Paid FMLA Will Cost Taxpayers Millions

A proposed paid family and medical leave program will cost Connecticut taxpayers millions of dollars in start-up and annual administrative costs according to the legislature’s nonpartisan Office of Fiscal Analysis.
The program will put a massive new charge on the state’s general fund at a time when Connecticut is facing a two-year projected budget deficit of $3.6 billion.
Due to the number of new collection and enforcement tasks this program requires—as outlined in two bills, SB 1 and HB 6212—implementing paid FMLA is costly.
Based on those bills, OFA estimates the program’s startup costs at $13.6 million, with annual operating costs at $18.6 million. OFA assumes these costs will initially be paid by taxpayers via the state’s general fund.
That’s a huge price to pay for starting a program at a time when budget deficits are forcing lawmakers to consider cutting critical services for some of the state’s most vulnerable populations.

Bad for Employers

SB 1 and HB 6212 require employees in businesses with as few as two workers to contribute a portion of their wages each pay period to a new paid FMLA trust fund.
Employees would be entitled to a maximum 12 weeks of paid leave each year, at 100% of their salary, capped at $1,000 per week, for their own or a family member’s illness.
At that rate, it will take 47 employees paying into the fund to compensate for one employee receiving full benefits.
Both bills also require employers to continue providing nonwage benefits to employees who are absent for up to three months each year.
Perhaps more telling is the state’s own move to shield itself from the burdens and costs associated with the new mandate.
Shortly before the Labor and Public Employees Committee approved both bills, they were rewritten to exempt state employees—meaning the legislature excluded the state as an employer from the very program the legislation’s authors and advocates want to mandate for the private sector.

Bad for Employees

Those advocates argue paid FMLA is needed as people living paycheck to paycheck can’t afford to take time from work to handle emergencies or illnesses.
However, the mandate takes an unspecified amount from workers each pay period, not only compromising their ability to cover living expenses, but their flexibility to spend their wages as they see fit.

If employees are not forced to pay into this new mandate, they can save money each pay period in case of a rainy day. If the rainy day doesn’t arrive, that money is theirs to keep.
However, under SB 1 and HB 6212, a percentage of their salary is basically confiscated, and employees cannot get it back if they never use paid leave.

Bad for the State

Connecticut’s budgetary shortfalls should be enough to put an end to the discussions about enacting paid FMLA.
But if not, proponents of these bills need look no further than the state’s lackluster job recovery to realize now is not the time for such a costly new mandate.
Connecticut has recovered just 74% of the 119,100 jobs lost during the recession, the slowest growth of any New England state. The U.S. recovery rate is 188%.
It would be prudent to drop discussions around mandated paid FMLA and do more to help, not hinder, job growth in Connecticut.
When businesses thrive and are forced to compete, they adopt more generous and flexible leave policies in order to attract the best talent.
That doesn't cost the state any money and its good for everyone.

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