State business groups oppose family-leave bill

Legislation passed Senate, House committee passed title only bill with details to be worked out later

Statewide business-interest groups are fighting proposed legislation that would allow Washington employees to take five weeks of paid leave to care for sick relatives and new children starting in 2009.

The family-leave bill (Senate Bill 5659) grants $250 a week for those five weeks and – if a business has more than 25 employees – a guaranteed job when employees return to work, paid for by 2-cent-an-hour deductions from employees’ paychecks.

The program would be administered through the Department of Labor & Industries, and employers who have less than 25 employees are subject to the bill but would be exempt from holding a worker’s job while on leave.

Jan Teague, president and CEO of the Washington Retail Assoc., said it is certain that if adopted, the bill will create a hardship on small retailers by generating the need to pay overtime to current employees to make up the slack for absent employees, hire costly temporary workers or cut service to customers.

"Where we’re not sure, is how much it’s going to cost everyone to participate," she said.

Some local business owners had gut reactions that if adopted, the bill would have a significant impact on scheduling. But they also said paid time off would be nice to have in a time of need.

Dellan Redjou, owner of Smokey’s Hot Oven Pizza, which has three locations in Vancouver, said she doesn’t begrudge her employees the five weeks off. In fact, Redjou said as a policy, she works around her employees’ scheduling needs.

Smokey’s employs 55 workers, many of whom are part-time.

But because her staff is split up into three small locations, guaranteeing that an employee may be able to return to the exact job he or she left, would be difficult, Redjou said.

A day shift may only include three employees, so replacing one for only five weeks could be difficult.

"It does affect business," she said.

The bill passed the full Senate March 15, underwent several changes in the House Commerce and Labor Committee but barely passed through the House Appropriations Committee March 31. The committee pushed it though to keep it alive, but stripped out all of the details, passing a title-only bill, which includes only its title and language of the intent to create a paid-leave program.

It was referred to the House Rules Committee April 3.

But on April 2, Gov. Chris Gregoire said voters should have the last word on the matter. As it stands, the bill includes automatic increases in the premiums, decided by L&I.

"I think you’ve got a problem when you have an automatic escalator, both in terms of the payout and the tax," she said at a news conference. "I think those need to come back to the Legislature for approval in the future."

Gregoire said she endorses the plan if lawmakers take out the automatic increases in grant size and the tax levy and if the public gets to vote on it.

Critics, such as Teague, say with the automatic escalator, there is no end in sight as to how high the premiums can go.

"This is just the initial idea, the starting number," she said.

But sponsors say they want grants to keep up with inflation and could go down.

Supporters have been trying to get a paid family leave program though the Legislature since 2001. Two years ago, it was passed by the Senate and died in the House.

Both the WRA and the Assoc. of Washington Business have testified against the bill numerous times in the Senate and House. And AWB members are in the midst of blitzing legislators with emails urging them to oppose the bill.

"We’re not against the policy to allow employees to take care of family emergencies and new children," said Kris Tefft, general counsel for the AWB. "We certainly encourage our members to provide that type of flexibility for their workers. Philosophically, the AWB thinks it’s an issue that should be in the realm of voluntary relationships between workers and employers."

Tefft said in the original bill, it was not clear whether it coordinated with the federal and state family and medical leave acts that grant employees up to 12 weeks of unpaid leave.

The association objects to mandating a "brand new" five weeks of paid leave for every worker.

And there is evidence, Tefft said, that many of the lowest-income workers would not take advantage of the program because $250 a week is not enough of a benefit to take time off work.

Paid family leave would particularly impact retailers, Teague said, because they use a large number of workers and "if they can come and go for all kinds of family reasons, what are we supposed to do when they’re not at work? … It is a serious problem to have a lot of workers absent."

Redjou said that while she doesn’t have a problem with giving employees five weeks off, she does take issue with a program in which half of the costs are projected to be administrative.

"I don’t want an increase in my payroll taxes," she said. "The state needs to be fiscally responsible, even if it means raising the cost from 2 cents to a 4-cent-an-hour deduction."

With the program could come a new department within L&I to administer the program that would require more than 80 new state workers – creating a whole new bureaucracy, Teague said.

Plus there are the questions of how the program would affect unemployment insurance rates, and how much the program actually will cost.

A 2-cent-an-hour deduction from a full-time employee’s paycheck comes to almost $42 annually, which is a far cry from the $1,250 that a worker is eligible for under the program.

Bill sponsors estimate that only 1 percent of the workforce – about 30,000 workers – will take advantage of the program. Mathematically, it makes sense, but in terms of justice, it does not, Tefft said.

"The only way to turn $40 into $1,250 is to spread the tax very broadly and hope that not many people take advantage of it," he said. "It’s not fair."

"I could never get away with something like that," Redjou said. "And if they can’t figure out how to do it without half of the costs being administrative, someone else should do it."

If the 2-cent-an-hour paycheck deduction isn’t enough to cover the program, the state could potentially look to employers to pay the extra costs, Teague said.

"The idea is not on solid ground," she added. "It’s just a foot in the door that raises attention about how it can grow into an employer cost beyond employees absent from the job. … There are enough questions that we just can’t support it."