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Small business costs rise as paid sick leave clears Senate » CBIA

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Small businesses in Connecticut will face higher operating costs starting next year after the Senate approved a sweeping expansion of the state’s paid sick leave mandate on May 6.

HB 5005 passed on a party-line vote of 23-12, with one Democrat-Sen. Joan Hartley (D-Waterbury) – no vote.

The bill was approved by the House of Representatives last month and is now on Governor Ned Lamont’s desk. The governor has said he will sign the legislation.

One of four anti-paid sick leave measures introduced this legislative session, HB 5005, would require all employers in Connecticut to provide up to 40 hours of annual leave.

The current law, which took effect in 2011 and was the first such mandate in the country, requires companies with 50 or more employees in designated service occupations to provide paid sick leave.

Phased implementation

Introduced as a study bill, HB 5005 was amended in the Legislature’s Labor and Public Works Committee to include the language of HB 5166, as part of a series of paid sick leave measures introduced this year.

The legislation phases the implementation of the leave mandate based on the size of the employer:

  • January 1, 2025 for employers with 25 or more employees
  • January 1, 2026, for employers with 11 or more employees
  • January 1, 2027, for employers with one or more employees
The expensive expansion of the paid sick leave mandate passed on a 23-12 party vote, with one Democrat not voting.

It exempts seasonal workers, those who work fewer than 120 days per year, and members of construction-related union organizations that are parties to multiemployer health plans.

Section 3 of the bill also exempts self-employed workers, while section 4 exempts workers covered by collectively bargained family and personal care agreements.

Companies that already offer at least 40 hours of paid leave per year in the form of vacation, personal time or other leave are considered compliant and are not required to offer additional leave.

No documentation

Employees receive one hour of paid leave for every 30 hours worked, with a maximum of 40 hours of leave per year.

During the more than seven-hour debate in the Senate, Sen. Julie Kushner (D-Danbury), co-chair of the Labor Committee and one of the bill’s leading advocates, acknowledged that employees can take leave for any reason.

“There will be no required documentation and no advance notice to use the sick leave provided in this bill,” Kushner said.

Employees begin accruing time off on their first day of work, although they cannot take leave until the 120th calendar day of employment, which can be used toward any increase they choose.

If an employee is laid off and rehired at a later date, he or she will not be eligible to use any unused benefits, which will reset accrual.

Nothing in the bill requires an employer to pay for unused sick time unless stated in the employee handbook.

The law allows employees to carry over up to 40 hours of unused sick time from the previous year, but annual paid leave is limited to 40 hours regardless of how many hours are carried over.

The bill also requires employers to maintain records of the accrual and use of paid sick leave for three years.

‘Tone deaf’

Senate Republican Leader Senator Stephen Harding (R-Brookfield) called the bill “one of the most irresponsible pieces of legislation we have ever seen passed by majority Democrats.”

“This is completely tone deaf,” he said. “Rather than nurturing our small mom and pop businesses, this burdensome mandate does the exact opposite.

“This is big government forcing the engines of our economy to comply. Every Democrat who voted ‘yes’ only contributed to our state’s reputation as a bad state for business.”

“Rather than nurturing our small mom and pop businesses, this burdensome mandate does the exact opposite.”

Senator Stephen Harding

Senator Ryan Fazio (R-Greenwich) noted that Connecticut was already one of the most expensive states in the country to run a business.

“My friends, we have seen this movie before. It will not end well,” he said during the floor debate.

“It results in lower job creation, lower wages, less prosperity for the working class and middle class, fewer opportunities for people who need it, and less success for small businesses and the Connecticut economy.”

One size fits all

CBIA strongly opposed HB 5005, noting its negative impact on small businesses given its difficult one-size-fits-all approach.

CBIA President and CEO Chris DiPentima called the bill “yet another unfortunate example of policymakers making it harder for small businesses to operate in Connecticut.”

Chris DiPentima of CBIA called the bill “yet another unfortunate example of policymakers making it harder for small businesses.”

“For a long time, we’ve really honored and protected those small businesses, those micro businesses that have less than 15 employees, less than 25 employees,” he said.

“This continues a disheartening trend during recent legislative sessions with a series of costly mandates that disproportionately target small businesses, the heartbeat of our economy.

“Companies are now unfortunately having to scramble as more and more laws are being passed that have a negative impact on them.”

For more information, contact Ashley Zane at CBIA (860.244.1169) | @AshleyZane9.

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