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March 15, 2019

Survey: Paid family medical leave mandate worries small business

PHOTO | Contributed Workers on the shop floor at Waterbury's Noujaim Tool Co.
By MICHAEL C. BINGHAM

Connecticut employers, particularly small-business owners, say they would be significantly impacted by a proposed mandate to offer paid family and medical leave to employees.

That’s the most notable takeaway from the 2018 fourth quarter “Economic and Credit Availability Survey” conducted by the Connecticut Business & Industry Association (CBIA).

The poll, conducted between mid-January and early February, found that 63 percent of surveyed business owners and managers expect the proposed mandate to significantly impact their operations. Nineteen percent say paid leave will have a moderate impact, six percent expect no impact, and the remaining four percent were unsure.

A legislative committee last month approved two identical bills mandating that all private-sector employers offer up to 12 weeks of leave in a given year at full salary, capped at $1,000 per week.

As proposed, the program would be funded through an employee payroll tax, while employers are required to continue paying benefits for workers on leave.

Eighty-eight percent of businesses surveyed in the fourth quarter employ less than 100 employees.

Many of those small employers said the paid FMLA mandate will impose “significant” financial and operational hardship.

"Not only would we have to bear the cost of benefits, we also have to hire a temporary worker to do their job," responded one small-business owner quoted by CBIA.

"We don’t have redundancy for most jobs,” the employer said. “The time and expense of training a replacement and then letting them go when the original worker returned would be impossible."

CBIA Vice President of Government Affairs Eric Gjede said one-size-fits-all mandates like paid FMLA disproportionately target small businesses, many of whom "are absolutely fearful about these measures and their cost burdens."

"It comes down to competitiveness," he said. "That's the key element driving the viability of any business.

"The last thing we should be doing is adding to the growing cost of running a business in this state.”

$15 Minimum Wage

Survey respondents were about evenly split when asked about raising the state’s hourly minimum wage to $15: 42 percent expect a significant or moderate impact, while 41 percent project minimal or no impact.

When asked how they would mitigate that impact, surveyed businesses offered a range of responses, including making greater investments in automation and reducing workforce levels, hours, or benefits.

"This might bar us from bringing in unskilled, young workers and training them," responded one small-business owner. "Young interns or high school age employees do not bring enough skill, however we pay them while we train them over six months to a year."

With Connecticut facing a two-year, $3.7 billion budget deficit, business leaders are also concerned about the prospect of tax hikes.

Contact Michael C. Bingham at mbingham@newhavenbiz.com

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