March 16, 2015
Other Voices

Mandated paid family medical leave bad for business

Eric Gjede

Every year, various groups show up at the State Capitol with ideas to change the rules in Connecticut workplaces. In a bygone age when local businesses were only competing against each other, many of these changes had an evenhanded effect.

However, today's Connecticut businesses are competing in a global marketplace, and these one-size-fits-all state mandates, such as paid family medical leave, don't apply to their competitors in other states or internationally. Operating a business in Connecticut can be costly, and when other states don't follow us down the path, the playing field can tilt against Nutmeg State companies and the people who work for them.

The one-size-fits-all proposals being considered at the State Capitol aren't nearly as effective as how employees and employers are already working out creative, innovative ways to accommodate the needs of both. Not all businesses are the same and what works for the manufacturer in town does not work for the daycare down the street. The end result of these proposals is that running a business in Connecticut, ranked by many standards as a costly place to do business, becomes even more expensive.

Think about something as basic as the workday. Fewer and fewer employees work the traditional workweek of Monday through Friday, 9-to-5 hours. Many businesses offer flexible work hours, or options like telecommuting. These developments, which are growingly popular with employer and employee alike, are happening organically — not by government fiat.

Yet HB 6932, proposed by the General Assembly's Labor Committee, would require employers to allow employees who elect to be in the program to take up to 12 weeks of paid leave each year, at 100 percent of their pay, to care for illness — their own or that of a family member. It sounds great at first glance, but only until the idea's proponents reveal the price tag.

This actually would be costly for an employee because it would be funded by another paycheck deduction — even if the employee never uses the leave.

And it would be costly for an employer that would have to pay to collect these paycheck deductions and continue to provide fringe benefits to an absent employee.

What's more, if the state of Washington is any guide, it would be costly for state taxpayers.

A program similar to this that was rejected in Washington carried a price tag of $1.2 billion per biennium to pay for all the new state employees, office space, and IT infrastructure that would have been needed to administer the proposed law.

A few years ago, Connecticut became the first state to pass a paid sick leave mandate on businesses with 50 or more employees. Employers across the state fought against the blanket mandate noting that it simply would not work for all types of businesses.

Today, only four years after this law was passed, little evidence exists to support the claim that paid sick leave has decreased illness in the workplace or reduced employee turnover. There is data, however, which suggests the law has resulted in employers cutting hours and other benefits to make up for the increased cost. Even employers that already offered paid sick leave have had a challenge complying with a mandate that was too inflexible to take their existing policies into account.

At its best, the legislative process is an evolution. If we would learn from these experiences, this year's debate over paid family and medical leave could be very different. What if, rather than imposing a one-size-fits-all mandate, we took a new approach relevant to the modern-day workplace? What if we offered businesses a carrot to get them to do what we want rather than immediately resort to the stick?

HB 6566 does just that. It provides a tax credit for businesses to adopt their own paid family and medical leave policy. The bill has some hurdles to get over — such as most Connecticut businesses not being eligible for tax credits — but that can be changed.

Taking this approach would give businesses incentives to craft policies that work for them. If they did it on their own, it wouldn't cost state taxpayers a dime. The businesses that couldn't afford to impose a policy, even with a tax credit, wouldn't have to. However, those that could would have one more incentive to attract top talent.

This is one of several mandates this legislative session that would increase the cost of doing business in Connecticut. As a state, we're just regaining economic confidence. Add more costs to businesses and suddenly we will veer off course toward being a place where people don't want to do business. If that happens, we will be out more jobs, and more opportunity than we could ever create with well-intentioned policies.

It's your call, Connecticut lawmakers. We can do it the tired way we've always done it, or we can work together to craft a public policy agenda that is informed by — and flexible enough to be relevant to — the variety of innovations in Connecticut's workplaces.

Eric Gjede is assistant counsel at the Connecticut Business & Industry Association.

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