2018 HB 5584: An Act Establishing A Tax Credit For Employers That Provide Paid Family And Medical Leave Benefits And Concerning Family And Medical Leave Accounts.

Bill Text

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective January 1, 2019, and applicable to income or taxable years commencing on or after January 1, 2019) (a) Any employer that employs fifty or fewer employees in the state and provides to its employees paid family and medical leave benefits for approved leave pursuant to the provisions of the federal Family and Medical Leave Act of 1993 and the regulations promulgated pursuant to said act or pursuant to sections 31-51kk to 31-51qq, inclusive, of the general statutes may claim a credit against the tax imposed under chapter 208 or 229 of the general statutes, as applicable. The credit shall be equal to fifty per cent of the gross amount of wages or compensation such employer paid to an employee or employees for such approved leave during the income or taxable year, as applicable, for which the employer is claiming the credit. The credit may not be claimed in any other income or taxable year. As used in this section, "employer" does not include the state or any political subdivision thereof.

(b) Any such employer may apply to the Commissioner of Revenue Services to reserve a credit under this section in the amount indicated by such employer. The aggregate amount of all credits under subsection (a) of this section shall not exceed two million five hundred thousand dollars annually for the fiscal year commencing July 1, 2019, and for each fiscal year thereafter. The amount of the credit allowed to any employer pursuant to this section shall not exceed the amount of tax due from such employer under chapter 208 or 229 of the general statutes, as applicable.

(c) An employer that reserves or claims a credit under this section shall provide any documentation required by the commissioner in a form and manner prescribed by said commissioner.

Sec. 2. (NEW) (Effective October 1, 2018) (a) As used in this section:

(1) "Family and medical leave benefits account" or "FMLA account" means an account established and maintained pursuant to this section for the purposes of paying qualified family and medical leave expenses;

(2) "Deposit" means a deposit, payment, contribution, gift or other transfer of funds;

(3) "Depositor" means any individual making a deposit into an FMLA account pursuant to a participation agreement;

(4) "Designated beneficiary" means any individual state resident designated in the participation agreement as the owner of an FMLA account;

(5) "Participation agreement" means an agreement between the trust established pursuant to subsection (c) of this section and a depositor that provides for participation in an FMLA account for the benefit of a designated beneficiary; and

(6) "Qualified family and medical leave expenses" means any expenses incurred during periods when the designated beneficiary is on approved leave pursuant to the provisions of the federal Family and Medical Leave Act of 1993 and the regulations promulgated pursuant to said act or pursuant to sections 31-51kk to 31-51qq, inclusive, of the general statutes.

(b) (1) The Treasurer shall establish an FMLA account program to allow individuals to make deposits to an FMLA account to meet qualified family and medical leave expenses of the designated beneficiary of the account. Under the program, the Treasurer shall administer individual FMLA accounts to encourage and assist eligible individuals to save private funds to provide support during periods of approved job protected leave under the provisions of the federal Family and Medical Leave Act of 1993 and the regulations promulgated pursuant to said act or pursuant to sections 31-51kk to 31-51qq, inclusive, of the general statutes.

(2) Any individual may make a deposit to an FMLA account, provided such individual has entered into a participation agreement with the trust established pursuant to subsection (c) of this section.

(c) (1) There is established within the Office of the Treasurer the Connecticut Family and Medical Benefit Trust. The trust shall constitute an instrumentality of the state and shall perform essential governmental functions, as provided in this section. The trust shall receive and hold all payments and deposits intended for FMLA accounts as well as gifts, bequests, endowments or federal, state or local grants and any other funds from public or private sources and all earnings.

(2) The Treasurer shall be responsible for the receipt, maintenance, administration, investment and disbursements of amounts from the trust. The trust shall not receive deposits in any form other than cash. No depositor or designated beneficiary may direct the investment of any contributions or amounts held in the trust other than in the specific fund options provided for by the trust and shall not direct investments in such specific fund options more than two times in any calendar year. No interest, or portion of any interest, in the program shall be used as security for a loan.

(3) The amounts on deposit in the trust shall not constitute property of the state and the trust shall not be construed to be a department, institution or agency of the state. Amounts on deposit in the trust shall not be commingled with state funds and the state shall have no claim to or against, or interest in, such amounts, except as provided in subdivision (5) of this subsection. Any contract entered into by, or any obligation of, the trust shall not constitute a debt or obligation of the state and the state shall have no obligation to any designated beneficiary or any other person on account of the trust and all amounts obligated to be paid from the trust shall be limited to amounts available for such obligation on deposit in the trust. The amounts on deposit in the trust may only be disbursed in accordance with the provisions of this section.

(4) The property of the trust and the earnings on the trust shall be exempt from taxation by the state and political subdivisions of the state.

(5) The trust shall continue in existence as long as it holds any deposits or other funds or has any obligations and until its existence is terminated by law. Upon termination of the trust, any unclaimed assets of the trust shall return to the state. Property of the trust shall be governed by section 3-61a of the general statutes.

(d) (1) The Treasurer, on behalf of the trust and for purposes of the trust, shall:

(A) Establish consistent terms for each participation agreement, bulk deposit, coupon or installment payments, including, but not limited to, (i) the method of payment into an FMLA account by payroll deduction, transfer from bank accounts or otherwise, (ii) the termination, withdrawal or transfer of payments under an FMLA account, (iii) the method of disbursement from an FMLA account, (iv) penalties for disbursements not used for qualified family and medical leave expenses, and (v) the amount of any charges or fees to be assessed in connection with the administration of the trust; and

(B) Establish one or more funds within the trust and maintain separate FMLA accounts for each designated beneficiary.

(2) The Treasurer, on behalf of the trust and for purposes of the trust, may:

(A) Receive and invest moneys in the trust in any instruments, obligations, securities or property in accordance with subsection (e) of this section;

(B) Enter into one or more contractual agreements, including contracts for legal, actuarial, accounting, custodial, advisory, management, administrative, advertising, marketing and consulting services for the trust and pay for such services from the gains and earnings of the trust;

(C) Procure insurance in connection with the trust's property, assets, activities or deposits or contributions to the trust;

(D) Apply for, accept and expend gifts, grants or donations from public or private sources to enable the Connecticut Family and Medical Benefit Trust to carry out its objectives;

(E) Sue and be sued; and

(F) Take any other action necessary to carry out the purposes of this section and incidental to the duties imposed on the Treasurer pursuant to this section.

(e) Notwithstanding the provisions of sections 3-13 to 3-13h, inclusive, of the general statutes, the Treasurer shall invest the amounts on deposit in the trust in a manner reasonable and appropriate to achieve the objectives of the trust, exercising the discretion and care of a prudent person in similar circumstances with similar objectives. The Treasurer shall give due consideration to the rate of return, risk, term or maturity, diversification of the total portfolio within the trust, liquidity, projected disbursements and expenditures and the expected payments, deposits, contributions and gifts to be received. The Treasurer shall not require the trust to invest directly in obligations of the state or any political subdivision of the state or in any investment or other fund administered by the Treasurer. The assets of the trust shall be continuously invested and reinvested in a manner consistent with the objectives of the trust until disbursed for qualified family and medical leave expenses, expended on expenses incurred by the operations of the trust or refunded to the depositor or designated beneficiary on the conditions provided in the participation agreement.

(f) Participation in the trust and the offering, sale and solicitation of opportunities to participate in the trust shall be exempt from sections 36b-16 and 36b-22 of the general statutes, provided the Treasurer has obtained written advice of counsel or written advice from the Securities Exchange Commission, or both, that the trust and the offering, sale and solicitation of opportunities to participate in the trust are not subject to federal securities laws.

(g) The state pledges to depositors, designated beneficiaries and any party who enters into contracts with the trust, pursuant to the provisions of this section, that the state will not limit or alter the rights under said sections vested in the trust or contract with the trust until such obligations are fully met and discharged and such contracts are fully performed on the part of the trust, provided nothing in this section shall preclude such limitation or alteration if adequate provision is made by law for the protection of such depositors and designated beneficiaries pursuant to the obligations of the trust or parties who entered into such contracts with the trust. The trust, on behalf of the state, may include a description of such pledge and undertaking for the state in participation agreements and such other obligations or contracts.

(h) (1) Moneys invested in a designated beneficiary's FMLA account, contributions to an individual FMLA account and distributions to a designated beneficiary from an FMLA account for qualified family and medical leave expenses shall be disregarded for purposes of determining a designated beneficiary's eligibility for assistance under the temporary family assistance program, as described in section 17b-112 of the general statutes, programs funded under the federal Low Income Home Energy Assistance Program block grant and any other federally funded assistance or benefit program, including, but not limited to, the state's medical assistance program, whenever such program requires consideration of one or more financial circumstances of an individual for the purpose of determining the individual's eligibility to receive any assistance or benefit or the amount of any assistance or benefit.

(2) No moneys invested in a designated beneficiary's FMLA account or distributions to a designated beneficiary from an FMLA account for qualified family and medical leave expenses shall be considered to be an asset for purposes of determining a designated beneficiary's eligibility for need-based, institutional aid grants offered to an individual at the public eligible educational institutions in the state.

(i) On or before December 31, 2019, and annually thereafter, the Treasurer shall submit (1) in accordance with the provisions of subsection (a) of section 3-37 of the general statutes, a report to the Governor on the operations of the trust, including the receipts, disbursements, assets, investments and liabilities and administrative costs of the trust for the immediately preceding fiscal year ending June thirtieth, and (2) in accordance with the provisions of section 11-4a of the general statutes, a report on the trust to the joint standing committee of the General Assembly having cognizance of matters relating to finance, revenue and bonding and shall make such report available to each depositor and designated beneficiary. The report required under subdivision (2) of this subsection shall include, but need not be limited to: (A) The number of FMLA accounts; (B) the total amount of contributions to such accounts; (C) the total amount and nature of disbursements from such accounts; and (D) a description of issues relating to the abuse of such accounts, if any.

In Section 2(c)(3), "subdivision (4)" was changed to "subdivision (5)" for accuracy.

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