Employers at Tipping Point During ‘Mandate Week’

Issues & Policies

What will be the next tipping point for Connecticut employers and their ability—or desire—to run a successful business here?
It’s a good bet that labor mandates could be that tipping point—with employers now facing proposals for mandatory paid family and medical leave, a state-mandated retirement savings plan, and a $15 minimum wage.
All three mandates were the subject of public hearings this week—a sort of “mandate week” at the legislature, two of them were quickly approved by the committee on near-party-line votes, and all ignore the state’s new economic reality.
Connecticut’s economy can’t afford these labor mandates because they:

  • Make it harder and more expensive to do business in Connecticut.
  • Push state government further into the business of Connecticut businesses.
  • Endanger jobs and sends a message that this state is unfriendly to businesses.

And all of that at a time when state revenues are declining and the economy still struggling to gain long-term traction after the recession.
Yet this week, legislative committees held public hearings on new labor mandates that would not only burden employers with new costs and administrative tasks, but also reduce employee hours and job opportunities, and, in some cases, simply take money right out of their paychecks.

New mandates would reduce employee hours and job opportunities, and, in some cases, simply take money right out of their paychecks.

In the Labor Committee are:
State Retirement Plan (HB 5591)
Requires businesses with five or more employees to enroll anyone not currently eligible for an employer-sponsored retirement plan into a new state-sponsored plan.
Regardless of an employer’s experience with retirement plans, they would be responsible for automatically enrolling employees into the plan (at a default 6% of the employee’s pay) and for making payroll deductions from employee wages and sending them to the plan.
Failure to fulfill these roles would result in heavy financial penalties.
This bill was approved by the Labor Committee on Thursday evening.
Paid Family and Medical Leave (SB 221)
Requires businesses with as few as two employees to allow individuals to take up to 12 weeks of family and medical leave a year, at 100% of their pay, to deal with their own or a family member’s illness.
Employees’ wages would be hit by a new payroll tax to support this program, which, despite those deposits, would still not be financially viable.
Employers also would have to keep providing non-wage benefits, like health insurance, to employees absent from work for up to three months each year.
The program would also require the hiring of 120 new state employees, at a cost of $18 million per year. This bill was also approved by the committee.
While it did pick up one Senate Republican vote, several House Democrats on the committee expressed their concerns about the impact this program would have on businesses.
And in the Human Services Committee:
Jobs Tax (SB 391)
A thinly veiled attempt to promote labor unions in Connecticut, this bill assumes that anyone making less than $15 per hour—including teenagers and those of any age simply looking to earn extra money—is also receiving expensive state services.
The bill forces a new wage tax on employers with 500 or more employees or franchisors whose franchisees collectively have 500 employees that supporters say would go to benefit those employees—a long-shot claim in a time of short-fall state budgets.
The bill doesn’t apply to employees under a collective bargaining agreement, meaning that its true purpose is to make union labor cheaper in order to force larger companies to unionize.
As the governor said in his State of the State address, employers are responding to the new economic reality by “making different decisions about how they hire, and the benefits they offer. They're looking at new technologies to fundamentally change how they operate, because if they don't, they won't survive.”
Given our state’s current fiscal picture, these bills would cause irreparable damage to Connecticut’s economy.

For more information, contact CBIA’s Eric Gjede (860.244.1931) | @egjede


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