Sick-days bill is unhealthy for owners-Small businesses will suffer if the City Council's legislation passes.Linda Baran - August 13, 2012
The City Council's paid-sick-days bill is well intentioned, but I've heard from many small business owners who are extremely concerned about this legislation. And they are right to be concerned. The owner of a local spa in Staten Island, for instance, tells me her employees typically have five appointments per day, three of them regular clients. With an average charge of $80 per appointment, her business faces a revenue loss of $400 when one of her employees takes a day off due to illness. The owner can shrink that loss to $228 for the day if she pays someone to cover the two nonregular clients, paying $18.50 per hour for an eight-hour shift ($148 total), and reschedules the three regulars (and their $240 in revenue) for future appointments. If this bill passes, she will have to pay an additional $148 to her sick employee, increasing her loss for the day to $376.
I've heard from owners who offer three paid sick days because that is what they can afford; owners who have 21 employees and would face an additional $33,000 annual payroll cost under the new law; and 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 her side of the story (perhaps the employee had other issues and the sick day was the last straw).
There is no consensus on the impact this bill will have on New York City's 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 perverse 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?
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.
A growing number of 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 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 Christine Quinn is right to withhold the measure from a full City Council vote.
Linda Baran is chief executive of the Staten Island Chamber of Commerce.
Categories: Chamber Blog