We are less than a year away from when the state’s paid family and medical leave program begins to kick in with a 0.5% employee payroll tax that will fund future benefits.
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We are less than a year away from when the state’s paid family and medical leave program begins to kick in with a 0.5% employee payroll tax that will fund future benefits.
And more and more I’m hearing concerns from employers about how the program will impact them. Small business owners in particular, many of whom are still just learning about the law’s 2019 passage, are trying to figure out how they will cope with losing some employees for as long as three months out of the year.
For business owners who think there’s still a chance lawmakers will reconsider the policy, forget about it. Unless a Republican wave hits Connecticut this fall and turns the state House and Senate deep red, paid family medical leave will remain the law of the land.
However, I still think there must be a willingness to reform the law, even before it kicks in. What’s most concerning is that it will apply to companies with as few as one employee, allowing up to 12 weeks of paid leave for workers to care for themselves or a family member.
That’s a direct attack on small businesses. Imagine being the owner of a seven-person firm and having two or even three highly skilled employees out on prolonged and/or unexpected absences.
It’s a scenario that could force a small business out of business. I’m not saying this will be the norm, but in a state already known as business unfriendly, this policy could end up being among Connecticut’s most onerous small-employer mandates, even though companies themselves aren’t paying for the benefits.
My solution: Exempt businesses with fewer than 50, 25 or even 10 employees from the program, at least at the outset.
The Connecticut Business & Industry Association, which lobbied against the law last year, has been pushing to make the program optional for companies with 30 or fewer employees. I think that’s a fair number, but lawmakers likely won’t consider any reforms to the program this year, said CBIA lobbyist Eric Gjede.
“People are really trying to figure this out and I think a lot of businesses are shocked that it passed [last year] in the way that it did,” Gjede said, referring to the fact that the law applies to businesses of all sizes. “Companies are trying to figure out how they could make it work, or if they can make it work.”
Seventy-seven percent of the 356 executives polled for CBIA’s 2019 “Survey of Connecticut Businesses” said the paid family medical leave program would have a negative impact on their business. That’s a good indicator of the jitters out there.
CBIA has been pushing other tweaks to the law, including capping repeated use of the program at 35 weeks over five years, which I think is also reasonable.
The state will begin collecting the mandatory 0.5% employee payroll tax on Jan. 1, 2021, while the program will begin paying out benefits a year later.
Employees will be able to receive up to 95% of pay, capped at 60 times the minimum wage, which will amount to $900 weekly when the minimum wage reaches $15 per hour in 2023, CBIA said.
Businesses must also pay non-wage benefits for employees on leave and there’s a concern that the money raised for the program won’t be enough to cover the benefits. If that happens, the program’s benefits are supposed to be curtailed, but employers worry they may be asked to foot the bill, Gjede said.
Supporters of the law may read this column and conclude I’m just another out-of-touch man not cognizant of the average workers’ struggles. As a new parent I’d rebut that idea, at least partially.
When my wife and I welcomed our first child last June, I didn’t get paid family medical leave. Sure, I wish I had it, but as a manager I also looked at the resources we had and how challenging it would have been if I was gone for 12 weeks.
I took three weeks of vacation and was paid for time off. Luckily, my wife had more paid time off and we had good family support. Not everybody has those things — I understand that.
But I also think legislators view all business owners as corporate fat cats and fail to distinguish between the man or woman trying to keep that seven-person operation afloat from the corporation paying their executives multimillion-dollar salaries and bonuses.
There is a difference and if lawmakers don’t learn that soon, Connecticut’s economy will continue to underperform.
