With a projected $17.6 billion state budget surplus, a chronic workforce shortage, record inflation, and other economic headwinds, you’d think tax hikes and heavy-handed government mandates would be off the table.
Unfortunately, the new majorities in the Minnesota Legislature are already contemplating a slew of mandates on small businesses. Many of these are holdovers from previous sessions, including a number that advanced through state House committees in 2022.
Now more than ever, your voice is needed to fight back against radical proposals that will punish small business owners. Keep an eye out for upcoming ways you can take action and make your voice heard.
Two of the most harmful mandates are paid leave proposals that would add to soaring labor costs and exacerbate the shortage already hurting Main Street businesses across our state.
Paid Family and Medical Leave (2022 HF 1200/SF 1205): This proposal would set up a government-run paid leave program that would allow employees to take up to 24 weeks off per year for illness, injury, childbirth, family care and other covered reasons.
The program would be funded by a new payroll tax. The tax could be split between employer and employee and was estimated to be about $840 million in 2020.
The tax would continue to grow as needed to cover paid leave claims. The legislation allows for upward adjustment of the tax without legislative approval.
In Washington state, where a similar program was implemented in 2020, costs greatly exceeded expectations. As a result, the payroll tax used to fund the program doubled in just three years.
And the payroll tax is just one hardship. Where will small employers find replacement workers for the 200,000 people who are projected to take leave under the program?
Minnesota’s workforce is still well below pre-pandemic levels. Help wanted signs are everywhere. Forty-four percent of small businesses have openings they can’t fill.
The likely result will be lost productivity, lost sales, and/or a premium price for replacement workers, any of which will exacerbate the current problems facing small employers.
In addition, employers face enormous record keeping requirements and penalties under the proposal.
Paid Sick Leave (HF 7/SF 29): This proposal requires all employers to provide every employee with a minimum of one hour of sick leave per every 30 hours worked, up to a maximum of 48 hours of “earned” sick leave per year. The employee must work a minimum of 80 hours for an employer to qualify.
This proposal also comes with significant record-keeping requirements and financial penalties for even minor noncompliance. The bill increases the standard penalty for mispayment of wages or benefits from $1,000 for the first instance and $5,000 for repeat failures to $10,000 for all instances.
