Expanding FMLA will negatively impact Utah’s small businesses and employees

Utah’s small businesses are the lifeblood of our economic success and provide hundreds of thousands of jobs for Utah families.

As such, any policy change that impacts their success should be weighed carefully. Expanding Family Medical Leave Act (FMLA), as the Utah House of Representatives is considering with H.B. 242, Family and Medical Leave Amendments, is no small change.

Just as important is supporting and strengthening Utah’s workforce, who enable our economy to thrive. Employers invest time and resources to hire and train workers, and ultimately their bottom line depends on the success of their employees. Because of this, over the past several weeks, the Salt Lake Chamber, which membership comprises more than 80% small businesses, has worked with supporters of H.B. 242, while also addressing our concerns.

The Chamber represents small businesses at every turn, fighting against over regulation, promoting good government and preventing intrusive government involvement in running our businesses. As small business owners ourselves, we appreciate their efforts.

As such, it’s important to be clear that FMLA is a complicated law to administer and would represent an extraordinary burden on small companies – and companies like ours. Specifically, dropping the criteria from 50 employees to 30 employees for companies that must offer FMLA will have, even in amended form, an adverse impact on small to mid-sized businesses and particularly start-up companies.

This is because most employers (including those with 50 or more employees) struggle with compliance because the FMLA application and eligibility process is so fraught with detail. To be clear, any good employer knows that treating and supporting their employees is critical to their business success. This is especially true when supporting and elevating the role of women in our workforce. However, H.B. 242 would not only burden our small businesses with a mandate that doesn’t improve outcomes for Utah families; it would also increase compliance costs and reduce job opportunities.

For example, complying with FMLA also comes with additional recordkeeping requirements and operational costs as a result of managing the human resources and administration of the law. Even with the amended language, companies with fewer than 50 employees often do not have, nor can they afford, to employ a person to take on this additional burden. Rough estimates place this at $1,720 per firm, per year with basic compliance, for the additional paperwork and assistance with human resources.

Small employers also have less of an ability to absorb the impact of operating with employees out for 12 solid weeks or out on an unpredictable intermittent basis as compared to larger companies. The bill has moved in the right direction with a stepped down approach, but even six or nine weeks is a significant burden – one that employers are best suited to address without a mandate.

Utah employers already offer employee benefits without additional legislation and regulations forced upon them. These generous benefit packages are a key way to attract, retain and motivate the qualified people they need to make their organizations successful.  Especially concerning time off, Utah employers provide FMLA benefits or FMLA-like benefits despite no legal requirement to do so. For example, according to the Employers Council Utah Paid Time Off Policies Survey,

  • When companies have multiple site locations with fewer than 50 employees working at each, 80% of survey respondents provide FMLA benefits to all locations even though they are not legally required to do so.
  • 26% of survey respondents provide medical leave for an employee’s serious health condition or pregnancy before his or her FMLA eligibility.
  • 18% of survey respondents indicated their organization offers paid Parental Leave (maternity/paternity) separate from other leave policies such as vacation, PTO, FMLA, etc. The median number of days provided is approximately 34 paid days.

H.B. 242 represents a one-size-fits-all solution which removes the ability for Utah’s businesses to work with each employee to balance their personal and professional responsibilities. Some have claimed that supporting H.B. 242 is a conservative, pro-family bill. However, we believe that our free enterprise system is the best way to grow the economy, stimulate innovation and provide jobs for Utah families. A government mandate would only make this more difficult.

Guest Blog by Salt Lake Chamber Small Business Committee co-chairs: Ingolf de Jong, President of GENCOMM, and Natalie Kaddas, CEO of Kaddas Enterprises.