NJBIA Opposes Expansion of Paid Family Leave

Bill will raise program’s cost by $147 million and lead to tax hikes

The New Jersey Business & Industry Association opposes legislation approved by an Assembly committee today that would change the state’s Paid Family Leave law to increase benefits, expand eligibility to more workers, and double the length of time they can be away from work.

NJBIA President & CEO Michele Siekerka said the state fund used to pay family leave benefits will soon be depleted if the state expands the number of workers who qualify for leaves, increases their benefits, and provides those checks six weeks longer than is current practice.

The nonpartisan Office of Legislative Service’s fiscal statement to the legislation says the program, which cost $88.7 million in 2016, is projected to cost $236 million if the changes are enacted into law—a $147.3 million increase, Siekerka pointed out.

“Expanding the number of weeks an employee can be out and increasing their benefits, all without adjusting the current payroll tax on employees, will no doubt cause the fund to go broke and then the state will be looking to more tax increases to pay for it all,” Siekerka said. “This legislation will make it more difficult and more expensive to run a business in New Jersey.”

Another change under this legislation would require businesses with 20 or more people to guarantee the jobs of workers who take 12-week family leaves. Currently, that requirement only applies to larger companies of 50 or more employees, which are in a slightly better position to provide coverage when a business is short-staffed.

New Jersey is one of only three states that now have a paid family leave benefit. The others are Rhode Island and California, in addition to the District of Columbia. New Jersey also is one of only six states to even provide temporary disability.

“This legislation will make New Jersey less affordable for the business community and less competitive with our No. 1 outmigration state of Pennsylvania,” Siekerka said. “New Jersey needs policies that encourage new businesses and the expansion of existing businesses. Unfortunately, this is one more example of a policy that will drive businesses away from here.”

The current New Jersey Paid Family Leave program is available to employees who need to care for a newborn or newly adopted child, or a severely ill spouse, domestic partner, or parent. The legislation, however, would expand the categories of family members to also include siblings, parents-in-law, grandparents, and grandchildren.

The benefit rate would increase from 66 percent of an employee’s weekly wage to 90 percent of his or her average weekly wage, subject to $932 weekly cap. The length of a paid family leave would double from six weeks to 12 weeks.

“Small businesses will have to pay overtime to other workers or hire replacement employees for longer periods of time if this legislation becomes law,” Siekerka said. “This will make New Jersey unattractive for new businesses and impose further hardship on those already here.”

The legislation, A-4927/S. 3085, was released by the Assembly Appropriations Committee.