Paid family leave program could further endanger our small businesses

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Ten years ago, I was serving as the ranking Republican on the House Labor and Commerce Committee in the Washington State Legislature. That session, we began collaborative efforts to come up with a fair and balanced paid family leave system – something that the employers and employees could point to and feel both would benefit.

Obviously, reaching this goal has not been an easy task. Even in years with one-party control, a law never made it through the legislative process, until this year. Paid family leave legislation passed on June 30.

It has been difficult to find a program to implement that is reasonable and acceptable to all employers and workers, especially for our small businesses. Unfortunately, the legislation passed this year still does not get us there. In fact, I believe it just adds another nail into the small business coffin that we seem to be building in Washington state.

Our small businesses continue to see laws and regulations stacked upon them. They must contend with the highest minimum wage in the country with annual increases until 2020, paid sick leave will kick in Jan. 1, and taxes on gross receipts – thanks to our unique business and occupation tax. Many will see an increase in property taxes with the recent education plan passed by the Legislature and employers continue to see health care costs go up.

Paid family leave is a great idea in principle, but small employers do not have the profit margins to address all the rules and regulations they are already trying to manage.

Some have said the program is voluntary. That is not the case. Employers may opt out if they are able to show they have a voluntary plan that meets certain standards – and is comparable to the state program. The Employment Security Department does require a $250 fee for reviewing each voluntary plan.

However, all employees will be in the paid family leave program, whether they choose to be or not. I can see some unhappy workers once their paychecks have been deducted by no choice of their own. They will also pay 100 percent of the premiums for family leave and 55 percent for disability leave if they work for a business with 50 or fewer employees. For employers who have more than 50 employees, their share of the total premiums will be about 37 percent with the employees share around 63 percent.

The premiums will not be collected until 2019 and then the program is supposed to be fully- operational in 2020. In the meantime, it is expected to cost the state 175 full-time equivalent employees (FTE's) and $80 million to get the program up and running. This is a ridiculous amount of overhead for what is being labeled as a reasonable, simple program. It is my understanding that a different state agency will be administering the paid family leave than the paid sick leave. That is bound to cause even more confusion and bureaucracy.

Finally, this plays right into the hands of big corporations. Companies like Home Depot, Costco and Safeway will be able to absorb this program to some extent. However, our local hardware stores, restaurants and retail stores in towns around the district like Chelan, Leavenworth, Cashmere, and Wenatchee will have a much harder time – especially when you add it to everything else the government has asked of them the last few years.

Our government already interferes too much with business decisions. Another mandate such as the paid family leave program just makes it that much more difficult for our small businesses to keep up with the big corporations, not to mention to merely keep their doors open. Like the effects of the higher minimum wage, it will take time to see how this plays out. Unfortunately, that means as the paid family leave program comes on line and the other rules and regulations affecting our small businesses reach full implementation, the worst may be yet to come.

Rep. Cary Condotta, R-Wenatchee, serves as the ranking member on the House Commerce and Gaming Committee, and also serves on the House Appropriations and Finance committees.

State Representative Cary Condotta
12th Legislative District
RepresentativeCaryCondotta.com
425B Legislative Building | P.O. Box 40600 | Olympia, WA 98504-0600
cary.condotta@leg.wa.gov
360-786-7954 | Toll-free: (800) 562-6000