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A Perk the Boss Can't Afford

New York City wants to give small business workers paid time off—a benefit some of their employers can rarely take.

October 22, 2012
Related Topics: Top Stories - Frontpage, Paid Time Off, Policies and Procedures, Health Care Benefits, Legal, Latest News
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Doreen Zayer, who has owned a New York spa for 17 years, can't remember the last time she took a sick day. In fact, pregnant with her son shortly after starting the business, "I worked on my due date," she recalled.

The past few years have been especially stressful at Relax on Cloud 9. Sales have dipped by about 50 percent since 2008, to $500,000 annually. To survive the recession, Zayer's business has required single-minded devotion, and the dedication of her 11 employees.

Yet despite razor-thin margins, she has continued to offer health care benefits and profit sharing. Now, with business finally starting to pick up, Zayer faces another hurdle: the Paid Sick Days Act, which would require small businesses like hers to give employees at least five days off per year.

"I wish I could pay my employees when they are sick," said Zayer. "I really want to do the best for them, and if I could afford it, believe me, I would."

As debate about the legislation continues, many small business owners face a similar, ironic reality. If it passes, they will be forced to provide time off that the rigors of entrepreneurial life don't allow them to take themselves. For some owners, taking a day off is unaffordable. For others, who are entwined in virtually every aspect of their company's operations, it's hard to find a substitute—to the extent that some find themselves working in situations that corporate counterparts might find unimaginable.

The Paid Sick Days Act, which is being pushed by labor and advocacy groups, has backing from a veto-proof majority in the City Council. But Speaker Christine Quinn has blocked a vote, saying it will harm business.

The bill would require most businesses with five or more employees to provide at least five paid days off a year, while those with 20 or more workers would have to provide nine. Councilman Daniel Garodnick last month proposed amendments that would make five days the minimum even for larger businesses, allow service-sector workers to swap shifts instead of using sick days, and exempt seasonal workers. Quinn is reviewing the amendments, and a revised bill is expected to emerge before a Nov. 1 hearing on the topic.

Critics have said that requiring paid leave would add a cost that many small businesses cannot afford. Even those that provide sick leave voluntarily often bristle at the notion of a mandate.

In 2011, 85 percent of companies provided some form of paid sick leave to employees, according to a survey of human-resources professionals by the Society for Human Resource Management. However, most were part of midsize or large organizations. Only 29 percent of respondents came from employers with 99 or fewer workers.

Small-firm owners handle so much of the day-to-day work that it's hard to break away, even when they're ill. "I've had a cold for a week and a half," said Cameron Keng, owner of Autotax.me, an automated 1099 tax software system with two offices in Manhattan and seven employees. "My team is so small, everyone relies on me. The issue isn't whether I can afford it. It's an issue of team efficiency."

Keng, who declined to reveal the company's revenue, provides paid sick leave and vacation time to employees, who are CPAs like himself. "It would be hard for me to hire licensed professionals without a full range of benefits," he said.

But Keng doesn't support the Paid Sick Days Act. "What if I go into another business?" he asked. "This puts a huge burden on me. Small businesses that hire between five and 19 employees are going to incur an additional $1,500 to $5,700 per year in salaries. That is an additional $300 per year for each employee." His math reflects minimum-wage workers using all five sick days annually.

Don Winter, owner and president of Encompass Media Group in Murray Hill, rarely takes off when he is sick, though paid sick time is available through his company, which has 30 employees and expects about $20 million in revenue this year. "A few years back, I broke my ankle," he recalled. "The morning I had my X-rays and my leg was put in a cast, I was at work by 10 a.m."

Winter's employees get five paid sick days a year but are not penalized if they need more. While Winter feels that his sick-leave policy gives him a competitive advantage in hiring, he finds it "repugnant that the City Council is going to dictate how I run my business."

"Doing business in New York City is onerous enough," said Winter. "We don't need additional mandates and hurdles to cross."

Eilene Zimmerman writes for Crain's New York Business, a sister publication of Workforce Management. Comment below or email editors@workforce.com.

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