Fall 2003

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Guest Commentary

Julianne Broyles is director of insurance, employee relations and small business for the California Chamber of Commerce in Sacramento.

As the start date for California's first-in-the-nation paid family leave program nears, the California Chamber of Commerce is taking the lead in disputing the state's claim that there will be no economic or fiscal impact on California businesses from the expansive new regulations.

This month, Julianne Broyles, Chamber director of employee relations and small business, testified to the state Employment Development Department (EDD) on behalf of the Chamber and the California Employers Coalition. She argued that the multibillion-dollar Family Temporary Disability Insurance (FTDI) program will have a significant impact on California businesses, particularly small businesses.

“Besides levying a new tax on employees to raise billions of dollars to support California’s paid family leave program, the law will force businesses, no matter how small, to shoulder huge unforeseen costs as well,” said Broyles.

Impact on Business

Broyles testified that business costs from the paid family leave program, which goes into effect January 1, 2004, will include:

• increased overtime pay when other workers are asked to pick up the slack caused by absent workers;

• costs for replacement workers;

• additional training costs; and

• lost productivity and service due to a worker’s prolonged or unscheduled absence, among others.

“The proposed regulations completely fail to anticipate and address the severe disruptions the increased unscheduled and unplanned absences will have on the small businesses,” testified Broyles. “The new regulations appear to be written in a manner to maximize economic costs, workplace disruption, consumer service disruption and operational difficulties, ultimately driving jobs out of California.”

Flawed Plan

The Chamber believes that there are serious flaws with the expansive FTDI program, including:

• no small business exemption;

• no length of service requirement for worker eligibility;

• lack of anti-fraud provisions; and

• conflicts with other federal and state leave programs, among other problems.

There also are numerous practical and operational issues with FTDI that will directly affect employers. Employers believe the program will jeopardize critical operations, pose safety issues and invite chaos into the workplace.

The regulations ignore the need for any employer notification that the worker is not coming into work, taking unplanned or unscheduled leave, or may be absent for an extended period. In addition, the six weeks of leave provided for in the law do not have to be taken all at once, but can be taken intermittently. These are just a few of the potential issues that the Chamber has identified with the law.

“EDD has not shown that it studied the actual costs of compliance with these proposed FTDI regulations. This is illustrated by the unsubstantiated claim that there will be no economic or fiscal impacts,” said Broyles. “The FTDI program makes it even more difficult, and certainly much more expensive, for employers to do business in California. There are major issues that will need to be addressed in the coming months.”