Paid Sick Leave Laws Generate Concern, but Not Much Pain
Back in 2007, as a new paid sick leave law — the first in the nation — was about to take effect in San Francisco, Bill Stone was worried. Mr. Stone owns the Atlas Cafe in the city’s Mission District, and the new law directed him to provide his 21 employees with one hour of paid time off for every 30 hours worked, up to nine days a year. “Basically, it’s just going to make it more expensive to operate your business,” Mr. Stone told NPR at the time. “Small business is going to have to pass that cost onto their customers.”
Six years later, Mr. Stone admits to having been a little alarmist about paid sick leave. “As a small restaurant business, it’s really hard to make money, and when they add another requirement, it makes you nervous,” Mr. Stone said in a recent interview. “But all and all, I actually think it’s a good thing.”
This spring, paid sick leave came up for vigorous debate in cities around the country. Portland, Ore., passed a law in March, and New York followed suit last week when the City Council overrode a veto by Mayor Michael R. Bloomberg. In Philadelphia, sick-leave legislation died after Mayor Michael Nutter vetoed it. In each case, the same concerns about the bill — that it is unnecessary and intrusive, and especially expensive and burdensome for small businesses — have surfaced.
At a contentious six-hour New York City Council meeting in March, representatives of at least a dozen trade associations testified against the bill. Jay Peltz, representing independent grocers, called it “a de facto annual $800 million tax increase.” Those arguments appeared to carry the day in the half-dozen states that have passed laws this year prohibiting cities and towns from enacting their own sick-leave laws. But in San Francisco, the District of Columbia and the state of Connecticut, places that have had such laws in force for more than a year (Seattle adopted one in September), it can be difficult to find small-business owners who say they have been hampered by the law’s obligations — though some object in principle.
While the statutes vary by jurisdiction, most require a company to provide an hour of paid time off for every 30 to 40 or so hours worked by full- and part-time employees. The laws make allowances for small businesses, setting varying accrual rates or limits on the amount of paid time earned or exempting the smallest businesses altogether. (In New York, initially, businesses with fewer than 20 employees will have to provide unpaid leave, not paid leave.) Companies that offer an equivalent benefit, including vacation days that can be used as emergency time off, do not have to change their policies.
Before the law took effect in San Francisco, nearly two-thirds of all businesses there already provided the equivalent of paid time off, according to a 2011 study for the Institute for Women’s Policy Research, which supports paid sick leave and other family-friendly laws. “I don’t remember when we didn’t have paid sick leave,” said Paul Cowden, who employs four people at Cowden Automotive, a San Francisco car repair shop he started in 1978. “To me, it’s a humane way to run a business. And I give my guys their time if they don’t use it. I figure I’m making deposits in my karma bank.”
Among those companies that did have to put a new policy in place, about half reported that adopting and managing it was not difficult, according to the study. And many businesses fearful that paying for sick leave would drive up expenses have since reported that those concerns were unfounded. Richard Crain, who runs the Village Grillin San Francisco, said his nine employees were not sick that often. “You have to give them one week per year,” he said. “But usually it’s just a day or two here and there.”
Mr. Stone agreed, and said that paid sick leave increased his payroll costs by less than 1 percent. “In retrospect,” he said, “it really hasn’t been a big expense at all.”
That is not to say that no small businesses claim to have been affected by the law. Daniel Shackford, who operates Great Beginnings, a day care center in Plainville, Conn., said his payroll costs increased by $20,000 last year because of paid sick leave — just over 2 percent. Under the new statewide law, which took effect early in 2012, when someone takes a day’s leave, Mr. Shackford said, “I now have to pay the temporary worker who comes in, as well as the person who’s out sick. That either comes out of my pocket, or I have to charge my customers more.”
But because the law exempts smaller competitors as well as nonprofit organizations like the Y.M.C.A., said Mr. Shackford, who is a member of the Connecticut Business and Industry Association, a trade group that fought the law, “it’s pretty hard to raise my prices to cover this expense.”
“Businesses that are affected by the law don’t like it,” said Peter Gioia, a vice president and economist for the Connecticut trade group. Many companies already had their own version of a sick-time policy, he said. “But this imposed a one-size-fits-all, union-type, strictly regulated set of procedures on everybody.”
Still, the number of businesses affected was limited in Connecticut, because the law was drawn narrowly. It applies only to companies with at least 50 workers, and manufacturers were excluded altogether. (New York City also exempted manufacturers.) Moreover, the Connecticut labor department has allowed business owners who have organized their ventures into individual legal entities to apply the 50-employee threshold to each entity.
For example, a restaurateur with six medium-size establishments might employ 200 or more people in total, but if each restaurant is established as its own business — and this is common, according to Carmen Vacalebre, whose Carmen Anthony chain operates four restaurants in Connecticut — the owner does not have to comply. Mr. Vacalebre said he provided sick leave only to his salaried employees. “In the restaurant business, the hours are very flexible. If someone wants to trade hours, they do it every day,” he said. “My folks make a lot of money, but only when they work.”
Officials of the Connecticut trade group concede that, as written, the law applies to only about 8 percent of its members, and that many of these companies already have paid sick leave policies, or something similar, in place. Bob Davis, president and chief executive of Schulz Electric, a New Haven company that repairs industrial equipment, said he offered a generous vacation policy — two weeks in the first year — to attract talented workers. “I belong to a number of different forums and industry groups,” Mr. Davis said, “and the way the law is written currently it doesn’t affect any of the members.”
In Washington, which mandated paid sick leave in 2008, companies with fewer than 25 workers need to provide only as many as three days of sick leave a year. A report released in June by the District of Columbia’s auditor found that nearly 90 percent of responding businesses said the law would not encourage them to move out of the city. Nearly a third of the businesses, however, said they did not offer paid sick leave to their employees, in apparent violation of the law.
Thomas Damato, an owner of the popular Restaurant Nora — in the ’90s, the Clintons dined there frequently — said he was not aware of the obligation until he heard about it from a reporter. “It’s never been an issue, because we just pay for it,” Mr. Damato said.
