U.S. Senate Finance Committee Hears Testimony on Paid Leave Mandates

Date: October 31, 2023

NFIB’s Elizabeth Milito spoke on small business struggles with one-size-fits-all mandates

On October 25, Executive Director of the NFIB Small Business Legal Center Elizabeth Milito testified before the U.S. Senate Finance Committee at a hearing titled, “Exploring Paid Leave: Policy, Practice, and Impact on the Workforce.” Milito explained how one-size-fits-all mandates are inflexible and costly to America’s small businesses.

“Small business owners understand the changing dynamics in the workplace – they are grandparents, parents, and caregivers, too – and they want to do all they can do to attract and retain the best employees,” explained Milito. “But when it comes to benefits, flexibility is key for small businesses. Mandated leave laws represent a significant challenge for small business owners since flexibility is critical for a small business, and mandated leave laws are generally anything but flexible, simple to comply with, and affordable.”

Milito’s testimony focused on three main concerns of small business owners:

  1. leave mandates impede flexibility, which is the key to making small businesses the “employers of choice” in our communities,
  2. leave mandates impose inordinate complexity and costs on small businesses, and
  3. leave mandates lead to death by a thousand mandates.

“The majority of small business owners already include paid leave in their compensation packages,” said Milito. “According to an NFIB national small business poll, a majority of small business owners indicated that they already provide flexible leave. Most small employers (73%) offer paid time off (PTO) to the majority of their full-time employees, and 67% of them offer two weeks or more of leave.”

Small businesses strive to be an employer of choice not just to recruit and retain employees, but to invest in their employees and offer them competitive wages at a job they want to continue doing. Mandated leave proposals often are one-size-fits-all and would make it more difficult for small business owners to attract the right employees at a critical time.

“The number of small business owners who struggle to fill positions is at a historically high level,” said Milito. “Small businesses are increasing compensation and benefits. They are providing flexibility so employees can pick their kids up from daycare or go to a doctor’s appointment. However, many small business owners are staunchly opposed to one-size-fits-all inflexible and costly mandates from Washington. Just as we know from past decisions the best political intentions do not always play out as desired. Therefore, we must also examine the likely consequences to small employers from new government mandates.”

Small businesses are leaders in flexible working arrangements which is a key benefit for many employees whose schedules don’t fit standard working hours. Milito cited small business owners on the challenges adding another mandated benefit will have on their businesses and the importance of flexibility to their employees.

“Mandated leave is not a free benefit for employees; mandated leave comes with a cost that businesses will have to shoulder and will eventually be absorbed by the employer, employees, and customers. In a small business with a finite number of resources, this translates into less money available for wage increases, health insurance and other benefits, and hiring additional employees.”

The success of small businesses is dependent on predictability in order to stay competitive. Offering paid leave benefits can be beneficial and boost morale, but mandated leave policies further complicate compliance with workforce laws for employers and raise costs on businesses. disappointment

“Only about 12% of small businesses have a human resources (HR) professional or dedicated employee who handles personnel matters,” explained Milito. “In most small businesses, HR matters are handled by the business owner or an employee who handles back office and administrative tasks. This means that the recordkeeping and reporting requirements mandated by leave proposals will fall more times than not on the business owner. About 50% do payroll in-house. Additionally, whether an employer is subject to a paid leave mandate or subject to an unpaid leave mandate, leave laws generally impose onerous recordkeeping requirements with which small businesses would need to comply, including new leave tracking, notification, documentation, and reporting requirements. Records would need to be maintained to demonstrate compliance.”

Milito stressed the challenges mandating paid leave would cause for small business owners and the importance of offering flexible schedules to Main Streets across the country. Every small business has different needs and requirements, so it is important for them to handle paid leave and other in a way that truly will help and not hurt their employees and businesses.

“Small business owners can and do offer support to employees in their lives away from work, whether it’s for their own care or to care for a parent, child, or other family member, but they must have flexibility in creating a policy that works for both the employees and the business.”

Milito’s full testimony is available to read and the full hearing is available to watch and learn more on this issue.

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