Amid Push to Avoid Tax Hikes, Paid FMLA an Exception

While many lawmakers are reluctant to raise taxes to address Connecticut’s budget crisis, advocates of a new paid family and medical leave mandate are doing just the opposite by pushing a new payroll tax on workers.
SB 1 and HB 6212, which are duplicate bills, require every employee in the state working for a business with at least two workers to fork over part of their paycheck each pay period to fund the new program.
In return, the employee is entitled to up to 12 weeks of paid leave, at 100% of their pay—capped at $1,000 per week—each year.
Businesses wouldn’t pay for the benefit itself, but would have to fund nonwage benefits for employees absent from the workforce up to three months each year.
Advocates cite an actuarial study conducted by a pro-paid leave organization that claims an employee would only need to contribute one half of one percent of their wages in order to keep the fund solvent.
But as CBIA has noted, at that rate, 47 people would be required to pay into the system for each employee using the benefit.
That puts the fund’s solvency at risk almost immediately after its launch.
And that could force more money to be taken from workers’ paychecks.
Lawmakers pushing for this proposal are considering imposing the tax on employee wages immediately, building up a reserve, then eventually, allowing employees to use the benefit for which their wages were confiscated.
So the date your paycheck starts to get reduced is known—but when you can start using the benefits you paid for is unknown.

As CBIA has noted, this program has astronomical startup and operating costs.
Lawmakers looking at the state's fiscal picture will have to make difficult choices in the coming weeks.
Many state programs and services face cuts.
Unfortunately, some legislators will support tax hikes, which historically achieves diminishing returns.
Paid leave advocates are among those few lawmakers willing to impose new taxes on Connecticut residents.

Employers across Connecticut are moving on their own to improve the benefits they provide their employees, including family leave.

These bills—which create a fund with shaky solvency and carry budget-busting startup and operating costs—are not the best way to generate the job growth Connecticut sorely needs.

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