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Family leave starts; first with tax

Phase 1 of Connecticut’s new paid family and medical leave program begins Jan. 1 with the payroll deduction to pay for it. However, employees in the state won’t benefit from it until a year later.

The intent of the program is to keep money flowing to workers dealing with the birth or adoption of a child, their own health problems or those of family members. There is no question such help is needed. A birth or personal health crisis should not pitch a family, or individual, into a financial crisis as well. That is bad for the individual, the family, for stability of businesses, and for the economy.

So, while we would have created a different approach to assuring paid family leave, we welcome the plan adopted in 2019 by the General Assembly. It deserves a chance to prove its merit. There are likely to be adjustments after the program is up and running for a time, which is usually the case with such major social initiatives.

Providing paid family leave, along with an increase in the minimum wage, were major planks in the Democratic platform leading up to the 2018 election. Voters responded by electing a Democrat, Ned Lamont, as governor and boosting Democratic majorities in the state Senate and House of Representatives. And, after enacting both a family leave program and a multistep process to boost the minimum wage to $15 on June 1, 2023, Democrats saw their Senate and House majorities grow larger this past Nov. 3.

That’s called a mandate.

Beginning with wages earned on Jan. 1 and thereafter, 0.5% of an employee’s pay will be taxed specifically to fund the family leave program. For example, if your base salary is $500 you will be assessed $2.50. Deductions will not be taken on salary above $142,800 annually, matching the Social Security deduction cap.

The Connecticut Paid Leave Authority, created to administer the program, expects to raise about $485 million by year’s end to fund the paid leave that starts in 2022.

Will the money raised be enough to pay the promised benefits? The authority says that based on the analysis, the answers is yes. We have our doubts. It is hard to imagine the fund would have kept up with demand during the pandemic, for example. The law states benefits will be reduced if the tax collected does not meet the need, but we suspect there would be such a howl of protest that the legislature would relent and find the money.

Under the law, up to 12 weeks paid leave will be available in a 12-month period. If you have unused time off, an employer can make you use some of that first, but cannot drop your accrued leave below two weeks. Those earning the minimum wage will be eligible for compensation of 95% of their pay. The compensation percentage decreases as salary increases and payment is capped at $780 weekly when the program starts in 2022. Tied to the growing minimum wage, the cap increases to $840 in mid-2022, and $900 in 2023.

Who is family? According to the law, “a spouse, sibling, daughter or son, grandparent, grandchild or parent; or, an individual related to the employee by blood or affinity, and whose close association the employee shows to be the equivalent of those family relationships.”

The “affinity” and “equivalent” provisions provide a broad definition which, while recognizing that “family” is not always easily defined, also invites potential abuse. Time will tell.

What could have been different?

State and municipal unions are exempted from the program, and the tax, unless they vote to participate. This provision recognizes that these groups negotiate their own family leave benefits with the government.

Correspondingly, private employers should have been allowed to opt out if they could demonstrate a family leave plan better or equal to the state’s plan. (See editor's note, below).

And why not let the private insurance sector compete to demonstrate whether it could collect the same or lesser fees and provide equal or better leave policies? Lamont considered this but abandoned the idea when pressured by party progressives. Competition encourages a better price and product. This is why we also advocate for a public option to compete with private health insurers.

These ideas could be resurrected if the program struggles. We hope, instead, for its success.

Editor's note: We were not entirely right. There is a provision to preserve a private leave insurance market, though it is complicated.

Specifically, Section 11 of Public Act 19-25 allows an employer to apply to the Paid Family Medical Leave Insurance Authority for approval to meet its obligations under the program through a private plan, which the authority must evaluate in coordination with the Insurance Department.

For a private plan to qualify it must (i) provide the same rights, protections, and benefits provided by the state PFML program; (ii) impose no additional conditions or restrictions on using leave beyond those explicitly authorized by the Act; (iii) cost employees no more than the premium charged under the state program; (iv) cover all employees for the duration of their employment; (v) include future employees; (vi) not result in a substantial selection of risks adverse to the state PFML program; (vii) be approved by a majority vote of the employer's employees; and (viii) meet any additional requirements established by the Authority.

The Day editorial board meets regularly with political, business and community leaders and convenes weekly to formulate editorial viewpoints. It is composed of President and Publisher Tim Dwyer, Editorial Page Editor Paul Choiniere, Managing Editor Izaskun E. Larrañeta, staff writer Julia Bergman and retired deputy managing editor Lisa McGinley. However, only the publisher and editorial page editor are responsible for developing the editorial opinions. The board operates independently from the Day newsroom.

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