A $15 hourly minimum wage and mandatory paid family and medical leave are the top legislative priorities for House and Senate Democrats this General Assembly session.

While well-intentioned, the initiatives are a combined hit to businesses and employees.

Paid FMLA, other mandates drive up business costs
Workplace mandates contribute to Connecticut's ranking as one of the 10 most costliest states in the country to run a business.

For instance, a $15 hourly minimum wage will cost employers more in payroll and will result in fewer hours and opportunities for workers.

The state's current minimum wage is $10.10 a hour, well above the federal minimum of $7.25, and one of the highest in the country.

A study last year by the state Office of Fiscal Analysis showed that a $15 minimum wage will cost taxpayers at least $50 million a year through increased compensation and contract costs to state agencies and municipalities.

CBIA's Eric Gjede said if lawmakers do push the minimum wage to $15, it should done over six to seven years to lessen the impact on business.

Chris DiPentima, president of Pegasus Manufacturing in Middletown and chair of CBIA's board of directors, told lawmakers last week that a minimum wage hike will hurt critical workforce development efforts.

"If a kid in Hartford can make $15 working at a Dunkin' Donuts around the corner, then he or she won't make the trip to Middletown to work in my facility for a career—let alone to manufacturers less centrally located," he said.

Paid FMLA

The two paid FMLA bills introduced this year—SB 1 and HB 5003—largely mirror legislation that failed in last year's General Assembly session

The new legislation deducts up to 0.5% from the paychecks of employees at all private sector companies to fund a state-run paid FMLA program—even if an employer already offers leave or has a short term disability policy.

Paid FMLA Taxpayer Cost
Lawmakers rejected several costly FMLA proposals last year.

The program then provides up to three months of paid leave annually for eligible applicants at 100% of pay, capped at $1,000 per week.

The eligibility requirements outlined in both bills are extremely broad: anyone who earned at least $2,325 in any quarter over the previous five quarters from one or more employers is eligible for benefits, regardless of whether they are employed when filing.

The leave mandates, which do not apply to public sector workers, define a family member as not just a blood relative, such as a grandchild or sibling, but also someone whose "close association with the employee is the equivalent of a family member."

OFA calculated the FMLA proposals lawmakers rejected last year would cost taxpayers over $13 million in start-up costs and almost $19 million annually to fund the 120 new state employees needed to run the program.

Small Business Impact

Among the arguments against paid leave is that many businesses, especially smaller ones, simply can't afford to leave a position vacant for up to 12 weeks.

And employers must determine how to run their companies when employees are out on leave.

"Employers will still be on the hook to pay for non-wage benefits for all these employees who are absent from the workforce for up to three months every single year," Gjede said.

Lucia Furman, president of Shelton-based Mercantile Development, told lawmakers last week she has "no idea" how her company will deal with implementing FMLA.

We need to be very careful not to pass policies which could obliterate our current economic momentum.
— State Sen. Len Fasano
"I'm going to have to hire someone to figure it all out—and we have a hard enough time finding people to run our machines," she said.

Senate Republican Leader Len Fasano (R-North Haven) told reporters that while mandated leave and a minimum wage hike "may have merit," the impact on businesses, particularly small businesses, must be considered.

"I'm interested in knowing how they can be enacted in a way which doesn't hurt Connecticut businesses," he said.

Economic Warning

Rep. Jason Perillo (R-Shelton) said the mandatory payroll deduction needed to fund the paid FMLA program amounted to another tax.

"It's just another burden on middle-class families and people who are working hard every day," he said.

A spokeswoman for Gov. Ned Lamont said he supports raising the minimum hourly wage and paid FMLA.

"He looks forward to working together with the legislature on the specifics to make sure they work best for the people and businesses of Connecticut," the spokesperson said.

Fasano warned against implementing policies that would further slow the state's economy.

"We need to be very careful not to pass policies which could obliterate our current economic momentum," he said.

"An onslaught of economic wrecking ball legislation would put Connecticut into a free fall."


For more information, contact CBIA's Eric Gjede (860.480.1784) | @egjede