As Washington prepares to implement a mandatory paid sick leave law for businesses, the department of Labor and Industries (L&I) is gauging small business concerns and considering cost mitigation options.
Those small business owners hope to discuss the frequency of reporting requirements and the number of hours claimed at one time with the department before the law takes effect on January 1, 2018.
Approved by Washington voters last November, Initiative 1433 (I-1433) implemented an $11 minimum wage statewide, scaling up to $13.50 by 2020. By 2018, it also would require employers to provide one hour of paid sick leave for every 40 hours worked.
Under the draft sick leave rule, an employee can start using accrued paid sick leave starting 90 days after employment begins, and an employer must allow employees to carry over any accumulated and unused leave of 40 hours or more to the next year. Under normal circumstances, employees can claim those hours to care for themselves or a family member.
According to L&I’s current implementation timeline, affected stakeholders will have until the end of May to submit comments on the draft rule. Sometime next month, L&I will submit its small business impact statement for the proposed law required under the Regulatory Fairness Act (RFA).
L&I is scheduled to finalize the proposed rule on July 4 and then hold several public hearings on proposed changes. The paid sick leave law will take effect on January 1, 2018.
In preparation for advising his clients of the change, Jeremy Saladino has done research on the paid sick leave law and the draft rule. He is an enrolled agent for the Renton-based accounting firm Grass CPA & Associates, representing a variety of small businesses in construction, adult family homes and retail.
Saladino told Lens some of his clients cited concerns with the frequency of reporting to employees every payroll under the new rule.
“Our construction companies pay every week. Having to compile (that information) will take, on the easy ones, a couple of hours, but adding a couple hours of time to your payroll every week is going to get monotonous and expensive.”
He added, “We’re hoping for small businesses to be allotted maybe reporting every quarter to their employees…it’s not that difficult for someone individually to figure out (their accrued sick days) if the report is every three months, however trying to compile that for every employee even every month might be difficult and cost-prohibitive.”
According to Saladino, the industry-accepted accounting program does not track paid sick leave the way the state or cities do, which means business owners must separately record accrued sick leave for up to 50 employees.
Also to consider is the number of hours able to be claimed at a time, added Saladino, especially for the construction sector where an employee could take off one hour in the beginning of the day to go to the doctor’s office, making it difficult for a business in the middle of a project.
Under the draft rule, an employer could prove that allowing hourly paid sick leave would cause an “undue hardship” and allow for up to four-hour increments of leave.
Gary Smith, executive director of the Independent Business Association (IBA), told Lens the association has informed L&I that this statute is unnecessary, citing a 2010 Small Business Administration report which found small businesses bear 36 percent more costs to comply with government regulation than do large firms.
“The impact on a small business from this rule is going to be significantly more in many cases than it is for a large business because most large businesses already have paid sick leave policies already in place and organized. Most small businesses don’t; they accommodate workers on a case-by-case basis and don’t have formal policies.”
Smith pointed to some potential unanticipated costs brought on by the proposed rule.
“If a small business wants a notification policy of employees notifying business when they want sick leave, the business has to create (it) and distribute it to employees, but obviously most small business don’t have this paid sick leave policy and therefore many of them would have to hire an attorney to help them draft a notification policy that meets all requirements of the rule.”
This can add up to hundreds – or thousands – of dollars, which is more than many small business owners can afford, according to Smith.
Among suggestions from the business community to address the issue is adding a first-time violation policy where small business owners wouldn’t be subject to a penalty if the business fixes the issue and doesn’t repeat it, Smith said.
Another way to mitigate costs is for L&I to establish a small business consultation service, similar to the department’s Workplace Safety & Health Consultation service. Smith said a consultant could visit a business owner and advise them, at no charge, on complying with paid sick leave requirements.
According to Allison Drake, labor standards policy advisor at L&I, the department is using several different mediums to consider business and labor concerns.
- An online engagement website for providing information and timeline updates;
- A designated email box for stakeholders to submit feedback;
- In-person meetings; and
- The ability for remote participation at meetings via computer software.
“What the department has done with this rulemaking process is an effort to promote transparency and inclusiveness and to really ensure we are in position to get feedback, hear feedback, have conversations with stakeholders,” she told Lens.
The proposed rule is set to be filed on July 4, with public hearings set to take place in: Tumwater on August 8, Spokane on August 16, Pasco on August 17 and Everett on August 29.