GOOD FOR BUSINESS?

GOOD FOR BUSINESS?The Case of Paid Sick Leave in Connecticut

Eileen

Appelbaum

, CEPR

Ruth Milkman, CUNY

On July 1, 2011, Connecticut became the first state to require employer-paid Paid Sick Days; law took effect on Jan. 1, 2012

Covers about 400,000 of the state’s 1.7 million employed workers

Many carve-outs, including manufacturing and most nationally-chartered nonprofits, as well as per diem and temporary workers

Covers most non-exempt service sector establishments employing 50 or more workers, including part-time workers

Those covered accrue one hour of paid sick leave for every 40 hours they work; can draw on the benefit after 680 hours’ work

Can accrue up to 5 days per year

Can use leave for own illness, injury, or medical care, for a child’s or spouse, or for care related to family violence or sexual assault

The law prohibits employer retaliation against workers who request or use paid sick leave

We surveyed 251 covered CT employers and conducted 15 site visits/interviews with managers

Survey:

Dun and Bradstreet sample, stratified by employer size

Oversampled large establishments

36% response rate (AAPOR RR 3)

Interviews with a convenience sample

Businesses concerned about negative impact, but for most, a non-event with minimal burdens

Carve-outs limited the impact

Employers that already offered paid sick days made minimal or no adjustments

Minimal abuse reported (and what little abuse there is was reported before as well as since the law took effect)

But coverage did increase: 88.5% of employers surveyed had offered 5+ PSD before the law took effect; by mid-2013, 93.7% did so

Number of days offered also rose slightly from an average of 6.9 days prior to the law’s implementation to 7.7 days in mid-2013

Main Impact on Hospitality, Retail, Health, Education & Social Services

Most workers use fewer Paid Sick Days than available

Employer respondents reported that about 2/3 of their workers had used the PSD benefit

Of those who did use it, average take up was 4 days (of 7.7 days available on average) in the previous year

Half of employers reported that employees used 3 days or less

This evidence suggests workers save PSD for when they are really needed, treating the program as a type of insurance

PSD law interacts with “progressive discipline” in unanticipated ways

The law’s anti-retaliation provision protects covered workers from discipline for the first 5 days they are absent from work if it is for a purpose covered by the PSD law

Employers that punish absences with warnings leading to termination were more likely to report abuse than those without progressive discipline

Interesting exception: if progressive discipline was limited to UNEXCUSED absences, less abuse was reported than in cases with no system of progressive discipline

Employer-reported positive effects of PSD law

Most covered the work of absent employees at minimal cost

Minimal cost impact

Only 10% of employers reported the law increased payroll costs by 3% or more

Biggest cost impact was on employers with lots of part-time workers; indeed the main benefit of the law was to these workers employed in establishments that previously offered PSD only to full-time workers

Unionized establishments half as likely to report cost increases as non-union ones

Record keeping burden was minimal as well, once system set up to track the benefit.

“It’s easy. It takes ten minutes” (nursing home payroll manager)

Only 29% of respondents tracked PSD costs separately from other benefits

“It would cost us more administratively to track the costs ... No hardship whatsoever!” (entertainment industry HR manager)

Few changes in operations due to increased costs (N=240, multiple responses could be reported )

Operational change

Percent reporting

Reduced employee hours

10.6%

Increased prices

15.6%

Reduced

operating hours

3.4%

Reduced quality

of service

1.3%

Reduced wages

1.0%

Employer Support for the Law has increased since implementation

We heard employers complain about legislators’ lack of understanding of business operations, and various other anti-regulation rants

Yet 18 months after the law took effect, most employers surveyed were supportive:

39.5% were “very supportive” of the PSD law

37.0% were “somewhat supportive”

Overall: a non-event for employers with real benefits for covered workers, especially part-time service workers