So my brilliant partner, Liz Torphy-Donzella (who also serves as General Counsel for the Maryland Chamber of Commerce), was a guest on WYPR’s “Midday with Dan Rodricks” show yesterday. She was invited to provide the management perspective on paid sick leave laws, while Jason Perkins-Cohen of the Job Opportunities Task Force, a Baltimore-area pro-worker advocacy group, presented the arguments in favor of such legislation. You can listen to a recording of the show here.
As management lawyers, we do not question the moral underpinnings of paid sick leave laws. (We’re not that heartless!) Of course, low-wage employees should not be forced to choose between going to work sick (or sending a sick child to school) and staying at home without pay. Of course, there are societal benefits to keeping sick employees from spreading infection in the workplace – to co-workers and customers. Of course, employers who provide such benefits build employee loyalty. And most of our clients who can afford to give sick leave do so – for the very reasons noted here.
As Liz pointed out during the show, what we object to is making paid sick leave a legal mandate, with all of the consequent results. It is clear that small employers suffer the most immediate impact as a result of paid sick leave. Although the economy has improved, many smaller businesses are still struggling and will continue to struggle to make a profit, and any added expenses – even arguably minor ones – can make the difference between making it and breaking it.
Now, I know that proponents of sick pay laws argue that paid sick leave actually reduces costs to employers. They say, for example, other employees won’t get sick if sick employees stay home, which increases productivity. They also say that employee turnover will be less, which reduces training costs for new employees. But the federal Bureau of Labor Statistics has calculated the cost of paid sick leave at $.34 per hour, per employee. This works out to $707 per year for each full-time employee! Even for a small employer, this works out to thousands of dollars per year in increased labor costs.
Employers who already provide sick leave, including most larger ones, may not object to proposed sick leave laws – after all, they’re already giving this benefit. However, they should still be aware that there are negative consequences to laws that mandate sick leave, even for them. These laws are very specific in the amount of sick leave that must be accrued, how and when it can be used, carryover requirements, and recordkeeping and notice provisions. They protect the use of sick leave from disciplinary consequences, meaning that an employer cannot implement a no-fault attendance policy that counts any absence – including time off when sick – as an occurrence (of course, not including legally protected leave like FMLA and ADA – and we all know how challenging that can be to manage!). It is certain that most, if not all, of these employers’ existing sick leave policies do not comply with one or more of these requirements, which will require possibly significant revisions to those policies. More importantly, these employers will lose the flexibility to develop sick leave policies that best fit their organizations, because the law imposes a one-size-fits-all sick leave policy. In addition, multi-state employers may end up with difference sick leave policies in different states, which will be an administrative nightmare to manage.
And back to the small employer – many of them do not have a Human Resources staff to manage the process and paperwork associated with sick leave, particularly to ensure compliance with the very technical requirements imposed by these laws. Moreover, the additional recordkeeping requirements are a new burden that the small employer may not be equipped to assume.
For all employers, these laws also provide a new basis for employees to sue. And in this litigation-happy society, you can be sure that they will.
So, in light of these costs, what will happen? We can look to San Franciso’s example (they passed a sick leave law in 2006). According to a study done by the Institute for Women’s Policy Research, 1/3 of employers increased work demands, reduced hours, or reduced employee compensation as a result of the law. Thus, this law hurt many of the very employees it was meant to help. 14% of employers reported a negative impact on profitability. One result of this is that many San Francisco restaurants are adding a 2-4% surcharge to checks to cover paid sick and health benefits, and a survey by San Francisco Gate found that 2/3 of respondents deducted that amount from the server’s tip!
Bottom line – forcing employers to comply with expensive and extensive mandates is damaging to business, and can end up hurting those workers whom the mandates intend to help.