcement activities, reflecting heightened tensions after recent federal actions in the state. They have also emphasized efforts to tackle issues such as gun violence, program fraud oversight, and support for infrastructure and bonding needs amid a challenging budget outlook. In their comments, they have underscored the need for effective, bipartisan solutions in a tightly divided Legislature while advocating for policies they believe will protect Minnesotans’ rights, safety, and economic stability.

Republican Session Priorities

Senate Minority Leader Mark Johnson, House Speaker Lisa Demuth, and House Floor Leader Harry Niska have outlined a Republican agenda focused on fiscal accountability, public safety, and affordability. They have emphasized combating fraud in state programs, including support for stronger oversight mechanisms such as an independent inspector general, and criticized what they have characterized as insufficient accountability in prior spending. They have also highlighted priorities such as reducing taxes and health care costs, easing regulatory burdens on businesses, strengthening school safety, and addressing crime. While signaling a willingness to work across the aisle in a closely divided Legislature, they have framed the session as an opportunity to refocus state government on transparency, responsible budgeting, and policies aimed at helping working Minnesotans.

Mark your Calendar: February Forecast released next week

Mark your calendar.  Minnesota Management and Budget (MMB) will release the February Forecast at 12:30 on Friday, February 27.  Minnesota’s budget forecast is the official economic and revenue projection that sets the financial framework for the state’s budget process. In practical terms, the February forecast drives committee budget targets, shapes negotiations between the House, Senate, and governor, and signals whether lawmakers will be debating new spending, tax cuts, or budget reductions. The last MMB forecast, released on December 4, 2025, estimated that the state will have a $2.465 billion surplus for the current FY 26-27 biennium but projected a deficit of $2.96 billion in the FY 28–29 biennium.

Effective March 1, 2026, owners and operators of residential rental properties in Minneapolis will be prohibited from using certain “algorithmic devices” to set rents or determine occupancy levels. The new ordinance targets the use of software that relies on non-public competitor data to recommend rental pricing or vacancy strategies.

Here are the top three things Minneapolis residential landlords need to know:

1. What qualifies as a prohibited “algorithmic device?”

The Minneapolis Code of Ordinances defines an “algorithmic device” as any device “that uses one or more algorithms to perform calculations of non-public competitor data concerning local or statewide rents or occupancy levels” to advise a residential property owner or operator as to vacancy rates and rent trends. As drafted, the ordinance appears to apply to residential dwelling units and does not extend to commercial leasing operations.

Importantly, the definition does not include:

• Sources that publish or aggregate existing rental data without providing recommendations as to rents or occupancy levels; and
• Products used to establish rent or income limits in accordance with affordable housing programs.

Landlords should carefully evaluate whether their pricing software merely aggregates public data or, instead, analyzes non-public competitor information to generate rent and occupancy recommendations.

2. The ban applies only to non-public competitor data.

The ordinance does not prohibit all algorithmic pricing tools. Rather, it prohibits the use of algorithmic devices that analyze or calculate “non-public competitor data.”

The ordinance defines non-public competitor data as information “that is not available to the general public,” including rent prices, occupancy rates, lease start and end dates, and similar data—regardless of whether the information is anonymized or specific to the Minneapolis market.

3. Tenants have a private right of action.

The ordinance grants residential tenants a private right of action against landlords who violate the ban on algorithmic devices. If a violation is established, tenants may recover compensatory damages as well as reasonable attorneys’ fees and costs.

While individual claims may be limited in value, a landlord’s exposure could increase significantly if multiple tenants bring claims. The prospect of attorneys’ fees and costs also increases litigation risk and potential exposure.

Bottom Line

Minneapolis residential landlords should conduct a prompt review of the tools and vendors they use to monitor occupancy levels and set rental pricing. If those tools rely on non-public competitor data to generate pricing or vacancy recommendations, adjustments may be necessary before March 1, 2026. Failure to ensure compliance could expose landlords to private litigation and significant aggregate liability.

Winthrop & Weinstine’s Real Estate and Commercial Litigation attorneys routinely advise landlords across Minnesota on the increasingly complex regulatory landscape governing residential and commercial leasing. For more information, feel free to connect with Peter, Elle, or your regular Winthrop contact.

Session Set to Begin

The Minnesota Legislature reconvenes on Tuesday, February 17, for the 2026 legislative session, but expect the first day to only include ceremonial activities along with a day of remembrance for Speaker Emerita Melissa Hortman. Because the legislature already has passed a two-year budget, the legislature isn’t required to pass any bills in 2026, though hope for passage of a bonding bill is high. While most expect few bills to make it to the Governor’s desk for a signature, some legislation will pass. Following is a calendar of key dates for the upcoming session:

• February 17 – First day of session
• Late February – Release of the February Forecast
• March 27 – First committee deadline
• March 28-Apri 6 – Legislative break
• April 17 – Final committee deadline
• May 18 – End of legislative session

Security Changes in St. Paul

Likely the biggest change at the state Capitol this year will be the implementation of security measures before entering the building. While all the details are still not fully known, it appears that metal detectors will be placed at three building entrances, and those will be the only entrances that can be utilized by the public, including legislators and staff. Individuals who have a valid permit to carry will be allowed to bring their gun into the Capitol, however guns will not be allowed by anyone who wishes to enter the Senate viewing gallery.

New security measures will also be in place in the Senate building. All visitors were already required to check in with security to visit members of the House of Representatives in their offices.

Governor’s Proposal Starts Capital Investment Process

The 2026 capital investment (bonding) process was kicked off on January 15 when Minnesota Management and Budget released Governor Tim Walz’s bonding recommendations. The plan totaled $907 million with $700 million in general obligation bonds and $207 million from other sources such as appropriation bonds, general fund cash, trunk highway bonds/cash, and user-financed bonds. The Governor’s recommendations impact the following areas:

• Asset preservation and maintenance of existing infrastructure
• Water and wastewater systems
• Transportation projects
• Public safety and corrections facilities
• Housing and economic development
• Other local and state projects such as regional parks and environmental improvements.

The House and Senate Capital Investment Committees will begin their own deliberations by reviewing the Governor’s plan before they begin to build their own bonding bills. Because the Minnesota Constitution requires a bonding bill to pass with a three-fifths majority in both the House and Senate, bipartisan support is essential for passage.

Good News-Bad News on the State Budget

An update on Minnesota’s budget situation is the proverbial tale of good news-bad news.  First the good news: the 2026 legislature convenes with a FY 26-27 biennial budget in place and a projected general fund surplus of $2.465 billion. This good news was bolstered on February 10 by strong January revenue collections reported by Minnesota Management and Budget. Net general fund revenues in January were $513 million (roughly 16.7 %) above the previous forecast, and fiscal-year-to-date receipts totaled approximately $19.4 billion (about 3.1 % above forecast). With this short-term infusion of revenue and the projected surplus in FY 26-27, the Legislature will not feel pressure to pass a supplemental budget to fix a short-term budget hole.

Now the bad news.  Looking beyond the current biennium, Minnesota Management and Budget projects a growing structural budget gap in the FY 28-29 biennium of $2.96 billion. This structural budget gap is driven largely by higher health care costs and slower economic growth, thereby increasing expenditures faster than projected revenues.

This good news-bad news budget picture will be updated at the end of February by the latest budget and economic forecast, and these numbers will then be used to finalize any supplemental budget. The question remains whether the Legislature and the Governor will attempt to take steps to limit the structural deficit in FY 28-29.

Retirements and Musical Chairs will have an Impact

At least 37 legislators have already announced that they plan to retire or run for a different position following this legislative session. This level of turnover will have implications for how the 2026 legislative session plays out. Consider that not one, but three members of the House Republican Caucus are vying to be the party’s gubernatorial candidate. This will impact how that caucus approaches decisions and, with Speaker Lisa Demuth as one of those candidates, will certainly impact negotiations with the current Governor as well.

Many of those retiring are long-time members of the House and Senate, and history shows that those who are retiring can be a less predictable than they were in the past. Some feel a sense of freedom to step away from the party line. Others may be willing to negotiate more in order to pass that last piece of legislation that they hope will be their legacy.

Earlier this week, the Northern District of Illinois upheld a prohibition on the collection of debit and credit card interchange fees for sales taxes, excise taxes and gratuities if the merchant informs the acquiring bank of the amount of these taxes and gratuities. The Illinois Interchange Fee Prohibition Act (IFPA) is scheduled to be effective July 1, 2026. The Court struck down the portion of the IFPA that makes it unlawful for “[a]n entity, other than the merchant” involved in a transaction to “distribute, exchange, transfer, disseminate, or use” the associated data “except to facilitate or process the electronic payment transaction or as required by law” (“Data Usage Limitation”).

Under the IFPA, the interchange fee restrictions require merchants to transmit the tax and gratuity information as part of the transaction; provided however, that the merchant has up to 180 days to submit the relevant documentation, which in turn triggers a 30-day window in which the card issuer must credit the merchant for the excess interchange fees. As there does not currently appear to be an automated process to complete the information submission, card issuers should expect merchants to manually submit information under the IFPA. Card issuers and payment card networks are subject to a civil penalty of $1,000 per electronic payment transaction under the IFPA if they have received the tax and tip documentation and do not credit the merchant within the 30-day window.

On August 15, 2024, numerous banking associations filed a complaint against the Illinois Attorney General challenging the enactment of the IFPA and sought a declaratory judgment that the IFPA is preempted by federal laws, unconstitutional, and invalid as applied to any participant in the payment system. Further, the associations sought to permanently enjoin the state from taking any investigatory or enforcement actions under the IFPA.

In December 2024, the Court granted a preliminary injunction to nationally chartered banks and federal savings associations and, in February 2025, expanded the injunction to out-of-state banks. The Court found that the National Bank Act and the Home Owners’ Loan Act likely preempted the IFPA’s application to national banks and federal savings associations, while the Riegle–Neal Interstate Banking and Branching Efficiency Act likely preempted the IFPA’s application to out-of-state State-chartered banks. Credit unions, Illinois-based banks and credit card companies were not covered by preliminary injunction.

In denying the permanent injunction for the interchange fee restriction, the Court relied upon the fact that the payment card networks, not the financial institutions, set the interchange fee amount and merchants must transmit the information about what portion of the transaction is gratuities and taxes. Acknowledging the complicated compliance challenges of the IFPA, including the onerous manual processing, the Court focused on whether federal law preempts the IFPA noting that the thrust of federal regulations is not to protect fees centrally established by a third-party company. The Court stated, however, that “This is a close call.”

In issuing the permanent injunction for the Data Usage Limitation, the Court found that the IFPA directly constrains the powers under federal law that gives banks broad power to process data. The Court stated, “The federal power to use data is express, and it permits the processing and use of data whether or not it comes from particular transactions. Unlike the prior provision, the scope of the conflict is not a close call.” The Court also concluded that the Data Usage Limitation is also preempted with respect to out-of-state State-chartered banks and federal credit unions.

As it stands, the interchange fee restrictions will apply to card issuers whose cardholders who use their cards or cardholder data for purchases in the state of Illinois. As the July 1^st compliance date nears, debit and credit card issuers will need to prepare for compliance by (i) tracking Illinois state and local taxes; (ii) creating procedures to receive and review merchant documentation regarding the amount of the taxes; (iii) informing merchants to which address to mail the documentation; (iv) creating procedures to pay merchants refunds within 30 days of receipt of the documentation; (v) training employees on the new procedures; and (vi) revising accounting practices for this trailing activity. Card issuers will also need to work with their payment networks to determine the process to include any previously issued merchant refunds in the chargeback process. We expect a manual process for card issuers until merchant acquirers can update the point of sale terminals in the state of Illinois to bifurcate taxes and gratuities from the purchase amount. Reach out to Winthrop if you need assistance in creating these compliance procedures.

This is a devastating ruling for the payment card industry; an industry that is still waiting for the merchant promised discounts after the Regulation II’s regulation of debit card interchange. The plaintiffs bank associations issued the following a joint statement in response to the Court’s ruling:

We are deeply disappointed by today’s ruling, and given the July 1 implementation date of the Illinois Interchange Fee Prohibition Act, we will appeal this decision. As the co-plaintiffs demonstrated and the OCC agreed, IFPA is clearly and fully preempted by federal law. The decision not to protect the payment system from this misguided state law is a serious error that will unleash chaos and confusion on Illinois consumers and businesses. We cannot let that stand.

In light of this outcome, we renew our call for state lawmakers to repeal this flawed law before it can do any more harm to the Illinois economy. The fight over IFPA and any similar proposal will continue.

Illinois is the first state to enact interchange fee restrictions. Unfortunately, this order may open up the flood gates for other states to enact similar legislation. Winthrop will monitor for copycat laws. Winthrop will monitor the case on appeal to the Seventh Circuit.

On January 22, 2026, the Federal Deposit Insurance Corporation (FDIC) issued a final rule to amend the signage requirements at 12 CFR 328.4 and 328.5 to provide insured depository institutions with greater flexibility in the display of FDIC signage on digital deposit-taking channels and ATMs and like devices. Compliance is required by April 17, 2027.

Background

On December 20, 2023, the FDIC adopted a final rule entitled “FDIC Official Signs and Advertising Requirements, False Advertising, Misrepresentation of Insured Status, and Misuse of the FDIC’s Name or Logo.” The final rule established FDIC signage requirements across banking channels and required full compliance by January 1, 2025. On October 17, 2024, the FDIC delayed the compliance date for the amendments to part 328 subpart A from January 1, 2025 to May 1, 2025. The FDIC further delayed the compliance date until January 1, 2027 for the amendments in Sections 328.4 and 328.5, which include the requirements for displaying the digital sign in digital and ATM channels. The delayed compliance date was intended to allow the FDIC time to develop proposed changes to the regulation to address implementation concerns and potential sources of confusion. However, the delay did not apply to the other amendments made by the final rule to on-premise signage, which went into effect on May 1, 2025.

In August 2025, the FDIC published a notice of proposed rulemaking related to 12 CFR 328.4 and 328.5 and the requirements regarding the (1) FDIC official digital sign design; (2) display of signage on digital deposit-taking channels; and (3) display of signage on ATMs and like devices. The comment period ended on October 20, 2025. Upon consideration of the public comments, implementation costs, ongoing compliance costs, benefits to consumers, and effect on small banks, the FDIC issued the final rule as described in greater detail below.

FDIC Official Digital Sign on Websites and Digital Banking Applications

This section applies to signage for digital deposit-taking channels, including insured bank’s websites and web-based or mobile applications, that offer the ability to make deposits electronically and provide access to deposits. The final rule:

• Gives banks some flexibility in the color, font, and text size that institutions may use when displaying the FDIC official digital sign.
• Requires display of the digital sign on a bank’s homepage, login page, and first page of the deposit account opening process.
• Narrows the requirement to display non-deposit signage only to pages primarily dedicated to advertising or providing information about, or access to, non-deposit products.
• Permits the one-time notification for bank customers related to third-party non-deposit products to automatically disappear after three seconds.
• Provides examples of the FDIC official digital sign and non-deposit signage placement that would satisfy the “clear, continuous, and conspicuous” standard as follows:

1. 1. The homepage of a bank’s website that continuously displays the FDIC official digital sign near the top of the page and adjacent to the bank’s name;
   2. The login page for bank’s mobile application that displays the FDIC official digital sign immediately adjacent to the username and password fields;
   3. The deposit account opening page for bank’s web-based application that displays the FDIC official digital sign near the top or center of the page; and
   4. With respect to non-deposit signage, a page on bank’s website promoting, for example, annuities available for purchase, with non- deposit signage appearing towards the bottom of the page in a manner that distinguishes the text of the non-deposit signage from the smallest text on the page using, for example, bold or larger text, or surrounding the signage with a text box.

FDIC Signage on ATMs and Like Devices

This section applies to signage for bank’s deposit-taking ATMs and other remote electronic facilities (referred to as “like devices). The final rule:

• Narrows the requirement for the display of the digital sign and non-deposit signage to apply only to the initial screen and initial non-deposit transaction screen, respectively.
• Clarifies that the sign does not have to display on a screen saver or an advertisement for products, services, or events.
• Allows the following devices to display the physical FDIC official sign rather than the FDIC official digital sign for : (1) ATMs and like devices placed into service after April 1, 2027 that do not permit an insured depository institution’s customer to transact with a non-deposit product and (2) ATMs and like devices placed into service on or before April 1, 2027.
• For ATMs and like devices that both receive deposits and permit the bank’s customer to transact with one or more non-deposit products, the ATM or device must display signage on the first page or screen displayed upon initiating a transaction with a non-deposit product indicating that the non-deposit products: are not insured by the FDIC; are not deposits; and may lose value.

If you have questions about implementing the FDIC signage requirements and related policies, reach out to the financial services attorneys at Winthrop & Weinstine, P.A.

On January 9, 2026, the U.S. Department of Treasury issued a Geographic Targeting Order and FinCEN Alert to enhance financial activity reporting and combat fraud in Minnesota.

Geographic Targeting Order

The Geographic Targeting Order (Order) requires banks (as defined in 31 CFR 1010.100(d)) and money transmitters with locations in Hennepin and Ramsey Counties to file to report additional information with FinCEN when they originate transactions in the amount of $3,000 or more to beneficiaries/recipients that are located outside of the United States. In addition to reporting all information required to be retained under 31 CFR 1020.410(a)(1) and (2), the bank is required to report the following information (regardless of whether the information is provided with the payment order):

1. The name and employer identification number of the bank;
2. The account number of the originator;
3. The name of the beneficiary;
4. The address of the beneficiary;
5. The date of birth of the beneficiary;
6. A phone number of the beneficiary;
7. An email address of the beneficiary;
8. The account number of the beneficiary;
9. Whether the source of funds for the transfer includes payments that are from any federal, state, or local government contract or benefit program; and
10. If the answer to question (9) is yes, whether those payments are from government agencies to entities in which the originator has any ownership interest.

The Order may require the bank to modify procedures and collect additional information from the customer for any affected transactions. The reporting will also require the bank to review the account to determine the source of funds for the transaction or inquire for any customers that deposit cash to fund such transactions. The Order indicated that the bank can rely upon information provided by the customer, absent knowledge of facts that would reasonably call into question the reliability of the information provided. The Order covers affected transactions between February 12, 2026, and August 10, 2026, and requires bank reporting by the end of the next month after the transaction date. The Order directs bank to retain records of all reports filed and any related compliance records until August 10, 2031, and make such records available upon request to FinCEN or any other appropriate law enforcement or regulatory agency, in accordance with applicable law. This means that the regulatory or law enforcement agency must comply with existing laws to obtain access to such banking records.

The Right to Financial Privacy Act (RFPA), 12 U.S.C. 3401 et seq., establishes specific procedures that federal government authorities must follow to obtain information from a financial institution about a customer’s financial records. For purposes of RFPA, a customer is defined as any individual (or representative of that individual) or a partnership of five or fewer individuals who utilized or is utilizing any service of a financial institution, or for whom a financial institution is acting or has acted as a fiduciary, in relation to an account maintained in the customer’s name. Therefore, restrictions in the RFPA do not apply to the financial records of corporations or partnerships with six or more partners. The RFPA requires the federal government authorities to obtain administrative summons or subpoenas, notify the customers and provide the customer the opportunity to object.

Banks should follow their standard operating procedures for releasing information to law enforcement or government agencies. For example, banks are not required to voluntarily share requested information with members of state or federal legislatures that seek information without providing a legislative or congressional subpoena or a warrant. Information shared with such persons or agencies who do not act in a supervisory capacity over the bank will not be treated as confidential supervisory information and will be subject to disclosure in any information requests. Banks should also consider their privacy policies before sharing any customer information.

FinCEN Alert

The FinCEN Alert has broader implications for all Minnesota-based banks and is not limited to Hennepin and Ramsey Counties as the above-mentioned targeting order. The alert was issued to “to urge financial institutions to identify and report fraud associated with Federal child nutrition programs, particularly past and ongoing suspicious activity potentially related to fraudsters in Minnesota.” FinCEN and federal law enforcement agencies have identified the red flag indicators to help banks detect, prevent, and report potential suspicious activity related to fraudsters targeting the Federal child nutrition programs in Minnesota. The alert suggests that banks should consider whether in connection with historical activity and prevailing business practices, the customer exhibits any of the following red flags for suspicious activity report (SAR) filings:

• A customer is a company or NPO serving as a sponsor for a government benefit program that suddenly receives and disburses a significant number of reimbursements in a short timeframe inconsistent with the customer profile of other similar entities.
• A customer is a recently established company or NPO enrolled in a government benefit program that is suddenly receiving a significant amount of Federal payments soon after starting its operations.
• A customer is a recently established company or NPO enrolled in a government benefit program receiving payments to their accounts that are inconsistent with their customer profile.
• A customer is a company or NPO enrolled in a government benefit program but is unable to verify its status to the financial institution or its customer profile is not commensurate with other similar entities.
• A customer is a company or NPO enrolled in a government benefit program that is receiving a significant amount of reimbursements despite limited operations.
• A customer is a recently established company or NPO enrolled in a government benefit program with a limited online presence.
• A customer is a company or NPO enrolled in a government benefit program that has minimal to no operating costs other than payments for “consulting fees” and nondescriptive, repetitive invoices (i.e. food supplies).
• A customer that is a company or NPO enrolled in a government benefit program makes a significant amount of cash withdrawals.
• A customer with previous fraud convictions is an employee of a company or NPO enrolled in a government benefit program.
• A customer is an employee of a company or NPO enrolled in a government benefit program that is frequently purchasing or redeeming cashier’s checks for no clear purpose.
• A customer that is a company or NPO, enrolled in a government benefit program, or the customer’s employee, engages in behavior suggesting efforts to evade the Currency Transaction Report (CTR) reporting requirement (e.g., alters or cancels a transaction when advised a CTR would be filed or engages in structuring with multiple cash transactions for under $10,000), as well as avoiding recordkeeping requirements.
• A customer is a company or NPO enrolled in a government benefit program meant for U.S. citizens and lawful permanent residents that is sending a significant amount of wire transfers to individuals and companies located in foreign jurisdictions.
• A customer is a company or NPO enrolled in a government benefit program that is sending payments abroad for residential and commercial real estate, vehicles, aircraft, airline tickets, and designer clothing.

The alert further encourages banks to file such SARs as soon as possible regardless of threshold and to reference the Alert in SAR field 2 (Filing Institution Note to FinCEN) and the narrative by including the key term “FIN-2026-MNFRAUD” and select SAR field 34(z) (Fraud – Other) and include the term “Federal Child Nutrition Programs” in the text box. The additional red flags may require changes to compliance policies and related trainings on red flags.

If you have questions about the Geographic Targeting Order and FinCEN Alert or are facing requests from law enforcement or agency actions, reach out to the financial services attorneys at Winthrop & Weinstine, P.A.

Yesterday afternoon (January 8, 2026), the Minnesota Department of Human Services (“DHS”) alerted providers that the Centers for Medicare & Medicaid Services (“CMS”) directed Minnesota to freeze new provider enrollments in over a dozen categories of health care services, including:

• Adult Companion Services
• Adult Day Services
• Adult Rehabilitative Mental Health Services
• Assertive Community Treatment
• Community First Services and Supports
• Early Intensive Developmental and Behavioral Intervention
• Housing Stabilization Services
• Individualized Home Supports
• Integrated Community Supports
• Intensive Residential Treatment Centers
• Night Supervision Services
• Nonemergency Medical Transportation Services
• Recovery Peer Support
• Recuperative Care

DHS stated that this freeze is the latest action in response to concerns over fraud, particularly in government-run health care programs. This directive by CMS, however, indicates that the federal government is stepping in to assert more control over Medicaid programs typically overseen by state agencies. Notably, DHS had already announced a two-year licensing freeze on home and community-based services and adult day programs.

According to DHS, a start date for the freeze is yet to be determined, and as of right now, there is no clear plan for implementing the necessary operational processes and updates needed to achieve this broad enrollment freeze, or determine how pending enrollment applications already in queue will be handled. Once implemented, however, the freeze is set to last at least six months.

Currently enrolled providers can continue to operate as usual and the freeze on new provider enrollments will not affect new member enrollment in existing programs. DHS also advises that it will issue exceptions to add new providers where capacity is needed, although any exception will require written approval from CMS. It is unclear at this juncture how such need will be determined or what the process or criteria will be to enroll new providers under an exception. The freeze on new enrollments coupled with the widespread payment withholds and prepayment reviews which have delayed or stopped payment to providers raises questions about how DHS will ensure that Medicaid recipients in need will continue to have access to necessary services.

If you are an affected provider and have questions about this pending licensing moratorium, or are facing adverse DHS or CMS action, reach out to the health care regulatory attorneys at Winthrop & Weinstine, P.A.

Minnesota enacted updates to its meal and rest break law, affecting nearly all employers operating in the state. These changes went into effect on January 1, 2026. Employers should ensure policies, timekeeping practices, and handbooks are updated in compliance with the new law.

The following frequently asked questions address common questions from Minnesota employers. For assistance tailoring the new law to your business, please reach out to any members of Winthrop & Weinstine, P.A.’s employment team.

What changed on January 1, 2026?

The new law clarifies that employees must be allowed a paid rest break of at least 15 minutes, or enough time to use the nearest restroom, whichever is longer, within each four consecutive hours worked. In addition, employees must be allowed an unpaid meal break of at least 30 minutes when working six or more consecutive hours.

Recall, the previous law provided adequate time within each four consecutive hours worked to use the restroom and sufficient time when working eight or more consecutive hours to eat a meal.

Who is covered by the new law?

The statute applies broadly to “employees” under the Minnesota Fair Labor Standards Act, unless a specific exception applies. Some exceptions include certain agricultural workers, individuals employees in a bona fide executive, administrative or professional capacity, and certain seasonal day camp staff members.

In what scenarios would a meal break need to be paid?

A meal period may be compensable if the employee is not completely relieved of their duties during the meal break, such as frequently being interrupted for work or performing job-related tasks while eating. If a meal is cut short to respond to work needs, the time should be treated as paid. However, an employer can require the employee to remain at work during the 30-minute meal break. Assuming the employee is completely relieved of their work duties in this instance, this time does not need to be paid.

How should we schedule breaks for an 8-hour shift?

For 8-hour shifts, many employers choose to give employees a meal break around the middle of their shift, usually at the 3 hour mark, then provide a rest break during the second half of the shift when the employee is working four or more consecutive hours. This schedule ensures adequate breaks are provided.

Can the break occur at the end of four hours, or the meal at the end of six hours?

No, rest breaks must be provided within 4 consecutive hours worked, and meal breaks must be provided within 6 consecutive hours worked.

Can employees waive their breaks?

Yes, an employer only has an obligation to allow their employees to take rest and meal breaks. If an employee voluntarily chooses to waive their break, we recommend employers obtain confirmation, in writing, from the employee each time they waive their break.

Can you combine meal and rest breaks?

You can combine meal and rest breaks as long as employees are receiving their 15-minute rest break within each four consecutive hours worked, and a 30-minute meal break when working six or more hours. You must ensure the breaks are scheduled within the consecutive hours worked, not after the hours are worked.

For example, if an employee is working 9 a.m. to 5 p.m., an unpaid meal break could be provided from 12 p.m. – 12:30 p.m., and a paid break could be provided at 4 p.m.

If the meal and rest break is combined into one-hour block, designated as a single meal break that satisfies the rest and meal break requirements, may the entire hour be unpaid?

Yes, as long as employees are completely relieved of their job duties during the one-hour meal break, it need not be paid. For illustrative purposes, using the example above, if an employee is working 9 a.m. to 5 p.m., an unpaid meal break would be provided from 12:30 – 1:30 p.m.

Our team reached out to Minnesota Department of Labor and Industry to confirm the answer to this question.

To comply with the changes now in effect, employers should revise policies to reflect the new timing and duration, train managers on scheduling, and notify employees on their rights under the new laws. Please reach out to any member of our employment team for assistance with compliance.

Employers should also be aware of Minnesota’s new paid family and medical leave program that went into effect on January 1, 2026. For practical guidance on this new law, please see our team’s articles: Minnesota’s New Paid Family and Medical Leave Law and Is Your Business Ready for Minnesota’s New Paid Family and Medical Leave?

The beginning of a new year means new estate and gift tax figures from the IRS! While there has been much uncertainty over the last few years regarding the estate and gift tax exemptions post-2025, the One Big Beautiful Bill Act passed in 2025 has given some certainty to the federal estate tax system, at least for the near term.

Federal Estate and Gift Tax Exemption

The federal estate and gift tax exemption is the amount that an individual can transfer during life or at death without owing federal transfer tax. It is a unified system, meaning that there is one exemption that covers both lifetime gifts (exceeding the annual gift tax exclusion amount, which is described further below) and transfers at death.

The estate and gift tax exemption for 2026 is $15 million per individual. With proper estate planning, married couples can shelter approximately $30 million from federal transfer taxes.

The estate tax rate for 2026 remains at 40% for assets exceeding an individual’s estate and gift tax exemption.

The One Big Beautiful Bill Act passed in 2025 made the $15 million estate and gift tax exemption “permanent” (meaning that the exemption amount will no longer be decreased unless there is new tax legislation signed into law). The $15 million exemption will continue to be indexed for inflation by the IRS.

GST Tax Exemption

The generation-skipping transfer (GST) tax exemption is the amount that an individual can shelter from the GST tax when transferring assets to beneficiaries who are more than one generation younger than an individual (typically, transfers to grandchildren or trusts for grandchildren and more remote descendants).

The GST exemption remains the same as the estate and gift tax exemption, at $15 million per individual for 2026.

Minnesota Estate Tax Exemption

The state of Minnesota also has a state estate tax. The exemption for Minnesota’s state estate tax remains at $3 million for 2026.  Estates of Minnesota residents (or non-residents who own Minnesota sitused property) that exceed the $3 million exemption are subject to state estate tax at a rate of 13-16%.

Unlike the federal estate tax system, Minnesota still does not allow “portability” of a deceased spouse’s estate tax exemption to the surviving spouse. It is critical that married couples with assets exceeding $3 million build estate tax planning provisions into their estate plans to ensure the first spouse to die’s exemption is not wasted.

Annual Gift Tax Exclusion

The IRS sets an annual gift tax exclusion each year, which is the amount an individual may gift per recipient without using any of the individual’s lifetime gift and estate tax exemption. The 2026 annual gift tax exclusion amount is $19,000 per person (remaining the same from 2025). For a married couple, that amount is doubled to $38,000 that the couple may give per recipient in 2026, though unless you are electing gift-splitting on a gift tax return, you should still separately make your own $19,000 gift to a recipient.

Gifts to Non-US Citizen Spouse

When both spouses are US citizens, typically each spouse may transfer unlimited amounts to one another without incurring gift tax. However, gifts to a non-US citizen spouse are limited. For 2026, the amount that can be gifted to a non-US citizen per year is $194,000. Gifts in excess of that amount must be reported on a gift tax return and use some of the available $15 million exemption.

Review Your Estate Plan in Light of Tax Law Changes

We recommend regularly connecting with your estate planning attorney to make sure your estate plan is appropriate for your financial situation. As tax laws change and your balance sheet grows, it is important to ensure that your plan incorporates the proper tax planning for you.

Our estate planning team can assist with wealth transfer planning strategies to reduce your estate and gift tax exposure during your lifetime and ensure that your estate planning documents maximize the use of your exemptions on your death. Contact a member of our estate planning team for assistance.

Adult day care settings are the most recent target in the Department of Human Services (“DHS”) recent efforts to tighten oversight and combat fraud in Minnesota. On December 16, 2025, DHS announced that it would pause issuing new licenses for adult day centers because, according to DHS, provider capacity currently exceeds the projected needs for that service. In addition, DHS states that this action will align with an Executive Order issued by Governor Walz, aimed at preventing and detecting fraud and abuse in Minnesota’s health care sectors. Adult day services include the delivery of supervision, care, assistance, training, and other activities aimed at supporting seniors and adults with disabilities to help support independent living and provide reprieve to family caretakers.

DHS states that the pause on adult day care licenses is projected to last two-years, from February 1, 2026, through January 31, 2028. During this period, DHS will stop accepting new applications for adult day center licenses and plans to cancel pending applications. In addition, DHS plans to increase its focus on current adult day center providers to ensure they are following state and federal rules. Providers currently operating adult day care centers should prepare for increased audits and oversight by ensuring records are accessible and comply with state and federal documentation requirements.