A bill likely to come before the New Mexico Legislature next session will be another run at passing a state-run Paid Family and Medical Leave program into law but in 2023, the program will have some concessions to businesses as well as new expansions.
Tracy McDaniel, policy advocate for Southwest Women’s Law Center, said a bill is expected to be introduced in the 2023 legislative session. A Paid Family and Medical Leave bill failed in the 2020 and 2021 Legislatures. The 2022 Legislature passed a Senate Memorial to create a task force that would deliver a report on the issue and arrive at some compromises with the business community.
A Paid Family and Medical Leave bill would provide up to 12 weeks of paid time off for employees who request it for a serious medical condition, caring for a family member with a serious medical condition or welcoming a new child. There are currently 11 states and the District of Columbia that offer such leave, McDaniel said.
The recommendation from the task force is that a new version of the bill allow small businesses with less than five employees to opt out of making contributions, although the employees of those businesses would contribute into the state-managed fund.
This is intended to protect small businesses, McDaniel said. She said that 67 percent of employers in the state would be eligible to opt out.
Another concession to the business community is to delay protections for employees until after 90 days of employment. This is, in part, to protect employers of seasonal workers, McDaniel said during an interim Legislative Finance Committee hearing about the task force’s recommendations on Thursday.
After 90 days, the employee must contribute into the state-managed fund for six months before eligible for some of the benefits, McDaniel said.
One of the expansions of the program would be to include sexual assault, domestic violence and stalking as reasons to request leave through the program. Another expansion will be bereavement for the death of a child, McDaniel said.
Senate Pro Tem Mim Stewart, D-Santa Fe, spoke before the LFC about the bill. She was the primary sponsor of the Senate Memorial that created the task force.
“This is a concept everyday people want,” she said.
The Department of Workforce Solutions will administer the program and the agency estimates a general fund cost of $36.5 million to set it up. The cost will include hiring full-time employees to administer the program, establishing the IT system and rulemaking work, McDaniel said.
The cost to employers would be about $4 for every $1,000 of wages while the cost for employees would be $5 for every $1,000 of wages. The benefit employees would receive would not be their entire salary but 100 percent of minimum wage plus 67 percent of their salary above minimum wage.
Currently, the state minimum wage is $11.50 an hour but will increase to $12 an hour starting Jan. 1, 2023. The state minimum wage would be the one that would apply, McDaniel said.
McDaniel said the benefit would operate similar to unemployment insurance, which is not the full amount of an individual’s previous salary, but a portion of it.
Both McDaniel and Stewart spoke of the benefits of the program to employers. Research has shown that employees are more likely to keep working when they can take paid family and medical leave and it also improves morale and productivity after an employee returns to work, McDaniel said. It also reduces workplace injury and deaths, she said.
Stewart said many large employers in the state already offer similar leave programs and that makes them more competitive and able to attract the best candidates for jobs.
Federal employees are eligible for a federal Paid Family and Medical Leave program but that leave is not paid, Stewart said.
McDaniel said the program would be self-sustaining after contributions begin to start and would pay back to the general fund the initial $36.5 million startup costs within 10 years.
If the legislature passes a Paid Family and Medical Leave bill with the 2023 Legislature and it is signed by Gov. Michelle Lujan Grisham, who has signaled her interest in the bill before, and it goes into effect by July 1, 2023, then contributions to the fund would start Jan. 1, 2025 with benefits available starting Jan. 1, 2026.
McDaniel said the period in between would require designing the IT system, agency rule making and a robust education program to employers and employees.
Some of the LFC members expressed concern about small businesses being adversely affected by the program, despite the concession to small businesses of fewer than five employees.
State Sen. George Muñoz, a Democrat from Gallup who chairs the Senate Finance Committee, said he could think of a restaurant in his district that he said would not survive. It has more than five employees, he said.
Rep. Harry Garcia, a Democrat from Grants, echoed Muñoz’s sentiment, saying that the contribution would be too much of a hardship.
“The problem I’m having, all these small communities are struggling to begin with. We impose more cost on them, they won’t survive it. In my town of Grants, there’s one restaurant open. They have 10 or 15 employees. It’s just my opinion. I’m looking at the reality of what happens at the end of the day,” he said.
Stewart said tipped employees make a very insignificant hourly wage, so the contribution amount would be very small.
Rep. Patty Lundstrom, a Democrat from Gallup and head of the House Finance and Appropriations Committee, said she was concerned about the creation of a trust fund and how that trust fund would work.
“You need a better understanding. Often it’s not dipping into the corpus, it’s the interest and if it doesn’t meet that dollar amount, it’s a general fund subsidy. You need to be much clearer about that trust fund and how it works. Some are done well at the return but are limited in use,” she said.
Updated: This story has been updated to clarify that the benefit employees would receive would not be their entire salary but 100 percent of minimum wage plus 67 percent of their salary above minimum wage, not 60 percent, as previously stated.