“An Act to Implement the Recommendations of the Commission to Develop a Paid Family and Medical Leave Benefits Program” – Sen. Mattie Daughtry & Rep. Kristen Cloutier
The Penobscot Bay Regional Chamber of Commerce highly recommends that all businesses and non-profits take notice of this proposed legislation as it will affect ALL of us with a new tax on every Maine employer and worker! Contact your State Legislator today and let them know how this will impact your ability to continue doing business in Maine.
Last week was the public hearing on Paid Family & Medical Leave (LD 1964), which lasted about 7 hours. Testimony was fairly evenly split between proponents and opponents. The process this bill has gone through is unfortunate in that one of the largest and most important pieces of legislation for employers and employees should have had weeks of legislative and public deliberation. Instead, just a few weeks before the legislative session is to end, the bill was finally printed. Although proponents will tell you it has been discussed for months, most of the critical details were not available or finalized, making it very difficult for the public to weigh in appropriately.
Shortly before the bill was public, a sponsor’s amendment was released. To further complicate things and not allow for a fair opportunity for the public to discuss their thoughts with the Labor Committee, a second sponsor’s amendment was presented at the public hearing with language not provided to the business community or the public until almost an hour after the hearing had begun.
Governor Mills’ Deputy Chief of Staff provided her testimony “Neither For Nor Against” where she expressed her support for PFML but also specified several concerns with the proposal. These concerns echo many other businesses and associations that testified against the bill. These include:
· Provide a true small business exemption, not the vague “hardship exemption” that is in the amendment
· Increase the benefit qualification where an employee must work for a single employer for 120 days before being eligible for leave
· Lower the wage replacement to closer to 66% (similar to short-term disability)
· Conduct a new actuarial analysis based on the new proposal to ensure solvency
Concerns for Maine Businesses:
· A New $400 Million Wage Tax: The 2022 Paid FMLA Task Force noted in a commission report that a proposal similar to the one outlined in this bill would cost nearly $400M annually, funded through a new payroll tax on employers and employees.
· Potential for Annual Tax Hikes: The bill requires the Program Administrator to annually increase the tax amount on employer payrolls and employee wages if the program doesn’t have sufficient funds for administration and benefit costs.
· Worsens the Workforce Shortage Crisis: The workforce shortage crisis shows no signs of rebounding anytime soon. 3-month paid absences from the workplace would provide no certainty to employers trying to secure stable staffing levels. Maine’s seasonal businesses could see employee absences for as long as 75% of their entire operating season and will likely need to offer job protections.
· Significant New Burden for Small Businesses: Thousands of small employers with fewer than 15 workers will for the first time ever be required to provide long-term leave to their employees. These small businesses will lose the longstanding protection provided for decades by Maine’s existing family and medical leave law.
· Prone to Misuse: The average Maine earner only needs 6 weeks’ worth of earnings over the course of a year to qualify for 12 weeks of leave annually. Employees could qualify for leave for anyone they consider having “like a family relationship”, regardless of actual blood or familial relation. This would be 100% subjective.
· An Outlier in Many Respects: Only 11 states have a Paid FMLA program. This bill is not an extension of the state’s existing FMLA law either—it creates a new short-term disability insurance program. Proponents could have written a bill that is more in line with neighboring New England states, which may have garnered more than partisan support; instead, this proposal is one of the most benefit-rich programs in the country. The allure of designing a program with overly generous benefits will unfortunately be to the detriment of businesses experiencing unpredictable absenteeism and unprecedented financial burdens.
