February 10, 2023

Paid Family and Medical Leave bill heads to Senate Finance Committee next

The New Mexico State Capitol, or Roundhouse Wikicommons.

The Paid Family and Medical Leave bill cleared its first committee hearing by a 6-2 party line vote.

The bill, SB 11, would allow employees to take up to 12 weeks of paid leave for a serious medical condition, to care for a family member with a serious medical condition or to welcome a new child. The bill passed with several amendments that bill sponsor, state Senate Pro Tem Mimi Stewart. D-Albuquerque, brought to the Senate Tax, Business and Transportation Committee at the start of the hearing.

One amendment clarifies that an employer can’t pass a portion of their premium onto their employees, another makes sure an employee’s medical privacy is protected while providing the employer with necessary information about their leave and another amendment adds two representatives from labor organizations to a Department of Workforce Solutions’ advisory board during rulemaking and implementation of the act, Stewart said.

The bill would, if enacted, appropriate about $36.5 million from the general fund to a fund created by the Department of Workforce Solutions for administrative costs associated with establishing the program. Once the fund is operational starting on Jan. 1, 2026, the new PFML fund will transfer $6 million back to the general fund until the $36.5 million is paid back.

Some aspects of the bill will include, if enacted, that an employee must have worked for 90 days before they would receive job protection, though they could still receive compensation from the state-run fund. The cost to employers would be $4 for every $1,000 of wages while the cost for employees would be $5 for every $1,000 of wages. The formula for benefits is 100 percent of minimum wage plus 67 percent of wages above minimum wage. That places a cap on wages the employee will earn during the time off. The shortest amount of time off an employee can request under the PFML Act would be four hours to reduce administrative burdens. Employers with four or fewer employees would not have to pay the .4 percent contribution per employee but the employees would still pay the .5 percent contribution. 

Employees who work for a small business with four or fewer employees would still be able to request paid time off.

During public comment, several representatives for the business community spoke in opposition to the bill. Some of the opposition expressed concern about the .4 percent that employers with five or more employees would have to pay. Some said small businesses were worried that the administrative aspects would be too burdensome. Art Hall, who spoke for various providers who receive their revenue through Medicaid reimbursements, said the employers he represents “can’t increase prices,” to offset the 0.4 percent contribution per employee.

Committee Chair Benny Shendo Jr., a Democrat from Jemez Pueblo, asked about how this bill would impact businesses that rely on Medicaid reimbursement.

Susan Reagan, a University of New Mexico economic researcher, stood in the audience and said the economic expectation is that, as a result of the bill, if it is enacted, wages in the state would remain “constant.”

“We’ll see wages not rise as fast because of this. But it will not hurt the bottom line for businesses. The premium will be a little bit of a heartache. But the premium is very reasonable for the outcome. It will take two to five  years for the employers to realize a positive outcome,” she said.

State Sen. Carrie Hamblen, D-Las Cruces, asked what would be the average cost to employers.

Stewart said the total contribution, including both employer and employee, is .9 percent and that 66 percent of businesses in New Mexico won’t pay the employer contribution because they have four or fewer employees.

“We’ve got a million workers in this state and there will be between 36,000 to 50,000 claims a year…the average number of weeks they take is 7 to 8 weeks in other states. A lot of it is maternity or paternity [leave],” Stewart said.

Hamblen asked the Secretary of the Department of Workforce Solutions, Sarita Nair, to speak about the program.

Nair said she believed “we ended up with a bill that is workable.”

She called the “ramp up” “pricey” but called it a “key” to the creation of the program.

“It’s an expensive program to administer and ramp up. The worst case scenario would be passing a bill and underfunding it. My role is to advocate for adequate resources for the bill,” she said.

Once the program is up and running by Jan. 1, 2026, the program is expected to pay for itself as well as pay back the general fund for the $36.5 million start up cost.

State Sen. Gay Kernan, R-Hobbs, asked if the paid leave would include public institutions, as well as private business.

Stewart said if an organization, such as a labor union, has a better leave program, they can opt out. But she said that in some of the 11 other states that have already passed this bill, most corporations that offer paid family and medical leave switch to the state-run program because it saves the business money.

Kernan said “small businesses know how to treat their employees” and said the bill gives “no credit to small businesses.”

Shendo asked about tribes. Terrelene Massey, Diné and executive director of Southwest Women’s Law Center and an expert witness for the bill, said that Tribal governments are not included because they are outside of state jurisdiction.

“But the bill allows the Tribes, as employers, to participate in the relief program,” Massey said.

State Sen. Ron Griggs, a Republican from Alamogordo, said he worried about small businesses in rural areas where finding temporary hires for up to 12 weeks could prove to be challenging.

“Businesses don’t have to pay the employee salary, but it’s difficult for some of them to recover or hire someone to work that 12-week period….I’m not necessarily opposed to this whole concept but I’m concerned about some of the things in it,” he said.

Stewart said the cap on employee reimbursement during the paid leave will act as an incentive for the employee to return to work as quickly as they can.

“There’s a motivation to come back,” she said.

The bill heads to the Senate Finance Committee next.