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Debate Over Mandated Paid Sick Leave Heats Up With State, Local Legislative Action

Monday, March 10, 2014

By Rhonda Smith  

March 3 --Following Connecticut's lead, Vermont and Massachusetts could be the next states to enact employer-paid sick leave laws.

Opponents of such laws contend that they hurt employers, especially in labor-intensive industries that have low profit margins and numerous temporary, part-time and seasonal workers. The laws tend to have a greater impact on small employers, they say, because large employers often already provide paid sick leave for their employees.

Proponents of mandated paid sick leave assert that such laws tend to help workers with low wages who disproportionately lack access to this benefit.

The Economic Policy Institute said in a report released last October that almost 40 million U.S. employees, or about 40 percent of the nation's private-sector workforce, currently have no right to any paid sick leave. As a result, EPI said, these employees commonly go to work sick or leave their ill children home alone because they fear they will be fired for missing work.

“Even if they are not terminated, the loss of pay they suffer takes a dramatic toll--particularly since jobs without sick pay are concentrated among low-wage workers,” EPI said in “The Legislative Attack on American Wages and Labor Standards, 2011-2012.”

“Thus, a typical family of four with two working parents who have no paid sick leave will have wiped out its entire health care budget for the year after just three days of missed work,” wrote Gordon Lafer, author of the report and an associate professor of political science and labor studies at the University of Oregon in Eugene.

Battles Unfolding in Cities, States

Efforts in Congress to gain approval of paid sick leave legislation remain stalled, prompting proponents of such laws to push for change at state and municipal levels.

“Our eyes are on Vermont, where a heated battle is going on in the legislature, and Massachusetts, where it's very likely that this issue will be on the ballot in November,” Vicki Shabo, director of work and family programs for the National Partnership for Women & Families, told Bloomberg BNA Feb. 26.

The NPWF said other states where paid sick leave campaigns are underway or legislation is pending are: Alaska, Arizona, California, Florida, Hawaii, Illinois, Iowa, Maryland, Michigan, Minnesota, Nebraska, New Jersey, New York, North Carolina, Oregon, Pennsylvania, South Carolina and Washington.

Supporters cite their success in gaining the enactment of paid sick day laws in Connecticut and six U.S. cities--the District of Columbia, Jersey City, N.J., New York City, Portland, Ore., San Francisco and Seattle--as proof that the campaign is gaining momentum.

“Of the jurisdictions that have passed paid sick days,” Shabo said, “three happened in the last year.”

Lawmakers in New York City (32 HRR 205, 3/3/14) and the District of Columbia recently revised their paid sick leave laws to provide benefits for more workers.

Mandating Paid Sick Leave

Proponents of the laws are pushing to advance their cause by reaching out to workers with low wages, labor unions, faith-based organizations and various grass-roots groups.

At the crux of this battle is the question of whether employers should have the option of offering paid sick leave benefits to their employees--or be required to do so.


“Most of our members have fewer than 10 employees,” NFIB spokesman Jack Mozloom said. “Unlike their corporate cousins, they don't have the same human resources to shift people from one assignment to another when one employee is not there.”  

“Paid sick leave used to be considered a benefit an employer could choose to grant to its workforce, or not,” management attorney Nancy Delogu, a shareholder in Littler Mendelson's Washington office, told Bloomberg BNA Feb. 27.

Today, she said, there are two arguments gaining attention in this debate.

“One is that employers should try to transfer some of the wealth and bargaining power back to employees who may not have the ability to get paid sick leave and lose their jobs after taking time off,” Delogu said. “The second argument and one of the things you see a lot now is as a public policy matter we should want employers to offer paid sick leave so ill people do not come to work and make the rest of us sick.”

Proliferation of 'PSL Preemption Legislation.'

But opponents, in a somewhat low-key effort to defeat such laws, have successfully backed “paid sick leave preemption legislation” in at least 10 states.

Preemption measures are designed to limit the ability of cities and towns to enact certain laws without a state's approval. Such laws pertaining to paid sick leave have been enacted in Arizona, Florida, Georgia, Indiana, Louisiana, Kansas, Mississippi, North Carolina, Tennessee and Wisconsin, EPI said.

Lafer pointed to what happened in Wisconsin six years ago as an example of how preemption legislation can block or abolish local paid sick leave laws.

“In 2008, Milwaukee passed by a popular referendum a right for employees to get paid sick leave,” he told Bloomberg BNA Feb. 26. “Then in 2011, when Scott Walker became governor and Republicans took control of all three branches of state government, they passed a preemption law, which abolished the right to paid sick leave in Milwaukee.”

Seven states approved paid sick leave preemption legislation in 2013, Lafer noted in an “economic snapshot” EPI released in November.

In the seven states that approved preemption measures last year, Lafer said, lawmakers approved the bills following “vigorous advocacy” by the U.S. Chamber of Commerce, some of the chamber's state affiliates, the National Federation of Independent Business and the National Restaurant Association.

Commenting on the strategy, Shabo said: “The misguided effort to preempt paid sick days laws is a mark of success that advocates have had making paid sick days a bread-and-butter issue. Preemption is commonly used to erode workers' rights as well as public health and safety, so this is a common and unsurprising tactic.”

Employers Cite Costs of Measures

In a 2012 report published by the NFIB Research Foundation, Michael J. Chow, a senior data analyst, predicted that a statewide paid sick leave mandate in Massachusetts such as in legislation pending in the state's House and Senate would have multiple negative effects.

Such a mandate “would impose new costs on [Massachusetts] employers in the forms of compensation costs associated with paying workers taking paid sick leave, lost production due to more workers taking leave, and new paperwork and recordkeeping costs incurred by complying with the mandate,” Chow wrote.

Scott DeFife, executive vice president of policy and government affairs for the National Restaurant Association, told Bloomberg BNA Feb. 26, “Paid leave advocates never want to talk about the details of their proposals, where the fine print shows an overreach and micro-managing of business operations.”

“Hyper-restrictive mandates come at a cost,” he said. “If businesses are required to provide paid leave, something else has to give--fewer benefits, less flexibility and more regimented hours. The restaurant industry has built in flexibility with a shift-based system, which is the reason why so many people seek opportunities in our industry. This type of environment cannot be compared to a traditional office setting.”

Jack Mozloom, an NFIB spokesman in Trenton, N.J., told Bloomberg BNA Feb. 26 that small businesses are facing a threat posed by paid sick leave laws in multiple states. The organization's members “are pretty strongly opposed to it” he said, because “it's another mandatory expense.”

“Most of our members have fewer than 10 employees,” Mozloom said. “Unlike their corporate cousins, they don't have the same human resources to shift people from one assignment to another when one employee is not there.”

When an employee at a small business doesn't show up for work because of illness, Mozloom said, the employer would either have to hire a temporary employee to help out or pay some other worker overtime.

“In both of those cases you would have to pay twice for the same labor--the temporary worker and the worker not there,” he said. “In either case, you either lose productivity or pay [more].”

Ultimately, Mozloom said, matters like this are best left between employers and employees, and there's no reason for politicians to get involved.


“Our biggest obstacle is the overblown predictions of doom that scare people into thinking jobs will be lost, wages will be cut, people will be laid off and businesses will close,” Vicki Shabo of NPWF said. “None of that has come true, based on economic evidence from cities and states that have passed these laws.”  

 


“Our members say they are willing to work with their employees,” Mozloom said. “They don't want to be told by Montpelier, Hartford or Boston how to manage their businesses.”

Proponents: Studies Reflect Positive Outcomes

Shabo and other advocates for paid sick leave laws said several studies that highlight employer experiences in cities where such laws have been enacted don't support the “gloom-and-doom” scenarios their opponents continue to mention.

“Our biggest obstacle is the overblown predictions of doom that scare people into thinking jobs will be lost, wages will be cut, people will be laid off and businesses will close,” Shabo said. “None of that has come true, based on economic evidence from cities and states that have passed these laws.”

In 2011, the Institute for Women's Policy Research released “San Francisco's Paid Sick Leave Ordinance: Outcomes for Employers and Employees” (29 HRR 186, 2/21/11). San Francisco was the first city in the nation to enact a paid sick leave law, which was implemented in February 2007.

“In general, surveys of workers and employers suggest that the law is functioning well,” said the authors of the IWPR report, which was based on survey results gathered from 727 employers and 1,194 employees in San Francisco.

“Despite the availability of either five or nine sick days under the PSLO,” the report said, “the typical worker with access used only three paid sick days during the previous year, and one-quarter of employees with access used zero paid sick days.”

The IWPR report found that parents with paid sick days were more than 20 percent less likely to send a child with a contagious disease to school than parents who didn't have paid sick days.

The report also said six out of seven employers didn't report any negative effect on profitability as a result of the ordinance.

D.C., Connecticut Experiences Vary

In the District of Columbia, an “Audit of the Accrued Sick and Safe Leave Act of 2008,” released in June 2013 by the Office of the District of Columbia Auditor, said: “The Act neither discouraged business owners from locating in the District nor encouraged business owners to move their businesses from the District.”

A report the Employment Policies Institute released in February 2013 titled “Paid Sick Leave in Connecticut: A Pilot Study of Businesses' Responses to the Law” drew significantly less positive conclusions (31 HRR 125, 2/11/13). The report written by Michael Saltsman, research director at the institute, highlighted the results of survey responses from 156 businesses in that state from April to October of 2012.

“Prior to the law taking effect in January 2012,” Saltsman wrote, “31 of the businesses surveyed had scaled [back] on employee benefits or reduced paid leave (or both) to account for the cost of the new law. Twelve had cut back on employee hours, and another six reduced employee wages.”

In addition, the report said 19 businesses increased consumer prices, six laid off employees, and three converted part-time positions to full-time positions.

Perhaps more concerning, the report said, was that 38 companies surveyed said they would hire fewer people as a result of the law. “Other actions included offering fewer raises, scaling back on overtime, raising prices, and increasing the cost of other benefits like health insurance,” the report said.

 

To contact the reporter on this story: Rhonda Smith in Washington at rsmith@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

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