Paid FMLA Mandates ‘Impossible for Small Businesses’

Small Business

Proposed paid family and medical leave legislation will significantly impact Connecticut small businesses, sparking calls this week for lawmakers to make major revisions.
Two bills, SB 1 and HB 5003, impose a mandatory 0.5% payroll tax on all private sector employees to fund a state-run paid FMLA program—even if an employer already offers leave or has a short term disability policy.

Small business owner Wendy Traub testifies on paid FMLA

“Severe impact.” Torrington small business owner Wendy Traub testifies before the legislature’s Labor Committee.

The program then provides up to 12 weeks of paid leave annually for eligible applicants at 100% of their pay, capped at $1,000 per week.

Both bills’ eligibility requirements are extremely broad: minimum earnings of $2,325 in any quarter over the previous five quarters from one or more employers, regardless of whether applicants are employed when filing.

The paid FMLA bills are among a number of new proposed mandates on Connecticut businesses that the state legislature will consider during the 2019 session.

‘Close the Doors’

Wendy Traub, the owner of Torrington-based Hemlock Directional Boring, told the legislature’s Labor and Public Employees Committee Feb. 14 some small businesses “would have to close their doors” when employees took leave.

“Closing the doors means everyone else in the company gets laid off for that period of time,” she said.

“Each of our eight employees, including myself and my husband, have specific jobs, and some require specialized training and government certifications.

“We can’t fill those jobs now and to fill them temporarily will be even more of a burden.

“We care for our employees and accommodate it when they need leave, but my husband works day and night to fill in when they are away.

“This extreme cookie-cutter mandate will severely impact smaller businesses like ours.”

Costly, Burdensome Mandate

CBIA’s Eric Gjede told the committee businesses saw the proposals as another costly and burdensome mandate, particularly as the state’s economy and job growth continue to lag the region and country.

“With each additional workplace mandate, the cost separation between Connecticut and other states increases,” he said.”Businesses are absolutely fearful about these bills and the costs associated with them.

Small business owner Wendy Traub

This extreme cookie-cutter mandate will severely impact smaller businesses like ours.

"What you're asking from us to take on in these two bills in terms of cost and burdens simply cannot be done by a significant number of Connecticut’s small businesses."

NFIB state director Andy Markowski said if enacted, the paid FMLA mandate "will become an impossible circumstance for most small businesses."

"How is a small business supposed to stay in business when it is possible for nearly its entire workforce to be out on leave for up to three months at a time?" he asked.

Proposed Reforms

Gjede urged the committee to consider revising the legislation, pointing out that state and local governments are exempt from the proposed mandates because of the huge costs and administrative burdens.

"This is no different than the impact it would have on private sector businesses," he said.

State and local governments are exempt from the proposed mandates because of the huge costs and administrative burdens.

He said the impact of the mandate could be lessened through the adoption of the following revisions:

  • Not allowing 100% wage replacement. No state has adopted a paid FMLA program with 100% wage replacement, with most averaging between 65%-70%. Full wage replacement discourages workers from returning to the workforce as soon as possible.
  • Not expanding the number of covered family members. SB 1 and HB 5003 allow leave to care for grandparents, grandchildren, in-laws, and even those "equivalent to a family member." This makes it impossible for an employer to know whether a claim is legitimate.
  • Doing more to discourage fraud. The proposals block someone caught defrauding the program from using it for a year. The bill should also require anyone found defrauding the program to pay back wages and be subject to criminal charges.
  • Don't allow sole proprietors to opt into FMLA. If sole proprietors can opt into the program, all employees should have the choice to permanently opt out.
  • Exclude independent contractors. Employers who hire independent contractors should not be required to administer this benefit on behalf of people they don't directly employ.
  • Exclude unemployed workers. This benefit should only be for individuals who are currently employed.
  • Set a one-day minimum time period for intermittent use of paid FMLA. Employers will have a difficult time finding replacement workers for a half day.
  • Allow the Department of Labor to rule on disputes and violations. Disputes under this program should not be handled through costly, time-consuming civil claims.
  • Apply FMLA to state workers. The state should be subject to the same mandates imposed on the private sector.

"While these revisions will help make the program more sustainable, they will not prevent the adverse economic impact the program will have on our state," Gjede said.

"While we would prefer no paid FMLA program be enacted, I urge the committee to adopt these reforms."

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


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