Paid Family Leave bills erode trust and destabilize small businesses

Jan 21, 2021
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Written by Rose Gundersen, VP of Operations & Retail Services
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Inside Washington Retail

The Paid Family Medical Leave (PFML) legislation passed in 2017 was an agreement between Washington’s employers and workers. The momentous trust that laid the foundational principles and structure of this insurance program, however, may be eroding quickly.

Two bills (HB 1073 and SB 5097) in the 2021 virtual legislative session are proposing changes without going through the PFML Advisory Committee that’s composed of representatives from both the worker and business communities. Significant changes in these bills would present inequitable challenges to the already struggling small businesses and may diminish the financial viability of this program:

  • Lowering employees’ eligibility for benefits from having to work 820 hours or more to just earning $1,000 in the qualifying period.
  • Expanding the “family member” definition to include non-blood related individuals whose close association is the equivalent of a family member.
  • Removing the exemption for small businesses (less than 50 employees) from job restoration and health benefit coverage mandates. Employment Security Department (ESD) data show that 96% of employers in Washington have less than 50 employees. Seventy-four percent of WR’s members have less than 50 employees.
  • Lowering the eligibility for job restoration rights from having to work 12 months for an employer to merely 90 days.

Though paying a premium is optional for businesses with less than 25 employees, the cost of premiums is not as consequential as interruptions to operations and the burden of the job restoration and health insurance coverage mandate.

Knowing that COVID-19 has caused a tsunami-scale “transfer of wealth” from small to big businesses, these mandates would further erode the viability of small businesses. Adding such burdens to them without thoughtful stakeholdering and data analysis may even destabilize this insurance program.

ESD that administers the PFML Program has been behind in operations. Besides the initial backlog in processing claims that lasted for several months, the small business grant program is about one year behind in being available. Now is not the time to propose significant changes to the PFML program when ESD is handling a multitude of operational issues.

Washington Retail urges legislators to continue the collaborative approach especially during a prolonged period of crises for small businesses that represent 96% of employers in our state.