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Paid Sick Leave: Solving a Health Issue or Another Burden on Employers?

New York is the latest to approve a paid-sick-leave measure, although opponents say such laws raise business costs, which could prevent them from hiring new workers or even trigger layoffs.

June 4, 2013
Related Topics: Top Stories - Frontpage, HR/Workforce Trends, Paid Time Off, Compensation Design and Communication, Benefits, Latest News
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A number of states and cities across the country have recently passed bills that require employers to provide paid sick days, sparking fierce debate among employers, advocates and legislators, which has prompted some to overturn these laws.

New York joins San Francisco; Portland, Oregon; Washington, D.C.; and Seattle as the latest municipality to approve such a measure. Under New York's law, which was passed in May, businesses with 20 or more employees will have to provide five paid sick days starting in April 2014, while businesses with 15 or more workers will have until October 2015 to comply. California, Connecticut, New Jersey and Washington have all passed paid family-leave laws.

According to the U.S. Bureau of Labor Statistics, about one-third of all workers do not have access to paid sick days.

Supporters say mandatory paid sick leave is a public health issue that will help prevent the spread of disease by allowing workers who are ill or have a sick child to stay home without fear of losing a day's wages or a job. Others see it as a matter of work-life balance that will enable workers to care for family members.

But some employers argue that these laws raise their costs, which could prevent them from hiring new workers or even trigger layoffs.

"This effort to increase labor costs given the current employment situation seems be counter to the best interests of people who are currently unemployed," says Steve Wojcik, vice president of public policy for the National Business Group on Health, an advocacy group of large employers. "And if you are employed, raising labor costs means employers are likely to hire fewer people."

Employer opposition has prompted some states to overturn paid sick leave laws. Milwaukee passed a measure in 2008 requiring large employers to offer up to nine paid sick days, but four years later it was overturned by state legislators who cited the need to help businesses stay competitive.

In Florida, legislators recently approved a ban on mandatory paid sick leave, spurred by support from The Walt Disney Co. and Darden Restaurants Inc., which owns food chains such as Olive Garden and Red Lobster. Neither company was available for comment. The law is awaiting Gov. Rick Scott's signature.

But Eileen Appelbaum, senior economist at the Center for Economic and Policy Research, says that the average cost increase to most employers offering paid leave is a one-time spike of 2 percent in payroll costs. She argues that mandated paid leave levels the playing field, adding that "workers in low-paid jobs haven't had access to paid leave and that's tremendously unfair."

The Family and Medical Leave Act, which was passed in 1993, guarantees up to 12 weeks of unpaid leave to covered workers. Appelbaum, who is the former director of the Rutgers University Center for Women and Work, says that higher-paid employees might be able to afford unpaid time off, but most workers can't go without a paycheck for very long.

"Around the world women are working in record numbers, and many countries have had a national conversation around, 'How do we make it possible for people to care for kids and the elderly and be productive employees?' Appelbaum says. We are having a conversation in this country today that is 40 years overdue. The general attitude here when you say, 'My kid has a fever' is: 'You took the job, you knew you had a kid, you figure out how to get here.' "

But Wojcik says that most large employers already provide generous paid leave, and requiring them to comply with a law saddles them with an unnecessary administrative burden. Although employers are not required by law to provide paid sick leave, about 75 percent do, according the Bureau of Labor Statistics.

"For a large employer thinking to expand and invest in a particular city or state and see this happening will say, 'Let's expand elsewhere.' In New York, employers might say let's not put those jobs in Manhattan," Wojcik says. "They are harming the smaller employer, and they're hurting employees themselves. If an employer is not offering paid sick leave, it means they're trying to make ends meet. Adding requirements like mandated paid leave will only make that harder."

Rita Pyrillis is Workforce's senior editor. Comment below or email editors@workforce.com. Follow Pyrillis on Twitter at @RitaPyrillis.

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