Small Business Opposes Paid Family & Medical Leave

Date: June 26, 2017

The following 'Priority Vote' memorandum was transmitted to the Washington State Legislature today

Priority votes are tallied at the end of every session and used to assign small-business scores to senators and representatives for the purpose of campaign endorsements.

The NFIB/Washington Leadership Council unanimously opposes a new state-run insurance program requiring all workers to participate, regardless of their willingness to do so.

The state has a remarkably poor track record overseeing insurance programs:

  • Despite record payouts during the Great Recession, the unemployment trust fund has a $4.37 BILLION surplus, paid entirely by employers. Those dollars are unavailable to reinvest in the company, add positions, increase wages, or provide additional voluntary benefits.
  • A long history of politicized rate-setting allowed Labor & Industries to squander workers compensation reserves, leading to a decade of rate increases to rebuild those reserves, and the current practice of annual rate increases to artificially peg rates to wage growth.
  • The state’s three leading health insurance carriers hold $3.5 BILLION in excess reserves – beyond those needed to pay future costs of claims – yet are requesting 13 percent to 39 percent rate hikes for 2018. The Insurance Commissioner cannot consider surpluses when approving rates. Consequently, small-business owners and working families continue to be overcharged for health insurance policies they are required by law to purchase.

Premiums for this new program could swing annually from 0.10 percent to 0.60 percent of payroll, with no requirement for maintaining low, predictable rates, and no cap on reserves – which the Legislature could sweep for other purposes.

This program would allow 12 to 18 weeks leave with inadequate limitations on reasons for taking leave – even high pollen count and morning sickness would be permitted reasons for long-term absences [Sec. 2(20)(h)].

It appears workers taking paid leave could still work on the side in “secondary employment,” despite being unable to report for work with their primary employer [Sec. 5(1)(h)].

Employers would be personally liable, even for unintentional accounting or administrative errors, and ESD allowed to lien assets, seize and sell property, and pursue civil litigation to collect premiums proponents claim are minor program costs.

It appears larger employers, including those utilizing collective bargaining agreements, could opt-out by establishing an ill-defined “voluntary plan.” Requirements for those plans are unclear, as are the benefits they would offer. This threatens to create another uneven playing field where small businesses are trapped in a costly state-run program while bigger businesses operate under a different set of rules, much like the state’s workers compensation monopoly.

Moreover, the bill allows the state labor council and Association of Washington Business to be the exclusive sources of nominations for the proposed advisory committee, much like the state’s Workers Compensation Advisory Committee. There is NO guarantee any small employer or non-union workers – who are the primary targets of this legislation – will be selected to serve on the advisory committee. Those with the most at stake with this new mandate are given no assurance of having a voice on how it operates. That is patently unfair.

Small-business owners are besieged with cost increases in this state, most resulting from legislation and initiatives, not market forces.

  • 2017 – $1.53 minimum wage increase, plus increases for near-minimum-wage workers, shift supervisors, foremen, assistant managers, etc., due to wage compression
  • 2018 – $.050 minimum wage increase, plus wage compression increase, plus paid sick and safe leave mandate of up to 52 hours leave per worker
  • 2019 – $0.50 minimum wage increase, plus wage compression, plus proposed paid family and medical leave payroll tax
  • 2020 – $1.50 minimum wage increase, plus wage compression, plus 12 to 18 weeks proposed annual paid family and medical leave per worker

Small employers are struggling with these higher personnel costs, plus increased costs from suppliers and subcontractors suffering the same increases. In some cases, they are able to increase prices but risk losing sales when doing so. Small businesses are being put at a competitive disadvantage to big box stores and other large businesses that can spread these costs over hundreds of products and thousands of customers.

Moreover, these pyramiding costs are driving competition for workers with more training, skills, and experience and killing opportunities for low-skill, young, and other inexperienced workers – the very people these programs claim they are intended to help.

We are fully aware Big Labor and other proponents plan to file an initiative if the Legislature refuses to enact paid family and medical leave legislation this year.

Small businesses simply can’t afford more attacks on their bottom line. We must oppose this new, mandatory, state-run guaranteed leave program and the payroll tax it creates.

Protect small business. Oppose Paid Family & Medical Leave.


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