Regulation

New York City's Sick Leave Mandate May Make Small Businesses Ill

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Sick
Www.CourtneyCarmody.com/ / Foter / CC BY

New York City Mayor Bill de Blasio, continuing his crusade to make the Big Apple a kinder and gentler place to live (as enforced by penalties prescribed by law), has pushed through an amendment to the city's still-new Earned Sick Time Act. The amended rule goes into affect April 1, and requires small businesses of five or more employees—down from 15—to provide paid sick leave to workers.

Supporters of the measure trumpet it as a victory not just for workers, but for businesses that will enjoy improved morale at a low, low cost. Even so, at least one of the city councilman who voted for the sick leave mandate already has second thoughts about the impact on small firms.

A nice summary of the law's measure comes courtesy of Think HR:

  • The Act now covers employers with five or more employees (rather than 15).
  • The definition of "family member" has been expanded to include sibling, grandchild, and grandparent. "Grandchild" means the child of an employee's child, "Grandparent" means a parent of an employee's parent, and "Sibling" means an employee's brother or sister, including half-siblings, step-siblings, and siblings related through adoption.
  • The exemption for employers in the manufacturing industry has been eliminated.
  • Employers must maintain sick time compliance records for three years (rather than two).
  • Employees have two years to file a complaint (rather than 270 days).

All of this benefit to ailing employees! And at little or no cost to businesses for whom even a single paid sick person can represent as much as one-fifth of the work force. At least, so we're told by one pro-regulation research outfit and the journalists citing it.

According to the Center for Economic and Policy Research (CEPR), after Connecticut passed a sick leave mandate, everything was swell.

The law had minimal effects on businesses. A large majority of employers reported that the law did not affect business operations and that they had no or only small increases in costs. Businesses most frequently covered absent workers by assigning the work to other employees, a solution which has little effect on costs. Just 10 percent of employers reported that the law caused their costs to increase by 3 percent or more. Since the implementation of the paid sick days law, Connecticut employers saw decreases in the spread of illnesses and increases in morale…

The Associated Press reported this to mean "many small businesses say they don't find complying with the laws a burden. Many already gave employees paid sick time before the laws were passed. And having paid sick time makes employees happy."

But the Connecticut measure applies to businesses with 50 or more employees, while the New York City measure sweeps up those with as few as five. And CEPR doesn't give us context for a 3 percent boost in costs—that may or may not be a lot, depending on a firm's profit margin. And that 3 percent is likely to rise for a smaller outfit for which a sick employee is a higher percentage of the total work force.

By contrast, a study by Ernst and Young on behalf of the Partnership for New York City found significant costs associated with sick leave mandates.

Implementation of the Paid Sick Time Act would raise costs, on average, to 48 cents per employee per hour. Large businesses would see an increase to 57 cents per employee per hour and small businesses 24 cents per employee per hour.

This does not include the costs of benefits such as health insurance, employment taxes or indirect costs that may be incurred as a result of providing paid sick leave to employees. Nor does the estimate include the administrative costs of compliance with the bill. These costs could not be captured in the scope of the survey, but anecdotal evidence suggests they are significant.

Although the payroll cost increase may seem small to advocates, it is roughly equivalent to the .34% payroll tax (the "Mobility Tax") that New York State imposed on all employers in 2009 to help fund the MTA capital program. Small business, government and nonprofit employers have widely described this tax as very burdensome and its rescission was one of the biggest issues in the last session of the State legislature and in the upcoming elections.

The Ernst and Young study has been criticized for overstating costs, but its estimates don't seem out of line with CEPR's—and it provides some context for the numbers it produces.

Ultimately, paid sick leave is a nice thing to have, if you're an ailing employee or one with a sick family member. But very little in life, including the helpful and desirable things, comes without a price tag attached. The price of mandating popular policies like paid sick leave for employees may well be that some businesses close or cut back, and some workers end up not on leave, but unemployed.

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  1. Fuck the employers = moar regulashuns is always good for the bureaucracy, and impossible to undo. This will ensure at least 100 new spots in City Govt to fill. Because who’s going ensure the rules are being followed?

    1. Employers must maintain sick time compliance records for three years (rather than two).

      And they’ll need to hire someone to do this, so, jerbs.

  2. Off Topic:

    I’d mentioned seeing a Dollar Store going out of business sale in one of the earlier AM links, but now I’ve found the cause: Minimum Wage and the ACA Of course, everyone knows that can’t be true. How dare a business with a slim margin on inventory like a dollar store that serves the poorest quintile dare close its doors because business costs have gone up.

    1. “It all comes down to greed” This evil corporashun would rather fire it’s entire workforce than force their billionaire fatcat store managers to live with 3 private jets instead of 4!

  3. Sick time for your GRANDchildren?

    Really?

    WTF NYC.

    Living in a right-to-work state has made me almost forget how impossible it is to run a business in a blue state. Thanks for the reminder.

    1. You forget, due to the breakdown of the modern family and morality, there are a great many broken homes in NY where the Grandparent is the primary caregiver for their children’s children.

      It’s a bandaid to cover a problem caused by their previous handywork.

      1. Or what you said. Shoulda hit refresh.

      2. There are plenty of those in Tennessee too, but you don’t get sick days to deal with the spawn of the spawn, as far as I know.

        Our office switched to the “you get X# sick days a year, period, use them wisely” program two years ago so I supposed you could use them to take a grandkid to the hospital, but then again our main office is in NYC so maybe that’s why.

        It baffles me how much people expect from their employer without supplying any kind of value deserving of said expectations.

        1. Aren’t fixed sick days pretty much “personal days”? Or do you need a doctor’s note?

          1. We got rid of “personal” days. You get X# of vacation days, and X# of sick time days. They did this primarily to eliminate the arguments about using personal days for sick time and vice versa.

            We don’t need a docs note, and I’m sure people take advantage of that but my employer expects us to behave like adults, so most do.

        2. *shrug*

          I’ve always been of the “If you don’t work, you don’t get paid” mentality personally.

          1. No trabajo, no dinero? What kind of witchcraft is this?

      3. But they could have said “children or elderly people for whom you are a primary guardian or caregiver” or “members of your household” or something like that. No need to make it apply to anyone’s grandparents or grandchildren.

    2. It’s not uncommon in NYC and other blue ghettoes. A totally foreseeable consequence of policies that undermine responsible parenting.

      I used to tutor elementary kids in Oakland, and I would say that almost half of the kids I worked with were being raised by their grandparents (not necessarily both).

      1. If there is a bright side, maybe the mothers are out working?

        1. Sure, laundry duty at Rikers.

        2. No, no they aren’t.

        3. That’s what I’m trying to figure out. De Blasio is pure crony, like Obama. Which of his constituencies are benefiting from this? Because he’s not doing this without someone getting paid off/what they want.

          1. This is soothing lotion for liberal butthurt. The no-sick-time chatter has been getting louder in the constituents he wants to keep happy. I don’t think this is flat-out corruption like the carriage ride fraud.

          2. Off the top of my head… big business? The biggest impact of this law will be on mom-n-pops and bodegas. Expect more Duane Reades and Starbucks than ever.

        4. Whenever I drive through the bad side of town, I always tell myself that the people standing around doing nothing at 2 p.m. on a weekday probably work the night shift.

    3. Well of course, because their parents don’t work in NYC and so won’t have paid sick leave, silly!

  4. businesses that will enjoy improved morale at a low, low cost

    Letting employers and employees voluntarily arrive at such an OBVIOUSLY BENEFICIAL arrangement would just be stupid, ammirite?!

    1. I like how activists and politicians who’ve never had to make a payroll know exactly what’s best for each and every business out there.

  5. How the fuck did the newest NYC mayor turn out to be worse than Bloomberg? It’s fucking amazing. De Blasio is like the Obama of New York.

    1. That meme is going to take off like wildfire! I want in on the ground floor.

      You are like the Obama of Hit N Run.

      1. I thought your mom was the Obama of H&R.

        1. She’s the Obama of something.

        2. That’s your mom, Epi. Cuz she fucks everyone.

      2. You are like the Obama of Hit N Run.

        Wouldn’t that be Shreek or Tony?

        1. I think it would be shreek, as tony pre-dated shreek and is ergo the bush to shreek’s obama.

          Having said that, I fear calling shreek the obama of H&R will only cause him to violently fap himself with glee.

          1. Actually, I think any acknowledgement of shreek causes him to violently fap with glee.

    2. It’s because many of the people with half a fucking clue have left NYC.

      Once again the Onion is less a parody and more of a prediction, really.

      8.4 Million New Yorkers Suddenly Realize New York City A Horrible Place To Live

      1. That’s a nice REGION WAR fantasy, but the fact is that you can live in NYC and completely ignore most of the bullshit you see in the news by living under the radar. The thing is, this causes the disconnect one sees between the political class and what one would think of the peons wanting. So the absurdities of the politicians continue to build, and there’s no groundswell to oppose them because the average person is mostly ignoring it.

        1. I think this was true maybe a few years ago, but not now. NYC has become absurdly expensive to live in, even more so than what it used to be. I still have some family there and they are planning on getting out.

          I agree that you can ignore most of the stupidity but you can’t ignore the economics. And unfortunately, most of the political stupidity is just compounding the economic problems.

          1. Yeah, nobody lives there anymore, it’s too crowded.

          2. NYC has become absurdly expensive to live in

            That is mostly because it’s in higher demand than ever. Yes, stupid policies like rent regulation and zoning restrictions have some effect but they pale in comparison to the effect that the high demand has had in recent years.

            1. Yes, but that higher demand is on the part of people who do not offer the faintest glimmer of hope for fixing it, merely furthering the reign of leeches.

              1. This is probably true, but I’m just talking about supply and demand. You would not believe all the high-rises going up but it’s still not enough. Of course it could be more if it wasn’t for regulations.

          3. I am likely to get out this year, even without a car or a job to go to, to eastern Penna.

        2. How does one run a business “under the RADAR”?

          When business leaves, you get Detroit. (But at least you can go to the museums.)

          1. I did it; you just hide every cent you can. “Oh look, I took a loss on that deal”. It’s a huge place; you really have to work overtime to attract the bureaucrats’ attention.

            1. But when the bigger businesses leave, won’t they eventually get around to you?

              1. You do realize how fucking massively huge NYC is, right? How many businesses are already there? I have a feeling a lot of you who love the REGION WAR speculations just really don’t get this. It’s colossal. It’s very easy to disappear into it.

                1. It’s not a REGION WAR thing. It’s just easier to live in a place where a 50 hour work week will pay for more than just rent and food.

                  I still love NYC and visit often, it is IMO the best city in the world, but fuck living there -even more so now that De Blasio is running the place.

                  1. Believe it or not, most of us have plenty of money left over after rent and food.

                2. Yeah, my ex worked for a Chinese travel agency in Midtown. There was nothin’ legal going on there.

          2. How does one run a business “under the RADAR”?

            You’ve never been to a Chinese restaurant? You think they pay payroll taxes, much less fill out I-9s and EVerify?

          3. How does one run a business “under the RADAR”?

            Narcotics, counterfeit apparel, unlicensed contracting, prostitution….

        3. That’s a nice REGION WAR fantasy, but the fact is that you can live in NYC and completely ignore most of the bullshit you see in the news by living under the radar.

          Sort of like Russia’s entire history–keep your head down so the people in power don’t decide to cut it off.

    3. Peak Derp is always just over the horizon.

    4. Mayor Nanny is gone and the kids in the nursery want candy, and they want it NOW!

      1. +1 Veruca Salt

    5. Bill DeBlasio — forging the way back to 1980!

    6. At least Obama gives lip-service to the free market on occasion. It’s becoming clearer by the day that De Blasio is a flat-out communist. His actions so far are worse than any of the rhetoric coming from the trail of idiots that were so handily beaten by Guiliani and Bloomberg over the years. I can only think that the few of us who voted (I didn’t) simply thought it was time to give it to the other TEAM this time without putting any actual thought into it.

      1. That’s the thing, though. Bloomberg, at least at first, seemed like a sane option. Businessman, successful; that should be good, right? And then he turns into The Nanny without looking like Fran Drescher. But De Blasio seems to not even try and cover his utterly Obama-like cronyism and bullshit.

        1. At least Bloomberg wasn’t actively trying to run the economy into the ground. After 20 years of him and Giuliani it really is strange for us to elect a man who wants to do just that.

          1. That’s why I say that there is a growing disconnect between the average voter (who probably doesn’t bother voting any more) and the political class.

            1. the average voter (who probably doesn’t bother voting any more)

              Given that only 1,026,168 votes were counted in the 2013 NYC Mayoral election, and there are 8.4 million residents in NYC, I think you’re right. (Given the laxity for voter fraud in NYC and their BoE’s hostility towards investigations thereof, I can’t say that there were a million voters).

              1. The # of registered voters in NYC is now vastly inflated by failure to purge the rolls of those who’ve died or moved. They used to be much more up to date, but I just concluded a petition drive, and the number I visited where the voter wasn’t living there (and in some cases just living) was enormous, which makes it much harder to get a candidate on the ballot because the dead wood counts toward the base number of whom you need 5% of the signatures. One address had the same voter listed under her maiden & married names, and she’d moved out anyway. Plus some registrations are just plain phony, and in some elections ballot stuffing is done systematically.

      2. Calling William Wilhelm, d/b/a Bill De Blasio, a “flat out communist” insults the intelligence of communists.

        Look at the bright side though…if he keeps on like this, he may become the best thing to happen to New Jersey’s economy since John Lindsey.

    7. As shocking as it may seem, Bloomberg is what you get when NYC voters are in, what passes for them, a reasonable mood.

    8. The city council is full of them. The odds were very favorable to getting a deBlasio. It the terror hadn’t happened 9/11/01, negating the primary election voting, we could well have had as mayor Mark Green. Mark Green’s about as far to the “left” as deBlasio, but less competent and connected.

  6. Employers must maintain sick time compliance records for three years (rather than two).

    Let me guess; any unclaimed sick days will be considered prima facie evidence of Oppressionz of the Workerz.

  7. Nothing helps unemployment like increasing the cost of employing workers!

  8. It is all very French, this piling on of all sorts of benefits for employees. I will not be long before unemployment starts to rise, to reflect the reluctance of business to hire any more people who carry with them lots of additional expense. If they can get the work done with fewer workers when one is on sick leave, then there is no real reason to hire a new worker to replace anyone who quits.

    NYC – soon to be known as Paris on the Hudson…

    1. If they can get the work done with fewer workers when one is on sick leave…

      …then there is no reason not to cut costs by eliminating a job.

  9. I’ve been reading H&R for several years. I’ve gotten to know where some of the regular commenters live (I live in Southern California near, Los Angeles). I vaguely recall that some commenters have lived in NYC at one time. Does anyone live in NYC, now?

    1. I believe Rhywun, and UnCivilServant do.

      1. No, I’m upstate.

      2. Maybe GILMORE too. Or I could be confusing something.

    2. I do. Rhywun certainly did; don’t know if he still does.

    3. I do. I’m starting to seriously look at moving to your area next year, though. From one high cost nanny state to another.

    4. Widget, where are you?

    5. I do as well (first living in Crow Hill/Bed Stuy and now, after having 2 kids, Rockaway Beach). Although work usually requires me to split the year between NYC and NOLA.

  10. All I can say is thank god for the government.

    Won’t be long before NYC mandates the number of children you can produce.

    1. Won’t be long before NYC mandates the number of children you can produce.

      If it is range with a lower bound of 1, I’m outta here.

  11. But very little in life, including the helpful and desirable things, comes without a price tag attached.

    If somebody else can be made to pay, it’s free.

    FREEFREEFREEEEEEE!!!!!!

  12. Businesses most frequently covered absent workers by assigning the work to other employees, a solution which has little effect on costs.

    By “assigning the work to other employees”, they naturally really mean “the business owner will do the work himself”.

    This naturally is not seen as a “cost”, because if you hire someone to do a job and they don’t show up to do it, and this forces you to do it yourself, you’re not out anything, amirite?

    Like if they passed law that said that if I hired someone to paint my house and that person didn’t feel like showing up they could just bail, while forcing me to pay them anyway…that wouldn’t “increase my costs”, even though I had to then paint the house myself. Amirite?

    Because the employer’s time has no value. Fucking exploiters.

  13. now I’ve found the cause: Minimum Wage and the ACA

    HOARDERS! WRECKERS!

    TRAITOROUS HERETICS

  14. Does anyone live in NYC, now?

    Nobody lives there, anymore. It’s too crowded.

    1. Only Yogi Berra lives there.

      1. Wherever you go, there you are. (for the kids in the audience)

    2. So you’re telling me that you don’t live there either. We’re taking phone calls now, who lives in NYC?

      1. You have to be an idiot or a government employee to live there now.

        But I repeat myself.

  15. A guy called in and said he couldn’t come in because he had hit his thumb with a hammer and his thumb was all swollen up.

    The employer didn’t believe him and asked him to send a picture of his “injury” to him.

    The picture of the thumb (NSFW) probably

  16. Since businesses that can do so will pass on the added costs, it’s really just a tax increase in disguise.

  17. It’s fun seeing the special interests accommodated by the bill. A sampling of the exceptions opposed to the bill:

    1) Government employees
    2) Therapists (occupational, speech, physical)
    3) Grocery store workers
    4) Construction workers

    And supporting the bill:

    1) Hourly employees
    2) Domestic workers (the < 5 employee requirement doesn’t apply)

  18. The problem with sick leave is that people generally expect you to be sick to use it, and they often would like documentation that you were sick.

    Plain old paid time off is so much nicer.

    Use it for vacation, use it for illness, use it because you are plain fed up and just want to take a day off.

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