Maine’s business community feels compelled to set the record straight on claims that it supports the paid family and medical leave program, a new bureaucratic entitlement, recently signed into law by Gov. Mills, that will be funded through a new payroll tax levied on Maine businesses. Many other organizations that represent small businesses such as those that we represent – consisting of thousands of employers statewide – did, in fact, support a reasonable version of the program – one much more workable than the final product. However, as has become commonplace in politics, compromise is a foreign concept. Maine’s business community could not support this extreme proposal for several reasons.
In their celebrations, proponents claimed they reached a compromise that incorporated Maine businesses’ concerns. However, it should be noted that no business association in the state supported the final product, and the concerns raised by actual employers were dismissed and left unanswered.
A cautious and deliberative legislative process is essential in good policymaking. A good example is L.D. 369 in 2019, from then-Sen. Rebecca Millett. L.D. 369 created an earned paid leave program that provided 40 hours of leave annually to employees. The legislative process for this bill had multiple work sessions, spanning several months, providing ample time for public discourse. This happened because the governor crafted a compromise proposal that, frankly, no side was happy with – often a sign of good lawmaking and true compromise. We had hoped the bill sponsors and the governor would take a similar approach with the paid family and medical leave law; however, that was not the case.
Maine’s new paid family and medical leave law – the largest change to Maine employment law in decades – was legislated in two meetings: a public hearing and a work session, conveniently held during the last week committees were authorized to meet. This is quite the opposite from L.D. 369. Holding meetings at the 11th hour did not allow for the same transparent committee process that led to Maine’s earned paid leave law, and that is to the detriment of the Maine people. Paid family and medical leave will hit Maine businesses and workers with $360 million in new annual taxes. Why would a program as consequential and high-stakes as this not undergo a similar process?
We disagree with the governor’s assertion that this bill is tailored to Maine. Perhaps it is only in the sense that Maine already has the third highest tax burden in the country. This will be one of the most expensive and benefit-rich programs in the country. This isn’t just our opinion – it’s fact. The tax portion for family-related leave will require the employer to pay 50% of the share. The average employer tax in all other New England states for the same leave is 0%, meaning they are either completely employee-funded or voluntary. The same outliers are found in the wage replacement and benefit cap determinations, putting Maine more in line with California.
Let’s be clear, this not sour grapes, it’s disappointment. Disappointment in the process, the politics and the outcome.
The governor said in her op-ed that, while she pledged not to raise taxes in her second term, she “lives in the real world” and that a referendum was looming that would’ve resulted in a tax hike anyway. Not only does this underestimate the political influence of a popular governor, it diminishes the real word that businesses live in. A statement from the governor, urging her fellow Mainers to reject a far-left dark money proposal, coupled with a pledge to design a program that works for all parties, including businesses, would go further than she gives herself credit.
Like the governor, Maine businesses also live in the real world, as they know the struggles they will face because of this new program, from the new payroll tax, the three-month unchecked absences and the inability to replace that worker on a temporary basis in a nonexistent labor market. Moreover, the idea that any hardship exemption built into this program will alleviate those struggles shows no grounding in the real world of business.
The Maine Department of Labor announced this week that it will begin rulemaking on this new law this fall. The idea that employers that already have a paid leave program can keep their program will certainly be tested through this process. We have serious concerns that the “substantially equivalent” provision will hold up through rulemaking.
While there is time, we hope that the governor will reconsider her position and introduce a bill in the next legislative session that rights this wrong and creates a program that works for all Mainers, including small businesses, which is absent of politics and considerate of Maine’s economic needs and constraints. Maine’s businesses are counting on it.
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