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Paid Family Leave: A Headache for Connecticut Small Businesses

Originally published in the Connecticut Law Tribune, June 2019. As paid family leave sweeps across the nation, we anticipate more and more employees will use it and will stay out longer because they are getting paid.

In the final days of the legislative session, the Connecticut Legislature approved the bill which will provide paid family leave to Connecticut employees. Once the bill is signed by Gov. Ned Lamont, Connecticut will be the seventh state to pass such legislation.

Only a few short weeks ago, the governor threatened to veto the bill unless some changes were made which would encourage private insurers to bid on providing the insurance needed under the bill. The original draft provided in-house state oversight of the program. Lamont expressed concerns not with the substance of the legislation, but with the fact the program would be administered by an already “top-heavy bureaucracy,” analogizing the program to a “$400 million-dollar startup company” which will take an incredible amount of time and resources to administer.

Due to some eleventh-hour changes, the board administering the program can include private-sector personnel and the governor is able to make appointments to the board and select the chairman. This seems to have satisfied Lamont. A spokeswoman for the governor announced an agreement has been reached and he now intends to sign the bill. Assuming this is true, beginning January 1, 2022, workers in Connecticut will get up to 12 paid weeks off on the birth, adoption or fostering of a new child, to care for a family member or loved one with a serious health condition, to deal with their own illness, to serve as an organ or bone marrow donor or as the result of an emergency related to active military duty or a call to active military duty of a spouse, child or parent of the employee. The bill also provides an additional two weeks for those incapacitated as a result of a complicated pregnancy.

To fund the benefit, beginning January 1, 2021, Connecticut workers will pay an additional tax of 0.5% on their wages. Benefits will cover up to 95 percent of wages on a sliding scale, capped at $900 a week. This makes Connecticut’s paid family leave the most generous paid family leave law in the U.S. Also extremely generous is Connecticut’s definition of who qualifies as a family member or loved one. The law allows paid time off to care for a family member or person “whose close relationship is the equivalent of a family member.” “Aunt Bea,” who has been a dear family friend for many years, is probably covered. Opie can now rest peacefully.

Paid family leave has been a hot issue across the country the last few years, with many advocates pushing for it on the federal level. As more and more states join the ranks in offering the paid leave, the pressure builds. While traditionally viewed as an issue with a strong Democratic push, several states have passed this type of legislation with bipartisan approval, suggesting that at least some Republicans agree with its purported value. This is at least partly responsible for the issue picking up steam in recent years.

Employers in Connecticut should keep a close eye on this. Unpaid family leave was never the big threat everyone initially feared because so few could afford it. In fact, most who used it were going out under doctor’s orders and only stayed out as long as medically necessary. Now, as paid family leave sweeps across the nation, we anticipate more and more employees will use it and will stay out longer because they are getting paid. The result? More and more businesses are going to be left shorthanded. There’s no question this is giving Connecticut employers a massive headache.