Paid Leave board backs plan to sue delinquent employers after extended collection process

The Connecticut Paid Leave Board on March 12 approved a plan to pursue litigation to recover outstanding employer contribution debts that staff say have not been resolved through quarterly notices and third‑party collection efforts.

Board staff described a multi-step outreach and referral process and presented an inventory of open balances totaling about $6.291 million across multiple notices and age buckets. "We currently issue notices on a quarterly basis...and then we send out four installments of those notices before we have exhausted our internal resources," Walter, who led the debt inventory presentation, said. He told the board roughly 4,940 employers have 10,427 collection notices open in the system.

Staff recommended authorizing sole-source procurement with the authority's existing fund-recovery vendor, Transworld Systems Incorporated (TSI), to direct litigable cases to law firms in TSI’s network. Locke, presenting the legal options, said the authority explored other avenues but concluded that TSI’s network and experience offered efficiencies: "We have a strong relationship with them. They've already helped us in collecting over $1.75 million of their notices," he said. He said litigation would be pursued only after an extended period in the collection pipeline and with the authority’s approval.

On costs, staff told the board that legal work would be contingency-based and estimated a commission of about 35 percent of recovered amounts; staff also budgeted roughly $500 in upfront court costs per case for planning purposes. "The legal fees would be on a commission basis. It's 35%," Locke said. He added the authority would pay court filing costs up front.

Board members pressed staff on timing and fairness. Several members questioned the proposed 17‑month trigger for litigation, arguing earlier action might improve recoveries. Mike Soltis said "the longer the debt is outstanding, the less likely it is to be collected," and urged exploring earlier litigation thresholds. Other members, including Molly Weston Williamson and David, emphasized balancing enforcement with protections for small employers and highlighted the authority’s prior grace periods and outreach.

Members also raised procedural safeguards: how employers would be served, the use of certified letters, compliance with the Fair Credit Reporting Act (FCRA) if the authority considered public posting of delinquents, and board oversight over which cases move to litigation. Staff said TSI would first send certified letters and that the authority would review and approve cases proposed for litigation.

Chair called for a motion to approve the proposed litigation plan; a motion was seconded and approved by voice vote. Immediately after the vote, a board member asked whether a roll-call vote was required; staff and the chair acknowledged the procedural question but indicated the board would proceed with the approved approach and follow up on any required formalities.

The authority’s staff told the board the litigation path is intended to address a relatively small number of employers who have not responded to multiple notices and TSI outreach and to protect the fund’s solvency and fairness to employers who remit contributions on time. The board directed staff to proceed with the recommended procurement and to include oversight safeguards when authorizing individual cases.

Next steps: staff will work to finalize the sole‑source procurement details with TSI, develop case‑by‑case approval protocols for litigation referrals and return to the board with implementation details and any additional procedural requirements.