Bill Could Net the State $100 Million a Year From Low-Wage Employers

Apr 7, 2014

Fast food workers campaigned in Hartford last summer for higher pay.
Credit Harriet Jones / WNPR

A new analysis says large companies that allow their workers to rely on state assistance could be heavily penalized by a law currently being considered by the state legislature.

While much of the attention has been focused on the minimum wage this legislative session -- with Connecticut finally becoming the first state in the nation to officially endorse President Obama's target of $10.10 an hour -- there's another controversial piece of wage legislation on the agenda at the General Assembly.

House Bill 5069 is titled An Act Concerning Low Wage Employers. If it's enacted, it would impose fines on large companies that pay their workers below 130 percent of the minimum wage. The bill terms that level a "standard wage."

The bill is aimed at corporations that pay such low wages that their workers end up relying on food stamps and Medicaid. The bill's proponents have said that means the state is, in effect, subsidizing profitable corporations.

Now the Office of Fiscal Analysis has taken a look at what those companies might end up paying in penalties if the bill becomes law. Its analysis assumes that 100,675 workers might be affected at companies employing over 500 people. If that's accurate, at a fine rate of $1.00 per work hour, the state could garner more than $100 million in penalties the first year of the legislation.

To counter that, the report said enforcing the law could cost $14 million a year.

The bill could have the biggest effect on franchised companies like fast food outlets, which are individually owned, but are treated by the legislation as one entity with the parent company. Its opponents say it's just one more way to make Connecticut less business-friendly.