ST. PAUL – House Democrats approved legislation Tuesday which Rep. Lisa Demuth, R-Cold Spring, said will hurt employee wages and damage businesses by establishing a mandatory paid leave program funded by a new tax on employers and workers at a time the state has a $17.5 billion surplus.
“This program is pitched as something of a life raft for workers, but I have strong concerns the opposite may be true – causing wages to shrink and putting many businesses in an unworkable position,” said Demuth, the House Republican Leader. “This is something we can least afford at a time we already are feeling the pinch of higher prices and a workforce shortage. Aside from our business community, we are hearing serious concerns from our school districts over the hole this program would blow in their budget, essentially wiping out any funding increases they may receive this session.”
Demuth said the program (H.F. 2) would cost billions of dollars to get up and running and require as many as 400 new full-time government employees to develop and administrate. She added the program applies to virtually every industry in the state – private employers, nonprofits, cities, counties, and school districts – despite objections. It would be funded with a $2.9 billion tax on employers and employees and expands employers’ leave obligations to part-time and temporary employees.
Unlike the Federal Family and Medical Leave Act, which only applies to employers with 50 or more employees, Demuth noted this program would apply to all employers including those with only one employee. Employees can stack leave together, allowing for up to 24 weeks of paid time off per year.
Meanwhile, Demuth indicated Republicans have developed a plan which takes a different approach, providing a small-business tax credit to incentivize employers to join the plan. The key difference, she said, is the minority’s plan provides paid family and medical leave benefits for employees without job-crushing mandates and new taxes.
“The Minnesota Chamber of Commerce reports 80 percent of their members already provide paid family leave,” Demuth said. “Instead of more mandates, our workers and small businesses need added flexibility to address their own unique circumstances and that is the approach we need.”
The House Republican proposal provides a small business tax credit to incentivize employers to join the plan. Minnesotans may opt into the program for $5 per week if an employer does not join by using the parameters of the state’s paid leave policy, leveraging the power of the state’s 10s of thousands of employees.
Demuth also indicated the House Republican option is backed by an insurance company, so taxpayers will not be expected to cover the costs of program shortfalls or losses. Benefits would be available to Minnesotans this Jan. 1 – a full 18 months earlier than the House Democrat proposal.
The House Republican plan was offered as an amendment to the Democrat bill on Tuesday. House Democrats voted down that offering before approving their own bill, sending it to the Senate for action.