TDI expansion seen as way to retain workers

WELL-COVERED? Erik Deneault with his daughter Danica Deneault, who was born with brain malformations. Erik recently testified in favor of expanded TDI. / PBN PHOTO/TRACY JENKINS
WELL-COVERED? Erik Deneault with his daughter Danica Deneault, who was born with brain malformations. Erik recently testified in favor of expanded TDI. / PBN PHOTO/TRACY JENKINS

Erik and Dawn Deneault have two healthy children and were blindsided when their third child, Danica, was born with brain malformations. Their life suddenly consisted of days and weeks of medical visits in Providence and Boston and months of searching for a way to decrease their daughter’s 40 to 50 seizures a day.
Dawn Deneault had worked as a bookkeeper, but left the workforce to care for their children and manage the complex details of their home life.
“I had to make a choice to go with my family for medical appointments for a few days or work,” said Erik Deneault, who was employed at the time as a financial adviser at an accounting firm. “Both were ineffective. At work I was worrying about my family and with my family I was worried about work.”
Deneault, of North Providence, testified at an April 24 hearing before the Senate Labor Committee in support of S-231. The bill would expand the state’s mandated Temporary Disability Insurance to include up to eight weeks of temporary caregiver insurance. Deneault said it would have helped in the first months of his daughter’s overwhelming medical needs.
“I got laid off and never got rehired from the accounting firm. I wasn’t bringing in enough new business and my employer could not sustain my salary,” Deneault said.
Now he’s working on commission for an insurance agency.
While supporters of the bill said it fills a gap in finances and peace of mind and builds company loyalty because employees would tend to return to work after the crisis, those who oppose it said there are more effective and less expensive ways to provide similar coverage.
“I don’t think it’s bad to provide family leave. It might be kind of a good idea to do that,” said Ken Block, president of Warwick-based Simpatico Software Systems and a member of the Smaller Business Association of New England, or SBANE. “But I don’t think it should be expanded, with the current cost of TDI.
“In Rhode Island, TDI is 1.2 percent of gross salary, capped at about $61,000 per year on the top end. So if you make $61,000 or more, your contribution is $720 a year. That’s a lot,” said Block, who was the sole person speaking in opposition to the bill at the April 24 hearing. “The reality is that I could go acquire insurance in Massachusetts for half of that and it could provide the same coverage as in Rhode Island,” said Block. “I could provide that insurance as a benefit to my employees.”
Block said in his research he found that about 9 percent of Rhode Island workers go out on TDI every year. New Jersey has a TDI program, and without the family leave portion included, only 3 percent of New Jersey workers go out on TDI a year, Block said.
“We should undertake a study to understand why our utilization is so high in Rhode Island,” said Block. “We either have an extraordinarily ill workforce or something is going wrong here. Are people abusing the system?”
Block is part of an SBANE working group that reviewed programs in the Rhode Island Department of Labor and Training and developed recommendations to boost economic development in the state. While TDI may be a small item generally under the radar, the SBANE group said it could be one piece of systemwide changes to improve the business climate.
Block has said the state-mandated insurance hits hard on employees who have it deducted from their paychecks.
“It’s a substantial cost to the Rhode Island middle class,” he said.
“This isn’t necessarily something that would rile up business owners,” Block continued. “I think it impacts business because of the overutilization of TDI and that interrupts the office.”
Adding the temporary caregiver insurance would raise the TDI deduction to 1.4 percent, said Block.
“Were [the bill] made into law, DLT estimates the need for an additional $28 million to cover costs in 2014,” said Laura Hart, spokeswoman for the R.I. Department of Labor and Training.
“Our current estimates do translate to a two-tenths of a percentage point increase in the contribution rate,” said Hart. “But we will not know for certain until our annual calculations are made in the fall.”
Last year, about 393,300 workers contributed to the TDI fund, said Hart. Most government employees are not covered by TDI, but the law allows for unions to elect to participate, and some have done so, she said. Government employees not covered by TDI may choose to buy into short-term disability insurance through AFLAC, she said.
Bill sponsor Sen. Gayle Goldin, D-Providence, said one of the reasons the extension of TDI to include temporary caregiver insurance is the change in the workforce since the TDI program began in Rhode Island in 1942.
“Now many families have both parents working. Some people don’t take the time for caregiving when it’s needed, or they have to take unpaid leave and that creates an undue hardship,” said Goldin, who researched the results of similar programs in California and New Jersey.
“Studies in California and New Jersey found companies view this as leaving employees in a good position to return to work,” Goldin said. “They come back productive and often have developed more company loyalty because of being given the time off they need to care for their family.”
In addition to representatives of several groups and individuals testifying in favor of the proposed temporary caregiver insurance, Goldin said she’s received many written statements of support. One is from the Small Business Majority, a national small-business advocacy group.
“This expansion of Temporary Disability Insurance will make Rhode Island small businesses competitive with larger businesses and will give them a competitive advantage over small businesses in neighboring states,” wrote Benjamin Geyerhahn, director of entrepreneurship and capital for the Small Business Majority. “For small business, this bill becoming law would provide only benefits.”
“First, it costs business nothing. It is paid entirely by employees. Second, a small business currently has no way to retain an employee faced with a sick child or parent or a pregnant employee,” Geyerhahn said. “Because the small business has no way to pay them, these employees take their leave and are unlikely to return. The [proposed] law provides small business a way to retain those employees through this difficult period.” •

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