Majority of Labor committee approves paid FMLA study bill

According to the Legislature’s website, as of March 17, 2020, LD 1410, An Act To Create Paid Family and Medical Leave Benefits, was carried over, in the same posture, to any special session of the 129th Legislature pursuant to Joint Order SP 788. Democrats on the Joint Standing Committee on Labor and Housing had given their approval to a proposal that would set up a stakeholder taskforce to study the feasibility of implementing a paid family medical leave program in Maine.

Appearing to be approved along party lines, with Republicans on the committee opposing and Democrats approving, the committee amended LD 1410, sponsored by Speaker Sara Gideon (D-Freeport), from a full-fledged proposal to fund and implement such a program, to a study group with report back requirements of January 2022. Submitted last session (2019), LD 1410 proposed to establish a new state agency, not unlike the current Unemployment Insurance Division within the Maine Department of Labor, for the purposes of administering a paid FMLA program. The details of the proposal include providing up to 12 weeks of maternity or paternity leave, and up to 20 weeks of leave for a serious health condition – either your own, or that of a broadly defined definition of “family member.” The funds used to provide the leave are the result of a new 0.75% payroll tax on all employees in Maine. It was not clear if the intent is to include LLC and S-corps as “employees” for the purposes of taxation, however we interpreted it as applying to these entities.
      
The Maine State Chamber opposed the initial proposal, along with several other business associations. While our concerns were numerous, one of our more overarching issues was the lack of any actuarial study on the soundness of the program as defined in the bill. Specifically, an extensive actuarial study to ensure it is properly financed and will remain fiscally solvent into the future. While only a few states have elected to institute paid FMLA, a number of those that have used an existing State short- or long-term disability insurance program to do so. Maine does not have such a program – we’d be starting from scratch. In no other universe should this legislature or state government, authorize the startup of a short- or long-term disability insurance company without ensuring its long-term viability.
      
As amended, the bill will set up a stakeholder group or commission, composed of 11 members and appointed by the Governor, Speaker of the House, and President of the Senate. The commission consists of legislators from both bodies and both parties, representatives from the large and small business communities, organized labor, elder care, and maternity care. The committee is charged with looking at what other states have done in this area with respect to equity, funding, state partnerships/consortiums, education and outreach, technology needs, oversight and structure of the program, and the interaction of state government and private employers participating in the program.
      
After doing so, they are to develop a paid FMLA proposal, as well as contract for an actuarial study that is tasked with looking at start-up costs, ongoing costs, the economic impact of the program on our state, and the contribution levels needed to maintain the solvency of the program.
      
While taking the time to find out the actual costs associated with implementing such a program – before putting it in place – is a step in the right direction, the problems with a paid FMLA program are more acute than just financing and operational issues. The impact on the workplace would and could be significant.
      
If finally implemented, LD 1410 will create a new, employee-funded entitlement program for the purposes of providing paid FMLA leave. Employers have expressed concern that, if the leave continues to be funded through a mandatory tax versus a voluntary opt-in tax on all Maine workers, employees will rightfully feel entitled to access leave for which they have paid. Obviously, this means higher utilization, creating greater absenteeism. Absenteeism in the workplace is a very real problem today, both because of workforce shortages and call outs.
      
As noted earlier, just because an employee goes out on leave, paid or unpaid, that the work of the business stops – it doesn’t. Services must continue to be provided; products pushed out the door; and, widgets manufactured. That means finding a replacement, if available, for the absent employee. If replacements cannot be found, the work is transferred to another other worker. Businesses report that this is a less-than-ideal solution, as the increased workload results in resentment within the workplace.
      
In addition, the program could place reporting requirements and tracking regarding leave, payroll deductions and calculations on every business of every size in the state. Also of note, those businesses with fewer than 15 employees operating here have never dealt with FLMA leave before, because they have not had to do so. LD 1410 could possibly change that. Most of Maine’s small employers have less than 15 employees, and many, if not most, lack an HR department to help them administer this program should it reach fruition.
             
For additional information or questions regarding FMLA, please contact Peter Gore by calling (207) 623-4568, ext. 107, or by emailing [email protected].