OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http://www.cga.ct.gov/ofa

HB-6212

AN ACT CONCERNING EARNED FAMILY AND MEDICAL LEAVE.


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 18 $

FY 19 $

Labor Dept.

GF - Cost

None

See Below

State Comptroller - Fringe Benefits1

GF - Cost

None

See Below

Labor Dept.

Family Medical Leave Compensation Trust Fund - Cost/Revenue Gain

None

See Below

Treasurer

GF - Cost

75,000

None

Treasurer

GF - Potential Cost

See Below

See Below

Note: GF=General Fund

Municipal Impact:

Municipalities

Effect

FY 18 $

FY 19 $

Various Municipalities

STATE MANDATE - Cost

See Below

See Below

Explanation

The bill expands the state's current Family Medical Leave Act (FMLA) law as it applies to the private sector and municipalities, and establishes a Family and Medical Leave Compensation (FMLC) program. This results in a significant annual state cost beginning in FY 19, as well as a potential cost to various municipalities beginning in FY 21. These impacts are explained in detail below.

Expanded FMLA Municipal Impact

The bill expands private sector FMLA provisions to municipalities. Municipalities must currently comply with federal FMLA requirements. However, there is a potential cost to the extent that the bill requires municipalities to provide benefits beyond what is required under federal FMLA.

For example, a municipality would incur increased costs if an employee who is ineligible for FMLA under current law goes on FMLA leave and has a shift covered by an employee with a higher salary, or by an employee working an overtime shift.

Expanded FMLA Administrative Costs

The bill expands the FMLA law by reducing, from 75 to two, the minimum number of employees that makes an employer subject to FMLA beginning July 1, 2020.  The bill also extends allowable leave under FMLA to caring for grandparents, grandchildren, and siblings, in addition to relatives covered under current law. This results in a cost to the Department of Labor (DOL) of $414,240 beginning in FY 21 and associated with one Principal Attorney ($100,000 for salary and $38,080 for fringe costs), two Staff Attorneys ($75,000 for salary and $28,560 for fringe costs), and one Administrative Assistant ($50,000 for salary and $19,040 for fringe costs).

This estimate is based on the current costs for handling all FMLA inquiries and investigating complaints of alleged violation. There are currently 3,129 employers with 950,117 employees covered by existing FMLA law; it is projected that the bill would expand coverage to include approximately 57,700 employers with approximately 1,587,400 employees.

FMLC Program

The bill establishes the FMLC program to provide wage replacement benefits to covered employees taking leave under certain circumstances. This results in estimated administrative costs to DOL of approximately $13.6 million in FY 19 and up to $18.6 million annually thereafter, including fringe benefits.

The bill specifies the costs of administering the FMLC program are to be covered by the FMLC Trust Fund, which receives revenue from employee contributions as determined by the Labor Commissioner. However, no contributions to the FMLC Trust Fund are anticipated to be collected before July 1, 2019. Consequently, it is assumed the General Fund will cover the costs of the program until such time that FMLC Trust Fund revenues are sufficient.2

The FY 19 start-up costs include approximately $4.7 million in salaries and fringe costs, $7.7 million for information technology, $776,700 for overhead and capital needs, and $340,000 for outreach and marketing. The fully annualized cost of program administration increases to approximately $18.6 million beginning as early as FY 20.

The bill results in one-time costs associated with the establishment of the FMLC Trust Fund of up to $75,000, which includes funding for legal fees and asset allocation consultation.

There will be ongoing annual administrative and investment costs associated with the FMLC as a result of the bill. When fully funded, these costs will be paid for by the investment fund itself. To the extent that there are ongoing administrative and investment costs prior to funding being available in the FMLC, these costs will initially be paid through the General Fund before being reimbursed by the FMLC.

Administrative cost estimates are based on the costs identified in the “Implementing Paid Family and Medical Leave Insurance Connecticut” report undertaken by the Institute for Women's Policy Research pursuant to a contract with the Labor Department.3

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.

Sources:

Institute for Women's Policy Research "Implementing Paid Family and Medical Leave Insurance Connecticut"

1 The fringe benefit costs for most state employees are budgeted centrally in accounts administered by the Comptroller. The estimated active employee fringe benefit cost associated with most personnel changes is 38.08% of payroll in FY 18 and FY 19.

2 The bill specifies that any funds expended from the General Fund for the purpose of administering the FMLC program be reimbursed no later than October 1, 2019.

3 Section 413 of PA 15-5 JSS required the Labor Commissioner to contract with a consultant to create an implementation plan for a paid family and medical leave program by October 1, 2015, including an actuarial analysis and report on the employee contribution level needed to ensure sustainable funding and administration for the program.