Employers Beware: Paid-Sick-Day Laws May Be Coming Your Way

It could become a critical factor as CEOs and company chiefs weigh their staffing and talent needs against rising costs and regulations that discourage expanding employment, including Obamacare and minimum-wage hikes.

California recently became the third locale—after Connecticut, in 2011, and New York City earlier this year—to impose paid sick leave on companies. Its law requires all employers to grant workers at least three days a year that they can use to call out sick and still get paid. The law is expected to affect about 39% of California’s workforce, or about 6.5 million workers, making it the most widespread sick-day law on the books in the United States.

Employees in California will get one hour of paid sick time for every 30 hours worked, though businesses can cap the benefit at three days annually. Employees must work at least 30 days in one year to become eligible, and the law excludes home-healthcare workers. The law will go into effect July 1 of next year and applies to all businesses regardless of size, unlike laws in Connecticut and New York City that don’t apply to the smallest businesses.

Organized labor praised the law, but some business interests objected. For example, the National Federation of Independent Businesses complained that the new measure will penalize small businesses in California that already are among the most burdened in the country. “This will only serve to eliminate any plans small employers have to grow and expand their businesses,” said John Kabateck, the group’s California executive director, in a statement.

Kabateck also criticized the state for setting a poor example by exempting in-home care workers, who are public employees, while requiring all private-sector employers in the state to comply. “That’s outrageous,” Kabateck said. “It’s a classic example of double standards and hypocrisy in Sacramento.”

In fact, a late amendment was added to the bill to exempt state-funded in-home healthcare providers because including them would have cost the state $106 million annually. “That’s an admission of the fact that this [law] is a burden,” Jose Villa, a member of the National Federation of Independent Businesses California Leadership Council and president of an advertising agency in downtown Los Angeles, told the Los Angeles Times, noting that that burden could disproportionately affect small business in the state.

Villa, whose business employs more than 40 people, told the publication that he already provides paid leave time because the market dictates it and workers expect it. But he said he’s annoyed that the state will now tell him how he should account for and credit those hours. Villa also said he was concerned that the law created a liability for business owners. Employers could face fines of up to $4,000 per day for withholding paid sick leave or violating the bill’s requirements.

Workers taking time off because of an illness was never a “real issue,” Jot Condie, president and chief executive of the California Restaurants Association, told the San Francisco Chronicle. He said that said flexible scheduling or shift swapping in the food-service industry enables employees to take off when they need it without penalty. The state’s requirement adds an unnecessary expense for businesses, he said.