In a hearing that began at 1:00 pm today, the Senate Finance Committee heard testimony on Senate Bill 472, the Maryland Healthy Working Families Act. The Maryland Association of CPAs, joining other associations including the Maryland Chamber of Commerce and the National Federation of Independent Businesses, opposes the bill, which would: 

  • Require employers with more than nine employees to provide employees with earned sick and safe [‘safe’ = domestic violence-related] leave that is paid at the same rate as the employee normally earns, and
  • Require employers with nine or fewer employees to provide an employee with unpaid earned sick and safe leave; 
  • Provide for the manner in which earned sick and safe leave is accrued by the employee and treated by the employer; 
  • Require an employer to allow an employee to use earned sick and safe leave for specified purposes. 
Mandatory vs. Private Sector Initiatives; Inconsistencies with Current Laws
Testimony provided by individuals and business associations reflected the fact that ‘the devil is in the details’ of the 13-page bill, including enforcement provisions described as ‘draconian,’ provisions that could conflict with existing laws and collective bargaining agreements, and compliance and accounting issues. To avoid adding another layer of cost and regulation, opponents of the bill testified that business decisions on paid and unpaid leave should remain within the realm of business decisions as part of the entire benefits package, leaving it to the marketplace, within the bounds of existing law. Others testified that to absorb costs associated with this bill, companies would reduce other benefits.
 
MACPA Files Written Testimony Opposing Bill
In written testimony filed on the bill, MACPA CEO Tom Hood noted, “While we appreciate the good intentions of this legislation, as CPAs and tax advisers, we oppose SB 472 as drafted.” Hood cites compliance costs and unintended consequences arising from the bill. The MACPA’s written statement continues, “We have heard from our members that this legislation creates significant policy and compliance issues.” Additionally, the statement notes, “The bill, as proposed, also creates accounting issues as businesses will be obligated to accrue the ‘leave liability’ that results from the accrual and rollover requirements. This will create additional cost and an undue hardship and administrative burden on small and mid-sized employers who can least afford it.”
 
A ‘Cookie Cutter’ Bill
A lobbyist representing Safeway testified at the hearing that HB 472 is a ‘cookie cutter’ bill, and handed out cookie cutters for emphasis. He noted,  “There are three glaring deficiencies in this legislation: One is the premise that businesses don’t care about their employees, that is wrong and is grossly unfair; second is the cookie cutter approach in this bill; it is unrealistic, not the real world; thirdly, there are currently laws on the books dealing with employer and employee rights, there is a paid leave law, a shift break law; this proposal does not take into account or harmonize with those laws.” He also pointed out problems in the language in the bill with respect to companies with collective bargaining agreements, and pointed out practical issues and costs with the proposed approach of having the State Attorney General represent employees, raising costs of the state, without any provision for ‘bogus’ claims, and no provision for employers to receive punitive damages if that were the case.     
 
NFIB Study: Bill Would Hurt Small Business
Mike O’Halloran, State Director of the National Federation of Independent Businesses (NFIB), testified at today’s hearing that the NFIB conducted a study showing SB 472 would negatively impact jobs and carry a significant economic cost to Maryland. Some Senators asked questions about similar bills put in place in other states during the economic downturn of 2008-2011; O’Halloran cautioned that recent surveys indicate variable economic activity, and this would not be an appropriate time to introduce a bill adding this cost to business. He also noted results of an NFIB study, Mandating Paid Leave in Maryland Will Hurt Small Businesses, Employees and Consumers, which concluded the bill would cause a loss of 8,500 jobs and carry a significant economic cost. He also emphasized there is a misunderstanding among some as to whether there is an ‘exemption’ in the bill for businesses with less than 10 employees; indeed, there is no ‘exemption,’ but rather the proposal would require unpaid leave to be provided by companies with less than 10 employees, bringing about attendant cost and compliance burdens. 

The Maryland Chamber of Commerce also opposes the bill, stating that, “the proposed policy will create a lot of costly intended and unintended consequences for businesses. As drafted, there are no true exemptions for small businesses, who will be disproportionally affected by this legislation. The bill, also, does not include any provisions to address or prevent abuse or fraud and there several provisions that conflict with the current Family Medical Leave Act.” The Chamber adds, “Despite, the good intent behind the proposed policy, there are numerous items that would propose negative consequences to businesses and would further drive businesses and industries away from this state.”

A representative of the National Restaurant Association testified at the hearing that under existing laws and health codes, employees cannot work in food service when sick, and they are provided the opportunity to ‘swap shifts’ when that happens. The bill is therefore not only unnecessary, but would disproportionately impact that industry, essentially doubling labor cost when an employee is out sick, by being required to pay the sick employee and the employee that covers their shift.
 
Other business associations testified during the two-plus hour hearing; here is the link to today’s Senate Finance Committee hearing.
 
Continuing the Momentum from CPA Day in Annapolis
In other advocacy-related news, former MACPA Chairman Allen DeLeon testified earlier this week at the joint hearing of the Senate Budget and Finance Committee and the House Ways and Means Committee, on House Bill 1251 / Senate Bill 844 which proposes to reduce the interest rate on tax deficiencies and refunds. As noted by DeLeon, “In recent years, Maryland has made efforts to be more business friendly, in an attempt to attract and retain businesses and individuals to Maryland. Indeed, the Augustine Commission report focuses on this very subject. The current interest rate on deficiencies and refund of 13% is too high, and out of line with DC and Virgiia, and indeed most other states, as well as the federal government.” DeLeon concluded by urging passage of the bill.  (Read more about the Augustine Commission’s tax proposals.) 
 
MACPA advocacy efforts have also brought about positive results in backing the small business appeal bond bill, with the full House voting unanimously in favor of the bill; the action next moves to the Senate.
 
The MACPA encourages its members to continue to share their views about proposed legislation with their elected officials, particularly as to the impact on business and the profession. In this way, MACPA members continue the momentum established at MACPA’s CPA Day 2016
 
 
Loading