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Approved sweeping paid FMLA legislation potential burden for small business owners

February 27, 2019

A proposed expansion of Connecticut’s Paid Family and Medical Leave may be a win for workers, but members of the small business sector are worried where that will leave them if someone calls out because a family member is sick.

“It’s going to cause a lot of administrative problems for small businesses,” said Eric Gjede, Vice President of Government Affairs for the Connecticut Business and Industry Association, which also expressed its concerns earlier this month when a pair of bills got the go-ahead by the Labor and Public Employees Committee, inching the state closer to establishing a Family Medical Leave Trust Fund.

The General Assembly committee approved two identical bills —SB 1 and HB 5003 — on 9-5 party line votes Feb. 20.

Both bills establish up to 12 weeks of annual leave for private sector and some state government employees at 100 percent of their salary, capped at $1,000 per week, for their own or extended family members’ illnesses.

The state-run program would be funded through an automatic 0.5 percent payroll tax, withheld from employees’ after-tax earnings. Employees cannot opt out of the program.

Among the bills’ supporters is state Sen. Julie Kushner, D-Danbury, who has said in published reports that she spent a lot of time talking to voters and small business owners about the legislation.

What she found was that employees who need the time are going to take it regardless of whether a program is in place.

“They just simply don’t get paid,” Kushner said.

She also said the bill is a way for small businesses to provide a benefit to their employees that they might not have been able to offer.

Critics, however, say the price is too high for worker and small business.

“You have a lot of folks in the state living paycheck to paycheck who now are going to see less take-home wage if you’re looking to employers to make up the difference,” Gjede said.

In a press release earlier this month, the Connecticut branch of the National Federation of Independent Businesses openly opposed both.

“It’s possible a larger corporation or firms with many employees can fill the void, especially when a couple of people take leave at the same time, but this will become an impossible circumstance for most small businesses,” said Andrew Markowski, state director of NFIB in Connecticut, in the release.

Connecticut is now surrounded by states that offer some version of paid Family and Medical Leave.

Massachusetts and New York, two of the most recent states to adopt paid leave, already are looking to increase the payroll taxes that fund their programs.

In 2019, New York increased the payroll tax to 0.153 percent from 0.126 the year prior — still far below Connecticut’s proposed tax — with a maximum employee contribution of $108 while the benefit increased to 55 percent for a maximum of eight weeks —up from 50 percent.

Gjede has expressed his support for programs closer to those models

“It is a benefit for employees, no doubt about that, and that’s why some businesses — particularly larger businesses — voluntarily provide this when they can afford to do so,” Gjede said. “We’re just arguing that applying it to such small businesses is going to be a problem for many and what is proposed for the state is financially unsustainable.”

Jordan.grice@hearstmediact.com