State’s mandatory sick leave price tag: $22 billion-plus

May 30th, 2008, 5:00 am · 16 Comments · posted by Jan Norman, small-business columnist

California’s first-in-the-nation bill requiring all employers to pay for sick leave would add $22 billion in new costs for businesses, according to a study by the National Federation of Independent Business Research Foundation.

Those costs include wages paid for no work and new administrative expenses.

In addition to the business cost, the Assembly Appropriations Committee (scroll to page C) projects state enforcement costs of $600,000 plus tens of millions of dollars in additional costs for providers of state-subsidized child care and In Home Support Services.

The bill’s author Fiona Ma, D-San Francisco, has said health care costs would decrease and companies would benefit from lower employee turnover. She didn’t put a price tag on those savings.

The NFIB opposes the measure, AB 2716, which passed the Assembly on May 27, and must now pass the state Senate. Gov. Schwarzenegger has not said whether he would sign the bill if it reaches his desk.

The bill, patterned after a 2006 San Francisco ordinance, would require:

Every business with even one employee to pay for sick leave for all employees, including part-time and seasonal workers
An employee starts earning sick time after seven days of work and can be used after 90 days on the job.
The employee earns a minimum of one hour of sick leave for every 30 hours worked.
Businesses with fewer than 10 employees must allow workers to take 40 hours of sick time per year; those with more employees must give 72 hours.
Unused sick leave rolls over for use in future years.
Employees can use the leave not only for personal illness but to take care of a sick relative or “another designated person.”

The bill, sponsored by the California Labor Federation, AFL-CIO and California ACORN, would exempt unionized construction companies.

Ma said the measure would provide sick leave for an additional 5 million California workers. “It’s a win-win for workers and employers alike and is an important part of maintaining a healthy economy here in California.”

Mike Belote of the California Employment Law Council said no one argues that paid sick leave isn’t a good thing, but he questioned whether the state should put new costs on businesses at a time when Nevada is offering California businesses tax incentives to relocate and other countries are beckoning them with lower labor costs.

“It’s an amazingly expensive bill,” Belote said.

NFIB State Director John Kabateck was more blunt, noting that the day the Assembly passed AB 2716 was California Small Business Day at the State Capitol. “Legislators had the gall to vote for a massive small-business mandate …by supporting a multi-billion-dollar job-killing (bill), then walked across the street to proclaim their undying support for the very businesses they just crushed.”

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Todd says:

May 30, 2008 at 10:25 am

Another classic example of government sticking its nose where it doesn’t belong. It should come as no surprise that the bill’s author is a San Francisco Democrat (pardon the redundancy). Sometimes I wonder if these people are that ignorant about economics or they simply have it in for the private sector.

While larger companies might be able to withstand this additional cost, it will adversely affect smaller businesses. How will small businesses cope? Aside from losing money and closing up shop, they’ll either have to raise their prices or lay off people (or perhaps both!). And the choice of raising prices always runs the risk of losing business, which will result in layoffs or going out of business altogether.

Sacramento trying to dictate how businesses operate is appalling enough. But requiring them to pay sick leave for part-time and seasonal workers? I don’t know whether to laugh or vomit.

It’s clear that the liberal dweebs in Sacto view the private sector with disdain and nothing more than a bunch of sweatshop-type operations who treat their employees like slaves. In my entire working life, I’ve never had an employer that didn’t offer reasonably fair vacation and sick time. My goodness, many companies will bend over backwards to put together a decent package to entice people to work for them. It’s called competition.

As long as Democrats run the state legislature and are beholden to the labor unions, we can expect more of the same.

RUKidding? says:

May 30, 2008 at 11:40 am

It’s no secret that California is becoming the number one “welfare state” in the nation. What I keep wondering every time these liberal buffoons in Sacramento come up with these ridiculous ideas is, who is going to pay for all these expensive programs once all the employers are forced out of the state? It is rapidly becoming impossible for the working class and business owners to survive in this state. After all the workers and jobs have left the state, who is going to support all the freeloaders, illegals and welfare people? Are all these Democrats that are still around going to whip out their check books to help these people?

AlanS says:

May 30, 2008 at 11:49 am

Does Ms. Ma provide any hard evidence for her claim that “health care costs would decrease and companies would benefit from lower employee turnover” or is it just wishful thinking?

How many small businesses, and the jobs that go with them, be destroyed by this bill?

Keep in mind many jobs lost would be to teen-agers who don’t need sick leave if they live with their parents.

Dina says:

May 30, 2008 at 11:57 am

bad timing

rubypearl says:

May 30, 2008 at 12:47 pm

only in california..

Reader41 says:

May 30, 2008 at 1:02 pm

Somebody tell me how a 22 billion dollar price tag is a “win-win” for California employers.

Jim Williams says:

May 30, 2008 at 1:12 pm

Why does the Democrat controlled legislature here in California seem to dislike businesses so much?

It seems like the Democrats want to heap all of the woes of society onto the backs of business to pay for and then fake being upset when the businesses leave in droves to more friendly states, or worse overseas.

Good employees will not accept that a company doesn’t offer some form of sick time and good companies will attract these employees.

Startup businesses with 1 or maybe 2 workers will have an extra burden placed on them by the Democrats and this will undoubtedly lead to some failures that may not have happened otherwise.
This doesn’t help the state, the economy or the people of California.

It is what it is, silly “feel good” legislation that is harmful to business.

Ken in Irvine says:

May 31, 2008 at 12:33 am

I suggest a new state moto:

California: We hate the middle class!

TickedOff says:

June 2, 2008 at 7:28 am

Pass me whatever our legislators are smoking! With all due respect, when is this going to stop? Ridiculous.

Keep it simple: Put everyone on the payroll of the State of California. Oh, yes, they have no money. Go figure……….

Ric Franzi says:

June 2, 2008 at 12:44 pm

We need to let our Gov. know that this bill is bad for business owners and make sure he will veto it should it pass the senate.

This is a significant additional expense that many small businesses are not capable of paying.

David Northcutt says:

June 2, 2008 at 2:44 pm

Every January the Register prints all the new State laws going into effect. Each year I notice all the bad laws are spocored by Democrats. And now this insane bill forcing employers with less than 10 employees to give a full weeks “vacation” to part time employees. I won’t be hiring those two new employees I was considering until I see this bill is defeated. Those idiots!!!

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June 6, 2008 at 3:01 am

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Alexander says:

June 10, 2008 at 7:24 pm

Due to the nature of my buseness, I pay an employee one hour for every hour billed. Since salary expense is just more than half my gross revenues. This means that I will pay an employee once not to do the job, then once to do it, and then lose money on the job. There is no way this does not increase costs all around.

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