Paid sick days: big issue for small business

~ Paid sick time becomes bigger issue for small businesses as lawmakers take action on leave

NEW YORK -- Two months after a severe flu season forced millions of workers to stay home, paid sick time is becoming an issue for many small business owners.

City councils in Portland, Ore., and Philadelphia earlier this month approved laws requiring employers to give workers paid sick leave, and two Democratic lawmakers introduced a bill in Congress that would make paid sick leave a federal requirement.

The pros and cons

There's a great divide among business owners over the issue. On one side are opponents who say paid sick time creates financial and administrative burdens for businesses that are struggling in a recovering economy and uncertainty about health-care costs and federal budget cuts. Others argue that it makes for a happier workplace and encourages employees to stay home instead of coming to work and infecting those around them.

"It increases morale, it increases loyalty, it provides a much safer work environment," says Andy Shallal, owner of Busboys and Poets, a chain of four restaurants in the Washington, D.C., area. He was already giving his workers paid sick time before the Washington City Council passed a sick leave law in 2008. It's particularly important in the restaurant business that sick employees don't come to work.

"It's gross. Nobody wants to have anyone preparing their food when they're sick," Shallal says.

A lot of Americans are paid sick leave, including many who work at small businesses. A study issued in July by the Bureau of Labor Statistics found that 66 percent of small businesses, those with up to 499 workers, provided paid sick leave. Among companies with fewer than 50 workers, half provided leave. Eighty-two percent of workers at companies with 500 or more employees have paid sick leave.

In Missouri, employers "are not required to provide vacation pay, holiday pay or severance pay -- these are benefits given at an employer's discretion," according to the Missouri Department of Labor and Industrial Relations.

Lawmakers have been stepping in to have paid sick leave extended to more workers. San Francisco is widely believed to be the first major city to enact a paid sick leave law. The law, which requires that sick time be given to all workers, took effect in 2007. Since then, Washington, Seattle and Connecticut have enacted laws, and Portland's City Council passed its bill on March 13. The laws aren't identical, but all generally provide for workers to accrue sick time and to also use it for family illnesses and some types of emergencies.

Paid sick leave has run into roadblocks in other cities. Philadelphia's city council passed its bill March 14, but Mayor Michael Nutter vetoed a similar bill in 2011. He hasn't decided yet whether he'll sign the latest bill, spokesman Mark McDonald said. In Milwaukee, voters in 2008 approved a referendum creating a paid sick leave ordinance, but it was nullified by a subsequent state law that banned local governments from enacting such laws. And in New York City, a sick leave law has stalled in its city council.

Harm or help?

Opponents of mandatory paid sick leave say that it will hurt small businesses. Some also argue that the government shouldn't intrude in the relationship between companies and their workers.

"Any time you have a government mandate on small businesses, thay take away their options, their flexibility," says Andy Markowski, director of the National Federation of Independent Business in Connecticut, where a mandatory sick leave law took effect early last year. "With paid sick leave, a business might not be able to afford a benefit package that has benefits that are generous."

It's too soon to tell what impact the Connecticut law is having on businesses, Markowski says. But he also notes that the sick leave law is one of many sources of uncertainty for companies in the state -- they've also had to contend with state tax increases and they're still waiting to see how the health-care law will affect them.

Among the consequences cited by opponents of paid sick time: Companies will have to pay overtime to replacement workers, financially strapping businesses that already are struggling in an uncertain economy. The added expense will prevent them from expanding, or hiring other workers. Keeping track of accrued sick time will force an owner or another employee to take time away from other critical tasks.

A reintroduction

Those issues are likely to be raised in Congress, where Rep. Rosa DeLauro, D-Conn., and Sen. Tom Harkin, D-Iowa, have reintroduced the Healthy Families Act, which would require that workers be allowed to earn up to seven days of paid sick time a year. DeLauro has introduced such a bill in every Congress since 2004. In the last Congress, the bill didn't make it to the House floor.

DeLauro expects opposition from small businesses, but she notes that companies with fewer than 15 employees will be exempt.

"This is not only helpful for workers, but smart for employers," she said. "It reduces turnover, increases productivity and prevents the spread of illness."

A study by the federal Bureau of Labor Statistics issued last month showed that workers generally take few sick days. Those in industries including financial services, information, transportation and professional services took an average of about four sick days a year. Those in the leisure, hospitality and construction industries took about two days.

Many small company owners say paid sick time is good business.

"We, like many bookstores in the country, do not pay exceptionally well," says Bradley Graham, owner of Politics & Prose in Washington. "We're very happy to be able to offer additional compensation to the staff in the form of paid sick leave."

Fear about growth

Fears that businesses won't be able to grow if they have to pay for sick time are groundless, says Shallal, the Washington restaurant owner.

"With sick leave, we've expanded, we've hired more people," Shallal says. "Business associations tend to go through this apoplectic fit almost to scare people into believing this is going to be a horrible thing for business, when in reality, it's not."

Another reason why many business owners support the laws is they don't want people coming into work and infecting co-workers and customers.

"There's much more awareness among employers about public health concerns," says Ophelia Galindo, a human resources consultant with Buck Consultants in Orange County, Calif. "It's much better for that sick employee to be at home -- even employers that are struggling realize that's important."

The San Francisco law has created more paperwork for owner Basil Enan. He estimates that tracking how much sick leave his workers accrue takes up 10 percent of his time.

"I'm dealing with the regulatory burden rather than responding to employees' needs," says Enan, CEO of CoverHound, an insurance company.

Small business concerns have been considered as laws were drafted, and owners helped write some of the laws.

"We worked with labor and the city to discuss the impact on small business and asked, how could we do it in a way that could respect small businesses?" says Jody Hall, owner of Cupcake Royale in Seattle. The law that went into effect in September provides for fewer sick days at smaller companies.

Paid sick time also has the support of the Main Street Alliance, a network of small business groups across the country. It worked to have the law passed in Portland, where Jim Houser, who owns Hawthorne Auto Clinic, had to convince other owners that the law would ultimately be in their favor. Their biggest concern was that it might put them at a disadvantage. They didn't want to be forced to provide sick leave unless their competitors had to provide it too, he says.

"We had plenty of small business owners who said, 'I'd love to do this, but I cannot do this on my own."'

Southeast Missourin staff writer Shay Alderman contributed to this report.