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Effort to Require Paid Family Leave at Companies Receiving Tax Break Gets Pushback

Credit: iStock

by April Corbin Girnus, Nevada Current
May 11, 2023

A paid family and medical leave proposal is raising broader questions about what Nevada should require of the companies it gives tax breaks to.

State Sen. Edgar Flores (D-Las Vegas) describes his Senate Bill 429 as “pro-growth, pro-family.” The bill, which passed the full Senate with bipartisan support last month and was heard in the Assembly Revenue Committee on Tuesday, would require companies receiving tax abatements through the Governor’s Office of Economic Development to provide paid family medical leave to their employees.

“Any small business can do whatever they please, make whatever investment, if they don’t want to take advantage of this state’s money,” said Flores during the bill’s Senate committee hearing. “But if the people of Nevada are involved through the abatement process, you are going to have an added layer of responsibility. I think that’s appropriate.”

A 12-week paid family medical leave requirement would only apply to companies with more than 50 employees, and the leave would only have to be available for those who have worked for the company for a full year. Those provisions mirror the federal Family and Medical Leave Act (FMLA).

The paid family leave for tax-abated companies would have to pay at least 55% of the worker’s normal wages or salary. FMLA only requires employers provide unpaid leave, which, advocates have pointed out, many families simply cannot afford.

Thirteen states have paid family medical leave laws on the books. Nevada is not one of them.

Flores noted in his presentation that he and many other small business owners in Nevada choose to offer paid family medical leave despite not being required.

“We know that we have an obligation to take care of folk,” he said. “It’s what Nevadans do. It’s what good strong small businesses do. We do it because it’s a best practice. It’s how we retain and take care of our workforce. What we’re saying through this bill is, if we’re attracting businesses to Nevada, we’re also attracting businesses that are like-minded.”

Companies that provide paid family medical leave in states that do not universally require businesses to do so are eligible for federal tax credits. SB 429 aligns tax abatement requirements with that federal tax credit program, which expires in 2026, meaning any tax-abated company would be eligible for that federal tax credit.

Former Lt. Gov. Kate Marshall, who is now with The Impact Project and presented the bill alongside Flores, said states like California and New Jersey that have passed paid family leave laws have reaped both short- and long-term economic benefits. Rates of labor force participation among women with young children rise, particularly among women with higher incomes. Maternal and child health increases. Poverty is reduced.

Marshall said that research suggests women who return to work after giving birth work 10% to 17% more hours.

“For those of you who are moms, you know this,” she said. “I don’t even have to tell you this. Not only do you go back to work, you work harder… and you still get dinner on the table.”

Assemblywoman Shondra Summers-Armstrong (D-Las Vegas) agreed but noted that, while family medical leave is often discussed in the context of women needing to physically recover from giving birth and bond with their child, it is also commonly used by people taking care of aging parents or an ill spouse.

“Nevada is a beautiful state,” she added. “She’s a wonderful place to live. And the people that come and want some of her beauty should be prepared to meet her with the grace that she gives them and the benefits. We don’t want busters here. We want businesses that are going to come here and bring good things to our citizens because we deserve it.”

‘There’s a disconnect’

GOED did not weigh in on SB 429 during either of its hearings, but Flores acknowledged to his fellow lawmakers that the agency “expressed some concerns.”

In an emailed statement provided to the Current, GOED said: “Although we strongly believe in worker’s rights and that every business should provide terrific working conditions for all Nevada employees, we don’t believe added pre-conditions on abatements are the solution to bringing better paying jobs to Nevadans. It would make the state less competitive both nationally and globally.”

The bill is also opposed by the Las Vegas and Henderson chambers of commerce, as well as the Las Vegas Global Economic Alliance and the Economic Development Authority of Western Nevada — groups that work with GOED.

Paul Moradkhan of the Vegas Chamber in his opposition testimony pointed out that lawmakers in 2019 passed a flexible paid time off bill. That law sets a minimum mandatory paid time off accrual equivalent to earning 40 hours of paid time off after one year of full time work.

Flores said he and other supporters of SB 429 support economic development but have different thoughts on what that should entail.

“There’s a disconnect,” he said. “If we are trying to attract the best businesses with the best practices who protect their employees while meaningfully making money, versus people who are only prioritizing making money. That pool will look different.”

Flores contends that Nevada “no longer needs to position itself in a place of desperation, begging for companies to come here, willing to give any and all to close a deal.”

That sentiment has emerged repeatedly this legislative session in bills related to GOED and economic development.

State Sen. Dina Neal (D-North Las Vegas), who is pushing to limit the power of the executive branch agency more broadly, said during a hearing for SB 429 that she would be in favor of additional auditing or specific clawback provisions for companies caught violating the paid family leave requirement.

She said Nevada has not been able to clawback money from tax-abated companies that have significant numbers of employees enrolled in Medicaid. Those companies were supposed to offer salaries high enough for them to not need Medicaid.

“They always have excuses,” added Neal. “We’ll do it next time. We’ll do this. And in the meantime, you’re not paying taxes.”

Marshall told lawmakers SB 429 is not designed to address the broader questions regarding Nevada’s approach to tax abatements and economic development, but she acknowledged that conversation is happening.

“There is, I think, in front of this body, and in front of the legislature as a whole, a lot of questions these days about what we are doing with our abatements, who we are attracting, and who we are harming,” she said. “I think that’s a serious conversation in front of you. … Assuming we are going to attract businesses with abatements, what kind of companies do you want to attract and what do you want to require for those abatements?”

This article was originally published on Nevada Current and is republished here under a Creative Commons license.