Will S.F. Paid Sick Leave Ordinance Spread to Rest of State?

By Mari Edlin, California Healthline Regional Correspondent

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Can the afterglow of San Francisco's successful run with its paid sick leave ordinance radiate throughout the state? Assembly member Fiona Ma (D-San Francisco) -- who recently introduced a statewide bill (AB 400) mandating paid sick days for employees -- hopes the third time is the charm.

AB 400 would require employers to provide employees not covered by a collective bargaining agreement with paid sick leave accrued at a rate of no less than one hour for every 30 days worked. Ma introduced similar bills in 2008 and 2009.

San Francisco's ordinance, implemented in 2007, is similar to Ma's bill -- one hour of sick leave for every 30 hours worked. Employees in firms with fewer than 10 employees (after being on the job 90 days) can accrue a maximum of five sick days per year, while workers at larger firms can earn a maximum of nine days per year. Employees may carry over paid sick days from year to year.

A new report, "Paid Sick Leave Ordinance: Outcomes for Employers and Employees," from the Institute for Women's Policy Research concludes that the San Francisco ordinance is working. Researchers surveyed more than 700 employers and nearly 1,200 employees in the private sector between July 2009 and December 2009.

Among the report's highlights:

  • Two out of three employers support the law, while only one in seven reported that the law had adverse effects on profit;
  • Two out of three employers offered paid sick days before the ordinance went into effect. That ratio rose to four out of five employers -- a 17% increase -- after the ordinance passed, giving 59,000 more employees paid sick leave; and
  • About one in six of the city's employers did not offer paid sick days in violation of the law.

'A Change in Culture'

Robert Drago -- co-author of the report and a director at the research institute -- was surprised that only 17% of employers introduced a new policy after the ordinance passed, yet more than half of covered employees reported receiving a benefit from the ordinance -- mainly in the form of increased employer support. "But that still seems pretty impressive," he said, adding, "The new ordinance has brought a change in culture ­-- a more caring employer."

The report also found that employees are not abusing the ordinance. Despite a five- or nine-day allowance under the ordinance, a typical worker reported using three sick days the previous year, and about 25% of employees used zero days.

Drago said the low utilization rates suggest employees consider paid leave a form of insurance -- something they will use when they are really sick. The number of sick days taken by San Francisco employees is on par with the rest of the country, he said.

Overall Benefits of Paid Sick Leave

When workers are prevented from staying home when sick, disease is more likely to spread, increasing health care costs and causing needless economic losses, Drago said. "We saw this during the 2009 H1N1 influenza pandemic when workers without paid sick days were more likely to go to work while infected with the flu. It becomes a public health issue," he said.

A Institute for Women's Policy Research study following the flu pandemic suggested that more than one-quarter of private sector employees who contracted the virus did so because of others coming to work while sick.

The benefits of paid sick leave filter down, researchers said. Parents with paid sick days were 20% less likely to send a child with a contagious illness to school than those without days off.

Statistics showing that paid sick days result in healthier workers and increased public health in general are supporters' strongest rebuttals to opponents of the bill.

"Supporters of the bill say it's a no-win situation when employees come to work sick," said Nick Hardeman, capitol director in Ma's office.

Will It Pass?

"This is a common sense policy," said Brandy Davis, policy coordinator of the Labor Project for Working Families.

That's not exactly how the California Chamber of Commerce sees it. Although it has not announced a position on AB 400, Jennifer Barrera, policy advocate for the organization, said chamber officials are wary.

"The combination of paid family leave with the myriad other protected employee leave programs that only California requires creates a significant administrative burden on employers, increases costs and minimizes the ability of companies to expand hiring and create new jobs," Barrera said.

"The California chamber is concerned with the uncertainty created for businesses with each new effort to expand protected leaves of absences for employees in our state and the detrimental impact it will have on our economy and job creation," she continued. 

The California Assembly Republican Caucus echoes the chamber's response. "In an economy with 12% unemployment in the state, it is irresponsible for California to add another layer of regulations hindering job creation," said Darrel Ng, spokesperson for the caucus.

Despite the opposition of Republicans, Hardeman anticipates that AB 400 will land on Gov. Jerry Brown's (D) desk in six to nine months.

David Landis -- president of Landis Communications, a San Francisco-based public relations firm with 11 employees -- isn't so sure a statewide ordinance will pass. "Business generally takes a stance against regulation that mandates how it should conduct itself," he said.

John Kabateck -- executive director of the California branch of the National Federation of Independent Business based in Sacramento -- is concerned that AB 400 will force his 20,000 members in the state to make tough choices -- resulting in lower wages, fewer benefits and hours and even lay offs -- especially in this economy. He's also not too happy about the bill's cookie-cutter approach to mandating paid sick days.

The bill would promote unintended consequences for small business in offering an unnecessary and costly disincentive to both employers and employees, he said. Instead, he recommends flexible work weeks, tax incentives and flexibility in rest breaks for employees.

Drago questioned Kabateck's prediction, saying the paid sick day policy is a better alternative to laying off workers. Drago said paid sick days generate more stability at an affordable price once administrative costs are offset.

Employers Speak Out

At its inception in 1990, Landis Communications provided employees with five paid sick days per year, along with two weeks of vacation time. But when one of Landis' employees called in sick 17 consecutive Mondays, although she wasn't paid for more than five, Landis said her absence put a crimp in productivity at the then three-employee business. Landis polled his peers to check out their sick day policies; standard form was five days per year with a note from a physician -- not too different from what he was already doing.

"Then I had a change of heart ... and questioned why unhealthy employees should get preferential treatment at the expense of healthy ones," he said. The result was a new policy, in compliance with the 2007 law: three weeks of paid personal time off to be used as each employee sees fit. "The generous benefit enables me to attract good employees, and I know that is one of the reasons people want to work at Landis Communications," he said.

Landis said his company's personal time-off benefit has paid for itself in recruiting more efficient, higher level employees. And it hasn't stymied his company's growth -- up 5% last year.

Krystin Rubin -- co-owner of Mission Pie, a bakery café in San Francisco with 17 employees -- said the paid sick day policy is "abundantly fair." Having started her business four years ago, she married into the already existing law. She allows employees to accrue 10 days of paid sick leave annually.

"The sick days are part of incentives to keep employees healthy, well and strong, and to avoid turn-over," she said. "I want them to enjoy working here and to positively represent our restaurant. Less generous benefits bring out employees' bad habits."

Virginia Donohue, owner of Pet Camp in San Francisco, provides sick leave to her 25 employees as a result of the law. She said she is concerned that with so many policies, San Francisco is becoming too involved in mandating employee benefits that bump heads with flexibility. She has been in business since 1997.

To meet the needs of her work force and comply with the law, she provides the required number of paid days but stipulates that they can be used for illness or vacation. "The arrangement offers me more predictability from my employees -- that is needed in a service business. And they can use the days strictly for pleasure," Donohue added.

Conforming to the paid sick day policy has added to her costs, she admitted, which forces her to raise fees for pet sitting services. The Institute for Women's Policy Research report found service businesses were more likely than other businesses not to provide the benefit before the law was approved and that their profits were most affected by the law.


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