Now that voters have spoken out in favor of paid family and medical leave in Colorado — passing Proposition 118 on Tuesday — the question for businesses that will have to help pay for the $1.2 billion-a-year program is what happens next.
For Gail Lindley, owner of Denver Bookbinding Company, the new government mandate is “unnecessary” for her business, which has been operating in north Denver for more than 90 years.
“I already provide flexible time — for us, it’s an added cost,” she said.
Prop 118, which will create a state-run paid family and medical leave insurance program for Colorado workers, gives employees up to 12 weeks of paid leave annually — a weekly maximum of $1,100 in the first year — to be with a newborn or to care for themselves or a family member who is seriously ill, while simultaneously safeguarding their jobs.
Proponents say such an arrangement has payoffs that can’t be measured merely in dollars. Women and children benefit in particular, they say, as many mothers prematurely stop breast-feeding their babies because they have to return to work.
Paid time allows them more and better bonding time with their child, advocates say.
The program would split the cost of the premium to fund the coverage evenly between the worker and the employer. According to numbers from the state’s Legislative Council, an employee earning $52,000 a year would pay $234 in premiums per year, as would that worker’s employer.
While federal law already protects a worker’s job with up to 12 weeks of unpaid leave for a newborn or an illness, adding compulsory compensation may prompt employees to take advantage of the full duration of the program even if they can return to the workplace sooner, Lindley said.
“To have a staff member gone for 12 weeks, that’s gonna hurt,” she said. “We’re five generations here — we’ve all had babies. But we worked it out where you worked part time or three days a week.”
Even though premiums wouldn’t start to be levied until 2023 — with the first disbursements under the program going out in 2024 — Loren Furman, senior vice president of state and federal relations with the Colorado Chamber of Commerce, said placing a new cost burden on businesses as they struggle under ongoing coronavirus-fueled shutdowns and restrictions is cruel timing.
“I don’t think anyone can determine what the long-term economic devastation will be for businesses during and after the pandemic,” she said this week. “I would maintain that this is still the worst time to raise payroll taxes on employers and workers, and it is unlikely that they will have fully recovered by 2023.”
But state Sen. Faith Winter, who for years fought unsuccessfully to get a paid leave law passed in the statehouse, said she is prepared to “work with the business community” on putting into practice the new law. The nuts and bolts of the measure will likely be addressed by state lawmakers in the next legislative session, she said.
“I’m really proud of Colorado for being the first state to pass paid family and medical leave at the ballot box,” she said. “It shows the independence of Colorado voters and the thoughtfulness of Colorado voters to come together to find solutions.”
Colorado is the ninth state in the nation — and the first not on the coasts — to establish a paid family and medical leave system. California was the first to launch such a program in 2004.
Winter said she has already been hearing from lawmakers in other states about how Colorado put the measure on the ballot and got buy-in for the concept. She noted that more than 200 companies in the state have endorsed paid family and medical leave.
“This has worked in eight other states,” Winter said. “I think this will be one of the issues that takes off in the coming years.”
Kevin Curry, chief revenue officer for ReedGroup, a Westminster-based leave management firm, said Colorado could serve as a “blueprint” for other states on how to get a paid leave program off the ground.
“In the absence of a federal program, the states are taking this upon themselves,” he said. “From a talent attractiveness standpoint, this makes Colorado a more attractive state for young professionals. It’s where we see the rest of the world.”
But Tony Gagliardi, Colorado director for the National Federation of Independent Business, said more than 70% of small businesses in the state already offer some type of paid leave. And because the new law does not apply to companies with nine or fewer employees, it could have the effect of stifling growth.
“Many small businesses will be encouraged to reexamine their need for their current number of employees,” Gagliardi said.
He also worries about the long-term solvency of the program and whether it can survive without raising premiums in the future.
“Then we will see if the out-of-state groups who funded the proponents’ campaign will be back in Colorado offering financial assistance to Colorado taxpayers who are now saddled with the liability of the program,” he said.
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