Businesses in D.C. and San Francisco don’t like sick leave mandates

As advocates for a sick leave mandate in Milwaukee and the local business community begin what could likely be a long legal battle on the issue, businesses in Washington, D.C., and San Francisco, Calif., are trying to cope with sick leave mandates that have been approved in their cities.

One San Francisco business owner said the sick leave law is well-intended, but is ultimately bad for the community.

“I applaud the philosophy behind (the sick leave ordinance), but communities can’t really act in isolation in these types of manners because of the laws of unintended consequences,” said David Becker, president of PhilippeBecker, a branding and design firm in San Francisco with 22 employees. “Businesses will choose to operate elsewhere. Again, it’s a very well-intended and necessary program to think about, but ultimately, because of the unintended consequences, it is going to lessen the tax base for the city.”

Becker said his firm already had offered a sufficient amount of sick days and said other businesses would provide more sick days if they could afford it.

“I think it’s safe to say that most employers would like to offer this type of benefit if they could. Our company is able to, but a lot of businesses simply can’t,” he said.

The sick leave mandate puts businesses in San Francisco at a competitive disadvantage, Becker said. He knows of companies moving one or two miles out of the city once their lease is up to avoid being subject to the legislation.

“Those trying to compete with businesses outside of the city have absolutely no fighting chance,” Becker said. “This kind of legislation is important, but in isolation, it creates all sorts of anomalies in the marketplace. I think it sets a new baseline for business decisions. Are they going to renew their leases or are they going to conduct business in a different place? There are all of these things that people don’t consider when they enact these types of rules.”

The City of San Francisco’s Board of Supervisors placed the sick leave mandate on the ballot, and voters approved it. The law became effective in February of 2007.

The sick leave law was passed at the same time as a number of other regulations hit San Francisco businesses, according to Carol Piasente, vice president of communication at the San Francisco Chamber of Commerce.

“There really wasn’t a whole lot of opposition to the paid sick leave mandate itself,” Piasente said. “Most (business owners) were upset because it was just one more thing on top of other things that had been imposed.”

Many businesses in San Francisco were already offering sufficient sick leave plans, and the city has not seen an increase in businesses leaving specifically because of the sick leave mandate, Piasente said. However, the sick leave law and other new regulations on the business have put a damper on local job creation, she said.

“We have seen a number of different companies reduce the number of employees, or not hire as many, due to the cumulative effect of the comprehensive hit that they took (from the new regulations),” she said.

In Washington, D.C., the District’s Board of Supervisors adopted a sick leave mandate at the request of the Organized Labor Council. The national organization went to the local affiliates who then brought the bill to the D.C. Council, said Janene Jackson, senior vice president of external affairs at the D.C. Chamber of Commerce.

“The bill really flew under the radar for a while,” Jackson said. “The business community in D.C. really had no idea this was coming.”

The D.C. sick leave law was amended by Congress, which has ultimate oversight of the district. The D.C. Chamber of Commerce convinced Congress to make several amendments to the law to make it more palatable to businesses.

Prior to the amendments, the proposed legislation would have made the accrual of 10 paid days off possible for all employees in the district.

“We were able to get (Congress) to understand the implications of the mandate and that our seven amendments really did create a fairer piece of legislation,” Jackson said. “We made it more equitable for our members. We were able to come up with a more graduated scale related to the number of employees an employer had for compliance. This was a significant amendment for us because small businesses don’t always have the same amount of resources to keep track of hours worked. Many of them don’t even have human resource people.”

According to Jackson, the mandate was not received well by the business community in the nation’s capitol. Even before the sick leave law, D.C. already had a reputation for having an unfriendly business environment, Jackson said.

“Our concern was essentially, what is the tipping point that forces business out?” she said. “D.C. already has an unfavorable tax status, we have a high commercial tax rate, high lease rates, we’ve got a high corporate franchise tax and a high regional sale and use tax. The business community was stunned at what the bill would do and the anticipated cost and sweeping changes that would be required of them.”

The sick leave law for D.C. was adopted in May 2008, and businesses had to comply by November. However, the city still has not issued regulations on the mandate, Jackson said.

“Right now, the city can’t enforce the law,” she said. “Business owners have not been given any formal guidance on how to implement the law. They are doing what they think the law says. They are doing the best they can with the absence of guidance.”

For example, Kathryn Kiel, owner of Top Shelf Designs, a graphic and web design firm in Washington, D.C., with five employees, said she is still unclear of what she has to do to comply with the mandate.

“I think one fear I had initially was sitting here trying to figure out if I can afford this and what it is going to require me to do extra,” Kiel said. “I already offer 10 paid days off for my employees, but I am unsure if there are additional things I need to do. I can’t afford to pay for huge legal counsel, so of course, I want to make sure I am abiding by the law.”

Kiel also mentioned that the only way she found out about the mandate requirements was through the D.C. Chamber.

“It’s not like the city has been holding marketing forums or anything like that at all. I wouldn’t have any idea what to do if I didn’t hear about it through the chamber,” Keil said. 

San Francisco

  • Paid Sick Leave Ordinance
  • Voted approved with a 61-percent majority in November 2006; took effect in February 2007.
  • Was placed on city’s ballot by five members of the city’s board of supervisors.
  • Mandates: Grants one hour of paid time off for every 30 hours worked within the city limits. Employees are able to store a maximum of 72 hours (nine days) of paid sick leave for employers with more than 10 employees. For employers with fewer then 10 employees, the maximum is 40 hours. The accrued sick leave is for a given point in time that is not necessarily annual; it carries over from year to year.
  • Exemptions: Employees covered by a collective bargaining agreement that clearly states that the ordinance’s requirements are waived.
  • Employees hired before Feb. 5, 2007 begin to accrue on that date. Employees hired after that date begin to accrue 90 calendar days after first hire.
  • Office of Labor Standards Enforcement (which was already in existence) is responsible for regulating the mandate.
  • Allows employees to take paid sick leave when he or she, a family member, or a designated person, is ill, injured or needs to receive medical treatment or diagnosis.

Washington, D.C.

  • Sick and Safe Leave Ordinance
  • Approved in May 2008 and took effect in November 2008.
  • Approved by the District of Columbia’s board of supervisors at the request of the local affiliates of the Organized Labor Council, and later approved, with amendments, by Congress.
  • Mandates: Seven paid sick days for workers at companies with 100 or more employees; five paid sick days for workers at companies with 50 to 99 employees; and three paid sick days for workers at companies with less then 49 employees.
  • Exemptions: Students, independent contractors, restaurant wait staff, hospital staff.
  • Employee defined as: Worked for company for one year or 1,000 hours since date of hire.
  • Department of Employment Services (which was already in existence) is responsible for regulating the mandate.
  • Allows employees to take paid time off for personal illness, family illness or for reasons of domestic abuse and violence related to either the individual or a family member.

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