Bill to expand paid leave benefits comes with a big cost, says Minnesota Chamber CEO

ALEXANDRIA — New legislation that would provide 12 weeks of paid parental and family leave plus an additional 12 weeks of paid medical leave could spell trouble for both employers and employees.

That’s according to Doug Loon, president and CEO of the Minnesota Chamber of Commerce . Loon stopped by the Echo Press office on Friday, March 3 before speaking at a League of Minnesota Cities training institute in Alexandria.

As introduced, the legislation ( HF2 and SF2 ) would create a state-administered paid leave insurance program financed through a new tax on employers. This is different – and in addition to – a separate bill that mandates employers to provide up to 80 hours of paid sick leave for routine or minor illnesses.

Loon described the legislation as “too big, too costly and too big of a tax.” He said the program would create a “new layer of government bureaucracy.”

Loon was also concerned that the proposal did not go through a fiscal analysis to see what the actual cost would be to employers and taxpayers.

“This bill is on the fast track but we need to understand it…It’s just not workable,” he said.

Loon said only 11 states have enacted similar versions of paid leave mandates and some, such as Washington, have had to raise taxes to pay for the program.

The state, Loon said, would need to hire more than 300 full-time employees to run the new paid leave insurance company.

If the legislation is full enacted, Minnesota would have the most expansive and expensive mandates in terms of eligibility, qualifying events, benefits and employer obligation, according to the Minnesota Chamber of Commerce.

“We need to step back and consider alternate proposals, with simple approaches that are workable — less egregious,” Loon said.

Employers are already dealing with supply chain shortages and disruptions, lower productivity and a worker shortage, Loon said. “They can’t meet the demand and they can’t run their plant.”

Under the program, an employee could miss 24 weeks of work – 44% of workdays in a year, Loon said.

The cost to find temporary workers to replace those on leave would double, or in some cases, triple the taxes employers pay, according to Loon.

The Minnesota Chamber of Commerce, which has about 60 chamber of commerce members throughout the state, said the Legislature must act to:

• Ensure changes proposed through Minnesota state agencies consider impacts on employers.
• Oppose one-size-fits-all mandates on employee benefits that would constrain employers’ ability to conduct business.
• Preserve private-sector flexibility on wage, benefit and scheduling decisions.