Washington state industry associations want lawmakers to pump the brakes on paid family and medical leave until they consult with affected employers. They say that proposed state legislation is too generous and will run up operating costs in myriad ways. If any bill moves forward on paid family and sick leave, employers say, it should be a worker-funded model. Those were some of the big takeaways at a meeting of the House Labor and Workplace Standards Committee on January 19, as the debate in Washington began to intensify.
As currently written, HB 1116 would allow workers to claim up to 38 weeks of paid sick leave in one year. Opponents say that’s too much, especially in the midst of implementing a higher statewide minimum wage and some new paid sick leave benefits in 2018. That comes via Initiative 1433, approved by Washington voters last November. Additionally, employers say they would have to absorb training and replacement costs for hiring temporary workers.
Seattle implemented its paid sick and safe time ordinance in 2012. By the end of 2013, David Santillanes, owner of eight McDonald’s franchises, reported a $17,600 increase in costs per restaurant, and $19,200 in 2014. To compensate, he increased prices. Since the law’s implementation, he also said he has had employees calling in sick more often.
State Rep. June Robinson (D-38) is the House bill’s prime sponsor. On January 19, she told the committee, “the workers of the state of Washington want and deserve paid family leave…this is not only for new parents, it’s also for all of us as workers when have our own long-term health needs, as well as (for) a family member.”
Employers Air Their Concerns
Employers don’t entirely oppose paid leave benefits, but told lawmakers on the panel that they want more collaboration on the legislation, particularly in the wake of I-1433.
Bob Battles, Director of Government Affairs at the Association of Washington Business, said, “Every time we add another cost on employers…we tend to look at this in sort of a silo…These employers have just been hit with workers’ compensation increases…a minimum wage increase…they are currently talking about paid safe and sick leave that is going to be implemented and started on every size employer…all of these costs” fall “on the backs of employers who currently share 58 percent of the tax burden in the state of Washington.”
Carolyn Logue, contract lobbyist for the Washington Retail Association, said, “Washington employees already have leave options available in this state…many…through their employers, already, that are paid.”
Logue added, the bill is “dictating how it gets done, which does not allow the employer or employees to have flexible arrangements…Businesses in the mandate environment suffer increased costs for having to hire and train their temporary employees or pay existing employees overtime, to make up for the loss of the employee on leave. Businesses’ unemployment insurance (UI) rates rise when non-returning employees file for UI benefits after their leave expires, or temporary employees file for benefits.”
Holly Johnson, Government Relations Director for the Washington Food Industry Association, said, “The independent grocery industry in Washington averages one to one-and-a-half percent profits…we have just had a large increase in the minimum wage, and starting in 2018, we’re going to be mandated (to provide) paid sick leave….this proposal is impossible for my grocers, and some of them will likely not be able to make this happen.”
Employee-Paid Leave Eyed
Gary Smith, Executive Director of the Independent Business Association, recommended regular paycheck deductions to fund added leave benefits. “Make this employee-paid. It’s done in a number of other states,” and “can be a competitive advantage for an employer… It’s being done now in the state of Washington” in certain workplaces, said Smith. Also worth considering is an exemption for businesses with less than 20 employees, he added.
At AEI Ideas, Aparna Mathur of the American Enterprise Institute and Isabel Sawhill of the Brookings Institution report that paid family leave enjoys broad bipartisan support in polls nationally, and reflect the realties facing many two-income households. Uniformity across state lines and self-funding would go a long way toward easing concerns of employers, they write.
According Mathur and Sawhill, “From the business perspective, paid leave creates a variety of worries. One is that the proliferation of state laws and regulations will make it increasingly difficult for them to operate efficiently across state lines and will raise their costs of doing business. They may well prefer one federal law to 50 state laws.”
They add, “there is also an obvious cost associated with the lower productivity imposed by an absent employee or the wages that must be paid to a replacement. At the same time, paid leave may reduce turnover costs by encouraging parents to return to work after a leave. And if the costs are covered by a payroll tax on employees, the costs to firms are minimal.”
The companion bill to the Washington House measure is SB 5032. It scheduled for a hearing on January 30th in the Senate Commerce, Labor and Sports Committee.