Connecticut employers that miss the Feb. 1 deadline to register with the state's paid family and medical leave authority could face a fine and additional administrative headaches.
Businesses must register with the authority and begin mandatory 0.5% employee payroll tax deductions.
The payroll tax deductions began Jan. 1, 2021 and paid FMLA benefits will be available from Jan. 1, 2022.
Andrea Barton Reeves, CEO of the Connecticut Paid Family and Medical Leave Insurance Authority, says only 40% of state businesses—roughly 40,000—are registered.
Fines, Paperwork Burden
In addition to fines, businesses that fail to register and remit the payroll tax face paperwork problems as state labor laws limit the amount employers can withhold to catch up on missed withholdings, she said.
“We are working every day to get the word out to businesses that they need to register and begin withholding,” Barton Reeves said.
“But we are fast approaching the date where it will become more challenging if they have not. You really can’t go back to your employees and catch up on missed deductions."
Lawmakers narrowly passed the controversial leave mandate in 2019.
About 1.5 million Connecticut private sector employees must pay the 0.5% payroll tax that funds the program's benefits and bureaucracy.
Most public workers are exempt from the tax.
The mandate applies to businesses with as few as one employee, and allows up to 12 weeks paid leave for employees to care for themselves or an extended family member.
Program benefits are capped at 60 times the state’s hourly minimum wage, which will be $13 in January 2022, or $780 a week.
When the minimum wage hits $15 in 2023, the weekly benefit increases to $900.
Connecticut will have the richest benefits of any paid leave program in the country.
Small Business Challenges
The new mandate promises to be a challenge for small businesses, Barton Reeves said last fall at CBIA’s 2020 Employment Law Conference.
“For smaller employers, this is an entirely new world,” she said.
CBIA has warned state lawmakers for years of the unfair burden a paid leave mandate places on small businesses.
Josh Geballe, the state commissioner of administrative services and chair of the paid FMLA authority, did not seem surprised at the low participation rate.
“Everyone is expecting some growing pains as we roll it out,” he said.
Businesses that haven’t registered should go to the authority's website to register and begin withholding taxes.