The Austin City Council recently approved a resolution calling for the City Manager to collect input from stakeholders about policies that would require businesses to provide paid sick leave for their employees. A set of specific proposed policies has not yet been announced.
As the voice of local business, AIBA is part of the conversation shaping this policy. We surveyed our members last week seeking opinions, ideas and concerns. We received 111 responses to the survey. Read the entire survey report. This policy would apply to employees only since applying it to independent contractors could jeopardize their status as independent contractors. The discussion does include part-time and seasonal employees as well.
A 2013-2015 study shows that 37% of Austin’s total workforce does not have the benefit of paid sick days. The vast majority of this is in service and construction sectors. The number drops to 29% for full-time employees. Most are low-wage workers. What is not clear is whether independent contractors were included in the study. In some sectors of construction and maintenance, an estimated 30-50% of the workers are classified as independent contractors.
The majority of respondents said they offer some form of paid time off (PTO). Many offer PTO which could be used for any time-off needs. 51% offer specific paid sick days. Because the policy has yet to be defined, we did not ask for a yes or no in supporting a city mandated ordinance. Yet many people answered this in the comments. The vast majority are against the City of Austin regulating paid sick days in any form. 70% of those who did not already offer paid sick days cited cost as the reason they are unable to offer it. A few are in favor of the this regulation. Although most who are in favor already offer PTO.
Many who do offer PTO are against a city policy. A consistent view was that the market should regulate this. That business needs the flexibility to offer benefits that best suit their employees. If an employee wants a benefit that is not offered at a particular company, they can find employment with another company offering the benefits they seek. With an unemployment rate of 3.2%, Austin is an employee’s market.
The concerns about a policy were many.
• Cost was the biggest concern. Many businesses said that they would need to cut other benefits such as planned raises, overtime opportunities or schedule flexibility to pay for paid sick days. Others would lay off employees to comply with this policy. Some even stated that they would move out of Austin city limits, citing this as the final straw from a city they don’t believe supports them.
• Some businesses have highly customized benefits packages. They are very concerned that a single-issue policy would infringe on their own benefits already in place.
• This policy will destroy the ability for business owners to customize whole benefits packages.
• Compliance enforcement is a concern. How will this be administered and what kind of time and resource commitment will that require of the business owner?
• Concern about tracking, accounting and managing came mostly from businesses who have hourly employees. A restaurant owner commented that just calculating how much waitstaff earned per hour was difficult with tips.
• Some reported that they offer hourly employees the opportunity to make up the time taken off. How would a city policy address this?
• Some businesses, including retail and restaurants, must bring in replacement staff when an employee is absent. Requiring them to pay for the time off doubles their cost for the hours missed.
• The estimated cost is .25 per hour per employee. One member surveyed his hourly employees and asked if they would rather have a .50 per hour raise or a .25 per hour raise with five paid sick days. 80% chose the .50 per hour raise.
The ideas were few.
• Small business (under 100 employees) should be exempt.
• The city should offer some assistance in paying for this either through tax rebates or other means.
• A policy should offer comparable options such as the ability to make up the hours missed.
• Perhaps this should be PTO and not paid sick days.
• This should be defined as earned time off, not given time off.
• Should be for full-time salaried employees only.
Our conclusions drawn from survey results indicate that this is a complicated policy due to the wide variety of businesses that would be subject to such an ordinance. We caution the city in approaching this as a “one size fits all” solution. It’s going to be nearly impossible to create a policy that serves everyone, even every employee. No one wants people to work when they’re sick but there is a serious cost to a policy that demands specific benefits to employees. A strict policy will preclude businesses from finding innovative ways to secure happy employees and force businesses to make necessary cuts to pay for it. We hope the City Council has listened carefully to all the comments gathered through all means and proceed cautiously.
We will keep you posted on the resulting policy details and developments on this policy.