CT Paid Leave Authority says private-plan mixups led to $2.2M refund in October; board to pursue penalties for repeat errors

The Connecticut Paid Leave Authority reported that administrative mixups between payroll and insurance teams led to erroneous contributions being sent to the public program, and staff have begun refunding those amounts to employers and directing them to return withheld sums to workers when appropriate.

Dave (staff member) told the board on Dec. 11 that in October the Authority refunded about $2.2 million to 35 employers — an average of roughly seven quarters of contributions per employer — and that another $292,000 was refunded in November. Staff are processing an estimated $189,000 in additional refunds to 135 employers, expected to be completed by January 2026.

Why it matters: Employers that maintain approved private paid‑leave plans are not required to remit contributions to the Authority once private coverage is in force. When employers nevertheless continue sending contributions to the public program, the Authority must sort and return the funds; the work diverts staff time and can affect employer cash flow, board members said.

"So in October, we refunded about $2,200,000 of contributions to 35 employers, and that represented on average about 7 quarters of contributions," Dave said during the presentation.

Board members pressed staff on enforcement and on whether the Authority had earned or otherwise retained interest on these mistakenly remitted sums. Dave and other staff said they had not run a formal interest calculation and emphasized that the Authority has been turning refunds around quickly; they also said staff will explore whether monetary penalties can be imposed on repeat offenders.

Melissa Gibran, a board member, thanked staff for transparency and asked for clarity about whose money was being returned. "Is this money that you're returning belongs to the employees of the employer that was submitting it?" she asked. Staff replied that circumstances vary: sometimes employers withheld the money from employees and must repay them; other times employers paid private carriers from company funds and then separately remitted to the Authority.

An audit sample announced by staff shows no confirmed double‑deductions from employees in the cases examined so far. One presenter summarized the limited audit findings as: in the reviewed cases, employers paid private carriers (sometimes using funds withheld from employees) and also paid the Authority from their general accounts, but staff have not found systematic double‑withholding by employees.

To reduce future occurrences, staff described planned communications: a January notice to every approved private plan holder clarifying that contributions are owed to the Authority only up to the date the private plan becomes effective, and that continued payments could lead to penalties; improved refund notices that warn repeat payers; and outreach to payroll providers and insurance carriers to prompt corrective action.

Board members suggested that any future penalty consider staff investigative costs and administrative burden. Staff said a $50 compliance fee had been effective for other noncompliance issues and that they will evaluate the legal authority for alternative penalty structures.

The Authority did not adopt a penalty at the meeting; staff said they will return with further analysis and proposed language for enforcement options.

Ending: Staff will finish outstanding refunds by January 2026, proceed with the planned notices to private‑plan holders in January, and return with more detailed enforcement proposals and any interest‑calculation results for the board to consider.