Despite Business Fears, Sick-Day Laws Like New York’s Work Well Elsewhere

Donna Levitt was wrapping up an email in her office in San Francisco’s City Hall this month when she picked up the telephone. On the line was Mayor Bill de Blasio’s first deputy commissioner for consumer affairs, looking for insight and advice on carrying out New York City’s proposed paid sick-day law.

Ms. Levitt, who runs San Francisco’s Office of Labor Standards Enforcement, knows something about the subject. In 2007, San Francisco became the first municipality in the country to require all companies— big and small —to offer paid sick days to their workers.

Her staff hammered out the rules and regulations governing San Francisco’s new ordinance and consulted extensively with anxious business owners who feared that the cost of providing paid leave would threaten their bottom line.

Her message to the de Blasio administration? “We know that this can work,” Ms. Levitt said.

Mr. de Blasio set off alarm bells in some business circles on Jan. 17 when he announced his plan to greatly expand the reach of New York’s sick-leave law. Under his proposal, companies with five or more employees would have to provide up to five paid days off to full-time workers if they, or their close relatives, fell ill. A weaker version of the law, which passed last year, would have affected only companies with 15 or more workers.

The measure, which is likely to be approved by the City Council, would go into effect in April, leaving some small-business owners worried and uncertain. The good news, though, is that there are lessons to be learned from a look beyond New York City’s borders.

Already, four municipalities and the State of Connecticut have implemented paid sick-leave laws. Assessments of the programs in San Francisco, Washington and Seattle—the cities whose plans most closely resemble New York’s—indicate that the new policies have taken effect without harming local economies, touching off an exodus of businesses or being abused by workers.

Jim Lazarus, senior vice president for policy at the San Francisco Chamber of Commerce, was asked about the impact of the law on employers in San Francisco. His answer: “Minimal.”

Mr. Lazarus said that most companies who instituted new sick-leave policies in response to the law handled sick days informally, with one worker covering for another, instead of hiring replacement labor, which has reduced costs.

“By and large, this has not been an employer issue,” Mr. Lazarus said. “San Francisco’s economy is booming.”

In Washington, where all businesses have been required to pay for sick days since 2008, the city auditor surveyed 800 businesses and found that 88 percent of respondents said the requirement would not cause them to leave the city.

In Seattle, whose law took effect in September 2012 for companies with four or more workers, job growth was stronger in 2013 than it was in the months before the ordinance went into effect, according to a report by the Main Street Alliance, a left-leaning trade association of small businesses.

That does not mean, though, that the concerns of small-business owners are completely unfounded. The Institute for Women’s Policy Research, which surveyed 727 employers and 1,194 employees affected by San Francisco’s law, found that 14.2 percent of employers reported negative effects on their profitability.

About 11 percent said they increased prices as a result of the new law. The survey was conducted in 2009, two years after the ordinance went into effect.

On the flip side, the research group emphasized, workers in San Francisco typically took fewer than half the sick days they were eligible for. And a vast majority of employers, who supported the new law, did not report any negative impact on profitability.

That does little to comfort Jay M. Peltz, a spokesman for the Food Industry Alliance of New York, which represents food retailers including mom-and-pop grocers. New York City’s sick-leave law will be the nation’s biggest experiment yet, affecting more businesses and more people than in all of those other municipalities combined.

Who knows, he says, how it will play out here?

“We are in the beginning of the sixth year of the weakest recovery on record,” Mr. Peltz said. “It’s a difficult environment to absorb new costs. That makes any new mandate difficult to handle.”

But de Blasio administration officials said they were encouraged and energized by the conversation with Ms. Levitt, who briefed several officials from the Department of Consumer Affairs. The conference call, which was organized on January 14 by the Center for Law and Social Policy, a nonprofit research group, also included Karina Bull, a business liaison for Seattle.

New York officials say they plan to follow Seattle’s and San Francisco’s lead, emphasizing efforts to reassure, educate and involve the business community.

“Initially there were a lot of complaints and concerns,” Ms. Levitt said. “We don’t hear those anymore.

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