Paid Sick Leave Proposal Risks Jobs, Bad For Everyone
BY JON GILBERT & NANCY PLOEGER | The City Council’s paid-sick-days bill is well intentioned, but we have heard from many LGBT small business owners who are extremely concerned about this legislation and the unintended consequences of this proposed measure. And they are right to be concerned.
We have heard from owners who offer three paid sick days because that is what they can afford; from owners who have 21 employees and would face an additional $33,000 annual payroll cost under the new law; and from owners who note that proponents of the measure are trotting out people claiming they were “fired for calling in sick” but have never asked the business owner their side of the story, for example that the employee had other personnel issues.
There is no consensus on the impact this bill will have on New York City’s LGBT small businesses and all small businesses. What we do know is the entire cost of this legislation will be borne by the employer. To absorb the cost, employers will have to raise prices, delay hiring, cut other benefits, or, worse, finally pack up and leave for nearby counties or states where they can still take advantage of the New York market and not be subject to such costly mandates.
The bill also creates a disincentive to hire. There are three tiers of companies based on the number of workers — five or fewer employees, six to 19, and more than 20. Why should company size affect the number of sick days? Moreover, why grant five to nine paid sick days depending on company size when the national average for sick days taken by workers with paid sick leave is four days?
An LGBT restaurant owner wrote to City Council Speaker Christine Quinn: “The small business service industry is too random for paid sick leave with staffers working different shifts, swapping and averaging four shifts a week, so there is plenty of opportunity to be home when sick and still make up your time. The large majority of all their income is in tips, which would not be compensated by this law anyway.”
Finally, this bill is a litigator’s dream come true, as it provides a three-year private right of action for any claim against an employer. It can also interfere with existing policies, such as those that allow leave for reasons different from the ones described in this bill.
Proponents argue that this bill has passed in other cities “without adversely affecting small businesses.” But Connecticut exempts businesses with less than 50 employees and Washington DC exempts seven categories of workers — part-timers, tipped employees, and a host of other workers from their bills. And despite what the proponents say about San Francisco’s law having no effect, the fact is that the mandate did cost jobs in San Francisco. According to the Bureau of Labor Statistics, quick-service restaurants in San Francisco employed an average of 15.2 workers per establishment in 2006, before the paid sick leave ordinance went into effect. By 2010, quick-service restaurants employed only 14 workers per establishment. In comparison, quick-service restaurants in the five surrounding counties employed 2.5 percent more workers per establishment during the same period. In a National Restaurant Association survey in March, 55 percent of respondents said they would reduce employees as a result of a paid sick leave mandate.
Proponents are also discussing unpaid sick leave for businesses with less than five employees and one year’s grace period for new businesses. But if they are saying that this bill does not adversely affect businesses in the other cities where passed then why create these exemptions? Are you not then admitting then that there is an adverse effect?
A growing number of LGBT and all employers in this city are small startups. These are today’s job creators — the ones that will be hurt the most by the extra costs associated with a paid-sick-leave mandate. City government should not be taking actions that discourage entrepreneurs and small businesses in a struggling economy.
We all support the laudatory intentions behind paid sick leave, but this remains the “wrong approach, the wrong time, and the wrong bill.” Speaker Quinn is right to withhold the measure from a full City Council vote.
Jon Gilbert is the co-chair of the Manhattan Chamber of Commerce LGBT Committee. Nancy Ploeger is the president of the Manhattan Chamber of Commerce.