Backers, opponents of mandated paid sick leave bring arguments to Statehouse

Dozens of people affiliated with the Vermont Paid Sick Days Coalition flocked to the Statehouse on Thursday evening to lobby for mandatory paid sick leave for working Vermonters.

Business association lobbyists came too, representing the state’s employers and pushing a firm counter-message: Mandating paid sick leave will hurt Vermont businesses, especially small businesses.

The House General, Military, and Housing Affairs committee took testimony in a two-hour public hearing, alternating between those favoring paid sick leave legislation and those opposed. Those in favor significantly outweighed those opposed.

The legislation, H.208, requires Vermont businesses, regardless of size, to provide up to seven paid sick days a year, if employees work a certain number of hours. Employees can use this time to care for themselves or their family, and also to remedy sexual and domestic violence problems.

Lobbyists for business coalitions, like the Vermont Chamber of Commerce, hold that the bill forces a “one-size-fits-all” mandate upon employers which is neither necessary nor appropriate.

“Any type of paid time off, any policy regarding that, should be left up to the employer,” said Jessica Gingras, a lobbyist for the chamber. “We don’t think that a one-size-fits-all, 56-hour-a-year mandate, with accrued time mandated, with carry over time mandated, will fit for the average Vermont employer.”

Gingras is especially concerned that the legislation doesn’t carve out special provisions for small businesses, often defined as those with 25 or fewer employees. Existing maternity leave and family leave statutes in Vermont, said Gingras, do have those exceptions to protect small businesses.

Vermont employers do what they can, within what they can afford, to offer reasonable benefits and paid leave, said Gingras. Although she conceded there are a few “bad apples,” she said these were few.

“We know that employers bend over backwards for their employees,” said Gingras.

Not so, said many of those who spoke on Thursday evening, relating firsthand their personal work experiences.

“With already minimal benefits, we are not getting paid sick days,” said Desiree Roberts, a Monkton resident who’s worked in the service industry for much of her life. “We are forced to choose between going to work, and risk worsening our condition, or to go into debt, or possibly lose our jobs when we are ill.”

“It is not anyone’s fault when they get sick, or have a child that is ill, or have an elderly parent,” said Roberts. “These are all parts of being human. And we don’t seem to be making any allowances for being human.”

There’s both a human and economic dimension to this legislation, as the debate on Thursday evening evidenced.

George Malek, president of the Central Vermont Chamber of Commerce, warned that the legislation could result in 4,000 layoffs, as employers scramble to compensate for the hours that employees will inevitably miss given paid sick leave.

“I’m here to ask you to not further impose on Vermont employers, and not further restrict employment opportunities for Vermont’s residents,” Malek told House lawmakers. He said the sick leave measure translates to a 3.5 percent surcharge on payrolls, even as minimum wages, unemployment insurance, and workers compensation costs rise.

“Cash-strapped businesses are facing government-imposed increases in power costs, additional taxes on fuel and consumer spending, uncertain health care expenses, and hours of additional paperwork,” said Malek.

Still, not all business owners are against paid sick days. Wes Hamilton, who runs many Central Vermont restaurants, including Montpelier’s legendary Three Penny Taproom, said mandating sick leave both helps employees and levels the playing field for many businesses.

“Unfortunately, not all business owners are inclined to prioritize taking care of their employees,” said Hamilton. “When such benefits are voluntary, it puts those of us compelled to do the right thing at a disadvantage for doing so,” he continued, explaining that businesses are able to cut costs and prices by not offering reasonable benefits.

Hamilton said workers without sick leave who end up unemployed place greater strain on state welfare programs.

Heather Pipino, with the Vermont Workers Center, also argued that there are economic benefits to sick leave.

“You have less employee turnover, you have less costs associated with training,” said Pipino, who’s worked without sick leave in the nonprofit, restaurant, and retail sectors. She also pointed out that Vermont Businesses for Social Responsibility, a major business association, supports this bill.

“There are plenty of employers who can offer the counter-narrative to, that they’re going to have to lay people off if they give people paid sick leave,” she said.

Bill Driscoll, of the Associated Industries of Vermont, which represents manufacturers, isn’t convinced. He suspects there could be unforeseen consequences, including layoffs.

“You’re increasing the cost of employment,” he told VTDigger. “You’re going to have to have something to offset that.” Though one business owner testified that the state should fund this mandate by offering employers tax breaks or other subsidies, instead of leaving the costs to be borne by businesses, Driscoll isn’t a big fan of this state-based approach either.

This may all be moot. The rally to boost support of paid sick leave comes with less than a month left in the legislative session, and the bill hasn’t yet cleared a committee vote.

It’s unclear how much political traction the measure has, though former Gov. Madeline Kunin expressed her support of the bill earlier in March.

Similar legislation failed in 2010, said Gingras, after the Chamber of Commerce managed to rally 100 businesses to testify against paid sick days in 2010, in only 24 hours.

Nat Rudarakanchana

Comments

  1. Curtis Sinclair :

    From http://www.epi.org/publication/testimony-support-hb-735-maryland-earned/:
    The first jurisdiction to set a paid sick days standard was San Francisco, where employers have been required to offer
    earned paid leave since 2007. Fears that the law would impede job growth were never realized. In fact, during the last five years, employment in San Francisco grew twice as fast as in neighboring counties that had no sick leave policy.

  2. Steven Farnham :

    The degree to which professional liars are willing to ply their trade to influence the legislature is very disturbing.

    “[George] Malek told House lawmakers [the] sick leave measure translates to a 3.5 percent surcharge on payrolls…”

    Really?

    There are 2000 hours in a work year if you:
    Work 40 hours a week,
    work 50 weeks a year, and,
    take two weeks off for vacation (2080 hours, if you don’t).

    Three and a half percent of 2000 hours is 70 hours. The mandate calls for 56. 56 is 2.8% of 2000, 2.7% of 2080. 3.5 (Malek’s number) is 25% higher than 2.8, 30% higher than 2.7.

    In real numbers, by how much is Malek “elasticising” the truth? A $10 per hour employee costs $20,000 in annual salary. 2.8% of $20,000 is $560. 3.5% of $20,000 is $700. Malek’s assertion is exaggerated by a minimum of $140.

    And Malek’s entire stupid argument is based on the notion that every single hourly employee in Vermont is going to take all seven of his sick days EVERY YEAR!

    Now, of course, if a part-time employee takes seven days of sick time, (depending on how many hours he works per week) his sick time cost might represent something greater than 3.5 percent increase in payroll.

    But Malek made no mention of that. Why? My guess is that it might remind us that whole sectors of our economy are driven by part-timers. Why hire thirty full-time workers, when you can hire 45 part-timers, pay less for them, and screw them out of healthcare benefits? Malek certainly won’t gain from pouring salt in that wound.

    Malek “…warned that the legislation could result in 4,000 layoffs …” The average employer is going to give up $20,000 worth of productivity from a dependable worker because the price of that productivity MAY increase by up to $560 IF the employee becomes ill. Right. Malek might do that, but I doubt any sensible businessperson would.

    All Malek’s argument demonstrates is the voluminous amount of disingenuous claptrap these people will promulgate to bully our legislators in an effort to garner even the most niggardly gains for their clients.

    • David Dempsey :

      The bill will mandate carryover of unused sick leave, which will make the percentage higher. How much depends on how much carryover is mandated. The total sick leave of all employees at the end of a fiscal year has to be shown on the businesses books as a liability, whick reduces the value of the business. This could it more difficult to get loans and, if they can get loans, the interest rates would be higher. This could make or break some businesses that are just hanging on as it is. I was fortunate enough to get sick leave where I worked, and all my earned sick days from day one could be carried over. I worked there for 19 years before I got very sick and was put on disability. My employer had to pay me for all my accrued sick leave, which amounted to over 10 months pay. I was very, very fortunate that I worked for a large company that could afford it. But this could destroy a business that struggles to make the payroll every payday. The state has no business interfering with the employers by passing unfunded mandates.

  3. Steven Farnham :

    Mr. Dempsey.

    Thanks for pointing to the need for clarification.

    I believe carryover is good policy for both employer and employee, and I would advocate it. It gives the employer a more predictable set of expenses (which happen to benefit the employee), and it gives the employee an incentive to show up for work unless he is truly sick (which happens to benefit the employer). I fail to see how this makes the percentage higher – though carryover does guarantee the expense is there, whether the sick leave is taken or not.

    Amendments fly thick and fast in the lawmaking process, and while carryover may be part of the bill as written, no one has determined that carryover will still be part of the bill, if and when it ever passes into law. Above, I am advocating Mandatory Paid Sick Leave, period – I made no mention of carryover. Indeed, my argument that unclaimed sick leave costs nothing is kind of silly if sick leave must be paid – used or not.

    If Mr. Malek’s concerns are limited to carryover, then that is where he should focus his efforts – but in his comments, I saw no indication that, for him, carryover alone, was a deal breaker. Instead, he clearly indicates powerful opposition to the basic concept of mandatory sick leave, whole cloth, irrespective of the details – and for that, I believe he deserves rebuke.

    Not sure what you mean by sick leave being carried on the books as a liability. To my way of thinking, if carryover is part of the final law, any responsible employer would pay out all unused sick leave at the end of each year into an interest-bearing account of some sort. That way, the money is set aside and ready to pay to the employee in future when he resigns or retires (or is sick).

    Don’t know if such an account would be seen as an asset, but I fail to see how it could any longer be considered a liability. If you’re business owes money in the future, and there is money on the books designated to pay it – what problem does this present to a lender?

    Unlike you (apparently), I’ve had the pleasure of working for an employer, which refused to pay for sick time – carried over or not. It was an intense misery that I would not wish on anyone. As I have written in these pages before, I had the pleasure of becoming severely ill after catching a bug from someone else (who came to work sick), and likely my subsequent coming to work with it spread it to the others who got it – all of whom missed work.

    Avoiding these losses accrues value to the employer. Not having so many employees out sick likely cancels out most or all of what the paid sick leave costs in the first place. Employers that fail to grasp such basic concepts often elect short-sighted, idiotic, obtuse, and niggardly policies. Avoiding the misery such choices visit upon employees is what the law is for.

    Indeed, it is very much the state’s business to interfere with employers who engage in abusive practices with their employees.

  4. Dave Bellini :

    If the state had any interest in doing the right thing it would provide sick days to all state employees. The state is in love with hiring and maintaining temporary employees, without benefits. This hearing is only symbolic. There is no interest from any state government leaders to extend benefits to all its workers. It’s all about hiring contractors and temps.

  5. Matt Zambarano :

    Some basic math:
    At $18/hr an employee costs my company at least $25/hr when you figure in all the taxes and insurance including WC insurance so…
    56 x $25 = $1400.00 per employee per year
    $1400.00 x 35 employees = $49,000.00 per year

    So, a business that operates on 5% net (like commercial construction) needs to add an additional $980,000 in revenue to generate the profit needed to cover the $49,000.00 without hiring an additional person, adding hours, or purchasing any more materials. Seems like a significant impact to me but what would I know, I’m just a greedy business owner.

    The unintended consequence is that businesses that currently offer vacation time will simply stop offering it, or will offer less in lieu of mandated “sick Pay”. I am pretty sure that is what I would have to do. I can’t simply raise rates to cover the additional payroll expense. Vermont isn’t a closed economic ecosystem. There is competition from outside our state borders, not to mention the thousands of “Independent Contractors” in construction.

    One commenter says that it is not their “fault” if they get sick, or have an elderly person to take care of. That may be true, by why is it the fault of the business they work for? Because, with this legislation, it is the business who is ultimately held economically responsible for events or circumstances in an employee’s personal life that the business certainly has no control over.

    Oh, and Mr. Farnham, in your example your math is completely off. clearly you have never had to make a payroll. your $560, is more like $840,(the employer does have to pay employment taxes, UI insurance, Liability Insurance,and WC insurance on top of any hourly rate). additionally, the employer “owes” the employee the entire 56 hours per year whether they use it or not. It accumulates. Hence the term “Carryover” With carryover, The employer will have to pay it at some point.

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