Small Business Disappointed by House Vote to Mandate Medical Leave

Date: March 06, 2020

Vast Majority of Small Business Offer Paid Time Off, Bill is Bad for Minnesota’s Economy

Small business is disappointed after a vote by the Minnesota House, which passed legislation that will hurt small business owners across the state. The bill requires every employer in the state to offer up to 12 weeks a year for paid medical or pregnancy leave and another 12 weeks for other qualifying conditions. Even worse, the bill, HF 5, funds the program by throwing another tax on the shoulders of small business owners who are already burdened with enough federal and state taxes. The tax comes with a rate of .4-.6% on income as high as $137,700. The tax will be split between the employee and employer’s income.

“Notably, six of the nine states that enacted similar programs funded it by taxing employees, and not employers. The other three states have significant small business exemptions. However, this bill does not include an exemption for any small business owners,” said NFIB State Director in Minnesota, Mike Hickey. “The vast majority of Minnesota small businesses show significant flexibility for employees to balance the needs of work and family. Also, the federal Family and Medical Leave Act provides some employees with up to 12 weeks of unpaid and job-protected leave each year. We don’t need Minnesota lawmakers telling small business owners how to run their companies.”

NFIB continues to point out that unlike corporations, small business owners personally know each of their employees and their families and provide them what they need in a way the business can afford. Mandatory paid leave imposes new and unnecessary taxes and costs on small businesses. For small business, what works at one company could be detrimental for another.

HF 5 would create a new Paid Family and Medical Leave Program, cost close to $900 million dollars a year and require 322 new employees to operate. Small business is concerned the growing cost of this program would make Minnesota less competitive than other states.

“Minnesota’s culture is already discouraging small business growth.  High taxes and numerous government regulations are burdening small business owners. This mandate is simply one more thing that is going to make Minnesota less competitive,” said Hickey.

According to a study from the Freedom Foundation, small businesses that are forced to comply with paid leave mandates experience moderate negative consequences as they wrestle with how to comply. Consumers are then hit with higher prices and employees are much more likely to have a reduction in their pay, hours, or other benefits.

Related Content: Small Business News | Minnesota

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