Regulation Nation: Paid sick leaveRegulation Nation: Paid sick leave

In late March lawmakers in New York reached a deal with advocacy groups that would add the nation’s biggest city to the growing list of jurisdictions where paid sick leave is the law.

The deal on the proposed legislation, which is still to be voted on by the City Council, capped three years of contentious debate and highlighted an issue that observers say is gathering momentum as supporters seek to expand workers’ rights and opponents fight to stem more government intrusion in the workplace.

This is part of a special report from Nation’s Restaurant News. See the full section >>

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Since San Francisco first passed its paid sick leave law in 2006, several locales have followed suit, among them, Seattle; Washington, D.C.; Milwaukee; Connecticut; and, more recently, Portland, Ore. And although efforts have failed in such places as Denver, Miami-Dade County in Florida and Philadelphia, the National Restaurant Association and others expect more jurisdictions to tackle the issue.

For restaurant operators, offering paid sick leave raises the specter of increased costs at a time when the economy remains tenuous. Not only are already-thin margins at stake, but so is job creation, many say.

“Where you have the challenge is that you have a very low-margin industry,” said Rob Black, executive director of the Golden Gate Restaurant Association in San Francisco. “Your No. 1 cost is typically labor, and any policy [like paid sick leave] that impacts the cost of labor impacts your ability to stay operational.”

San Francisco lost 60,000 jobs between 2000 and 2010, Black said. And while jobs are bouncing back in the area, most are being added in the higher-paying technology sector, not at restaurants.

“The people who say there’s no real cost to [paid sick leave laws] are dismissing that there’s a real impact on business,” he said, adding that such laws disproportionately affect small businesses.

“It will have zero impact on a rich law firm, but it will have a big impact on a local small deli,” he said. “You are dealing with a fixed set of resources and revenue to pay for all these things. There’s not a lot of flexibility.”

Weighing costs and benefits

Adam Schlegel of Snooze, an A.M. Eatery

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The parameters of the laws vary by jurisdiction, with many requiring businesses with more than five employees to offer paid sick leave. In New York the proposed legislation, which is being touted as a blueprint for a federal bill, reportedly would require businesses with 20 or more employees to give full-time workers five days of paid leave annually, beginning in the spring of 2014. Eighteen months later, businesses with 15 or more workers would fall under the mandate, as well.

“We view these proposals as unnecessary government intrusion into private business relationships,” said Pete Meersman, president and chief executive of the Colorado Restaurant Association.

But Vicki Shabo, director of work and family programs at the National Partnership for Women & Families, which supports paid sick leave initiatives, said that one in every four adults has been threatened with job loss or has lost a job after missing work for illness. She added that for some breadwinners, missing 3 1/2 days of work and not getting paid means not having enough money for groceries for the month.

“In terms of cost, one of the myths is that a worker is going to use every single hour [of paid sick leave he or she earns] and that the employer is going to have to hire a replacement for that time,” she said.

Any costs, she said, are far outweighed by the potential benefits, such as increased employee morale and productivity, and the ability to stop the spread of illness to colleagues and customers.

“There are people who say the sky is going to fall,” Shabo said. “In fact, the sky has not fallen” in areas where offering sick leave is mandatory.

Some operators agree and are trying to get ahead of any future mandates.

Although Denver voters rejected a paid sick leave bill in 2011, Adam Schlegel, “consigliere” of the Denver-based breakfast concept Snooze, an A.M. Eatery, decided to put a sick leave policy into place at his six locations.

Schlegel offers all 250 of his employees three paid sick days per year — lower than what Denver’s proposed sick leave bill would have required — but it has still made a big difference to employees, he said.

“It’s a way to ensure that our teammates are looking after themselves,” he said. “We can show that we value them.”

The policy also acknowledges the reality that employees will get sick, and they will need time to get better, Schlegel said.

Very few employees have used more than their allotted three days, he said. There also has been no adverse effect on business, and employees are happier, he added.

“There are a myriad of reasons why I think we have a low turnover,” he said. “Benefits like this hopefully show folks that their health is more important to us than just one shift.”

Contact Erin Dostal at [email protected].
Follow her on Twitter: @ErinDostal