PAID FAMILY LEAVE A QUAGMIRE OF FISCAL, LEGAL PROBLEMS

Assembly Republican lawmakers said the paid family leave bill approved by the General Assembly Thursday is a quagmire of fiscal and legal problems.

Assemblymen David Russo and Scott Rumana, both R-Bergen, Passaic and Essex, questioned the fiscal sustainability of the legislation saying the plan will make New Jersey less economically competitive for businesses, ultimately costing the state more jobs.

Assemblyman Richard Merkt, meanwhile, said he is concerned about a new legal opinion produced by the non-partisan Office of Legislative Services (OLS) that indicates the bill may still open up businesses to costly litigation. In addition, a procedural flaw in the legislation requires an emergency vote in the Senate this coming Monday.

Russo explained that if more than one percent of those who pay into the TDI fund through payroll taxes choose to utilize the paid family leave option, the program will be under-funded. “This will eventually lead to either higher taxes to fund the program, or a raid on some other government account,” he said.

The paid leave act would be funded through an assessment paid by workers equal to 0.09% of the portion of each worker’s wages subject to TDI taxes. It is estimated this will total about $30 to $40 per year for the average employee. The average cost of providing paid leave to an employee is estimated to be approximately $3,000, meaning that on average, 100 employees will have to pay into the fund each year to cover the cost created by one employee utilizing the fund.

Rumana noted that the bill will impose a new financial and regulatory burden on New Jersey businesses that none of our neighboring states – and only two others in the nation – require of businesses, which will likely chase many businesses away from our state.

“New Jersey lost 9,500 jobs in January of this year and this bill will only cost our state more jobs,” said Rumana. “This bill is supposed to help working families, but we aren’t helping the working people if they don’t have a place to work.”

From a legal standpoint, Merkt, R-Morris, noted that “Even with the attempts to amend this bill to address the concerns raised by the Attorney General, this OLS opinion indicates that the bill may still open up businesses to costly litigation. This opinion confirms that this new law will create a significant legal risk for businesses, even if they believe they are in compliance with its provisions.”

An opinion presented two weeks ago to Labor & Workforce Development Commissioner David Socolow by the Attorney General’s Office, stated that the paid family leave bill as then drafted could leave small businesses susceptible to lawsuits.

The bill would require employers to give employees up to six weeks paid leave to care for a newborn or sick relative, but the legislation would supposedly allow businesses with less than 50 employees to tell workers they won’t be guaranteed their jobs when the leave ends.

According to the opinion from the Attorney General, an employee in that circumstance might have a cause of action for reemployment, thus opening the business to a costly lawsuit. The bill was amended in committee Monday in an attempt to address those concerns. But a March 13th opinion from OLS indicates that even with those amendments the bill still might raise constitutional concerns.

The OLS opinion states that it appears this bill, “would likely lead to liability for employers discharging employees for seeking or obtaining the paid family disability benefits it provides,” and that the amendments in committee, “give rise to constitutional concerns involving the equal protection clauses of the federal and New Jersey Constitutions.”

“This legal opinion confirms that this new law could become a litigation nightmare for New Jersey businesses, large and small,” Merkt stated. “Not only will this bill impose a new payroll tax and chase jobs from our state, but it will open up New Jersey businesses to significant legal exposure.”

As for the procedural flaw, because all “revenue-raising” bills must originate in the General Assembly, the legislation voted on Thursday in the Assembly could not be substituted by the previously passed Senate bill – meaning that the Senate will be taking action on the Assembly bill Monday on the same day it is given second reading.

No bill may proceed from second reading to third reading within one calendar day unless the house passes an ‘emergency’ allowing action on the bill – a move that requires a 3/4 vote of that house.
“Legally, this bill will not be able to win final approval from the Senate Monday without this emergency vote,” Merkt stated. “Given that a Senate version of this bill passed by a single vote last time, it seems unlikely an emergency vote will succeed.”

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