Sweeping paid family and medical leave bill proposed

Jan 12, 2017

Not content with the state’s new $13.50 minimum wage and paid sick mandates imposed on employers, Senator Karen Keiser has sponsored a paid family and medical leave bill that would be the most generous in the nation and cost employers and workers hundreds of millions.

SB 5032 would significantly expand the current paid family leave law that was passed in 2007 but never implemented because a funding source was never agreed upon. 

The proposed new paid family and medical leave bill would provide up to $1,000 per week for 26 weeks for a child’s birth or adoption or for a family member’s “serious health condition,” and another 12 weeks of paid leave for the individual’s own “serious health condition.”  Workers could apply for both benefits in the same year, meaning they could receive 38 weeks of paid leave in one year.  Employees would be eligible for the paid leave upon working just 340 hours (that’s an average of 6.5 hours per week).

The current unimplemented and unfunded Family Leave Insurance law mandates benefits of $250 per week for up to five weeks for individuals who regularly work 35 hours per week.  Workers with fewer hours receive a prorated benefit amount.  The benefit is only for the birth of adoption of a child, and eligibility begins after working 680 hours.  Since lawmakers could never agree on where the funding for the program should come from, the law has been suspended since 2009.

Despite the lack of funding for the already existing paid leave law, lawmakers have consistently pushed for costlier versions.

The fiscal note for a previous iteration (2013) of Senator Keiser’s paid family and medical leave proposal was staggering.  According to OFM it would have cost employers and workers $97 million in new taxes in 2013-15, $342 million in 2015-17 and $387 million in 2017-19.  OFM has not yet provided a fiscal analysis of Keiser’s new proposal, which is significantly more generous, expanding the leave time from 12 weeks to 26, increasing the coverage and lowering the eligibility threshold. 

Unlike it’s the current law, which allows five weeks of paid leave only for the birth or adoption of a child, HB 5032 does identify a funding source for the expanded coverage—a new payroll tax. 

Employees and workers would pick up the tab with a new payroll tax.  The tax rate would be set by the bill for the first two years of the law’s implementation, but by 2021 the tax would then be determined annually by the state based on the funds needed to maintain the specified account balance ratio (the program’s account balance divided by total wages paid into the fund).  Adding to the fun is the provision that if the account balance ratio falls below that specified point, employers and workers would be charged a “solvency surcharge” to keep the fund in the black.

Only four states (California, New Jersey, Rhode Island and New York) have laws mandating paid family and medical leave.  What is more, all four states are completely employee funded, relying solely on payroll taxes paid by workers.  SB 5032 would extend this burden to employers, along with the ever-expanding list of new labor costs (such as a $13.50 minimum wage and paid sick leave mandate).  As one business owner put it, one rule adding $100 to overhead may not be the straw that breaks the camel's back, but ten rules adding $1,000 to overhead and tens of thousands of rules to monitor make for a tall haystack.

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