When it comes to HB-11, much has been discussed about the additional financial burden it places on both employees and businesses. The bill mandates that 0.5% of an employee’s wages be paid by the employee, with 0.4% covered by the employer. Among the 13 states that have passed a PFMLA, 10 have already increased these rates, while the remaining three have only recently implemented their programs. Clearly, PFMLA programs quickly become financially unsustainable (effectively bankrupt).

An unintended consequence of this program is that employees who contribute to it feel entitled to use it—often leading to misuse. When people are paying into a benefit, they may feel compelled to take advantage of it, even when it may not be necessary. This will inevitably increase costs, forcing the government to raise rates further, compounding the financial strain on both employees and employers.

Now, ask any business owner in New Mexico what their greatest challenge is. Their answer? Staffing and finding good people. There are more "Help Wanted" signs in business windows than ever before. Much of this problem stems from COVID-era policies—when employees were asked to stay home, government assistance paid them (and in New Mexico, we overpaid many of them), and many workers chose to remain out of the workforce. This was an unintended consequence of government intervention.

Let’s pause and recognize how many businesses were lost due to government-mandated shutdowns. Many small businesses that did survive are still recovering or barely breaking even compared to their pre-COVID levels. Now is not the time to impose yet another harmful government regulation on struggling businesses.

For the past 18 years, I have coached and consulted hundreds of local small- and mid-sized businesses. Through this lens, I see serious concerns with HB-11 that haven’t been addressed yet.

HB-11 Mandates Employee Reinstatement

Under HB-11, employers are required to reinstate an employee to their original job (or one of equal status) after taking up to 12 weeks of paid leave.

Here’s a real-world scenario:An experienced employee takes the 12-week PFMLA leave at a small business with just eight employees. That business now must replace them for three months to continue to operate.

• Hiring a replacement is already difficult, but they try.
• They incur recruiting costs—potentially $1,000 or more for skilled positions.
• They hire a temporary worker who must be onboarded, trained, and integrated into HR and IT systems.
• Co-workers must also help train this new hire.

The greatest cost, however, is lost productivity.

According to the Society for Human Resource Management (SHRM) and Investopedia.com, the average cost to hire, onboard, and train a replacement employee for just 12 weeks is: $13,730. Finally, at the end of the 12 weeks the PMLFA employee returns and the business cannot afford to keep the replacement hire and they terminate them. There is no hold harmless clause, so the employee would be eligible to receive unemployment benefits. Yet another expense born by the business.

Using a temp agency isn’t much better—their markup fees add 50–75% to wages.

One thing is certain:

If HB-11 becomes law, it will sign the death warrant of many small and mid-sized businesses in New Mexico.

HB-11 is Bad for New Mexico, Bad for Business

 

We don’t need the government to interfere with how we manage our teams—especially when business leaders already prioritize their employees’ well-being.

The solution? Let’s trust business owners to take care of their greatest asset—their team—without government overreach.

Mark Tobiassen is a Business and Executive Coach with Action Coach New Mexico.