🔒Small business anxieties still persist as CT’s new paid leave program set to debut Jan. 1

Connecticut’s Paid Family and Medical Leave Insurance Authority is continuing outreach to employers, especially small businesses, as the state’s new benefits program prepares to start paying out perks Jan. 1.

Andrea Barton Reeves, the authority’s CEO, said the agency has seen the most concern from small enterprises that were not previously subject to family and medical leave requirements.

The state’s former leave structure required any employer with 75 or more workers to provide up to 16 weeks of medical- or family-related time off, and it could be unpaid. The new law, passed by state lawmakers in 2019, did away with the 75-employee threshold, adjusted the leave period to 12 weeks and now applies to companies with one or more workers. And if an employee’s reason for taking extended time off qualifies under state regulations, the leave will be paid through the authority.

“Small businesses will be very new to this,” Reeves said. “There’s an entire population of businesses that haven’t been exposed to this, so there are some concerns, especially over the differences between leave and paid leave.”

To address those anxieties, the authority is continuing a series of webinars designed to bring employers up to speed on the new leave program. The agency also sent out postcards to businesses that had not yet begun to pay into the system — the program is funded through a 0.5% payroll tax — and offered to help them become compliant.

Reeves said many of the late-comers have been employers of domestic workers, nannies and gardeners, who either didn’t know the paid leave rules applied to them or hadn’t heard about the program at all.

In total, Reeves said, the authority has enrolled about 120,500 employers, 365 of whom are adopting private plans the agency has signed off on. Because there is no single, definitive source on how many businesses are operating in the state, it’s difficult to pinpoint the number of delinquent employers, she noted, but the agency is continuing outreach efforts, including to municipalities to help spread the word in their small business communities.

Smooth transition

In general, Reeves said, businesses approaching the paid leave authority in recent months have been expressing concerns about how the agency will disseminate information to their workers and some want advice on how to balance state-mandated benefits with perks they already offer.

Reeves said she has also heard worries about staffing shortages once the law goes fully into effect and workers take advantage of the new benefits.

But data from states that have adopted similar plans don’t support those dire predictions, she said.

“In states that have this, they’re not seeing that uptick” in people taking leave, she said.

Businesses consulting with Hartford-area accounting firms and lawyers seem to have reached the same conclusion. At least for now, experts said, the most remarkable thing about the new paid medical and family leave system may be how unremarkable the implementation has been.

“It really has been a smooth transition into this program,” said Jennifer Marecki, director of HR advisory at accounting and professional services firm CLA in West Hartford. “The authority did a great job of putting communications out. It’s been a very simple process.”

Marecki said she hasn’t heard much concern from clients about benefits becoming available in January, probably because so much of the process is out of their hands. Employees pay the tax that supports the program, she noted, and the eligibility requirements for taking leave are very clear. In addition, it is the paid leave authority and its claims administrator that will ultimately determine an applicant’s eligibility.

And larger corporations with multistate operations have likely already encountered and successfully adapted to various paid leave requirements, Marecki added.

“There are similarly-structured programs in New York and Massachusetts, so many employers are familiar with this, at least at the higher level,” she said.

Glenn Dowd, a partner in Hartford law firm Day Pitney’s employment and labor department, echoed those sentiments, referring to the relatively low burden placed on employers.

“From a business owner’s perspective it’s not costing them,” Dowd said. “Unless you choose to form your own private plan, you’re not deciding eligibility. Employers are not happy about having another cost imposed on their workers, which makes them less competitive, but it’s hard to argue that this is imposing anything on them because it comes out of employees’ paychecks.”

Part of the reason for the seeming lack of worry could be that the new program does not greatly expand the number of conditions or situations that make workers eligible for leave. Under earlier state and federal rules, employees could still seek and receive time off from their jobs, and while the new law did extend eligibility to cover new situations, such as family violence and organ donation, the eligibility standards have not radically changed, Dowd explained.

“By and large it’s not significantly different,” he said.

The fact that workers will now be compensated during their leave period could end up changing that picture, Dowd noted, but at least for now, companies don’t appear to be too troubled.

“You could argue that it makes the leave more enticing because it’s paid, and so you might have more employees trying to take advantage of that, and that could exacerbate the worker shortage,” he said. “And that might turn out to be true, but I haven’t heard anything from employers indicating their concern about that.”

Even now, months after the payroll deduction came into effect, Dowd said he was caught somewhat off-guard by the lack of reaction to the added cost.

“I’m very surprised,” he said. “I would have thought there would have been a lot of grumbling when people noticed that deduction in their paycheck. But that didn’t happen.”