Sick & Safe: Nice Sentiment, Bad Policy

By Will Seihmer

When it comes to the Maryland Healthy Working Family Act introduced in the Senate on January 20, a bill by any other name is still the same, and still bad for business. “And if it’s bad for business,” said Mike Henderson, an executive with the Associated Builders and Contractors in Baltimore, “then it’s bad for the people employed by those businesses.”

As in previous incarnations, SB0040 comes at a high price to construction industry employers and other businesses that could negatively impact the livelihood of the very employees the bill hopes to help.

“That’s the hurdle for those who want to grow the economy and reverse Maryland’s well-earned reputation as over-regulating business,” said Henderson. “If it’s good for business, it’s good for the people employed by those businesses. More businesses, healthier businesses means more jobs. There’s just no getting around that fact.”

While Maryland does not require private-sector employers to provide employees paid or unpaid sick leave, employees are protected, however, under the Federal Family and Medical Leave Act of 1993 (FMLA), which requires covered employers to provide eligible employees with up to 12 work weeks of unpaid leave during any 12 month period under certain conditions.

Two similar bills were simultaneously introduced in the House (HB0735) and Senate (SB0698), as the Maryland Earned Sick and Safe Leave Act, during the 2013 Regular Session of the Maryland General Assembly. HB0735 was withdrawn after an unfavorable 16 to 6 vote by the House Economic Matters Committee. In 2014, the Act was once again cross-filed in the House (HB0968) and Senate (SB0753). HB0968 had a hearing on February 18 but it was ultimately defeated.

These previous bills outlined numerous fiscal expenditures and costs, both for small business and for the state of Maryland. According to the Fiscal Note for HB0968, the Institute for Women’s Policy Research estimates it would cost Maryland employers $165 million to provide new earned sick days for employees, which is equivalent to a 24 cents-per-hour increase in wages for employees receiving new leave, not an insignificant sum for a construction industry just at the start of adding new jobs after reducing its workforce because of recent recession and its toll on construction. Or that estimate could be slightly higher: The U.S.Bureau of Labor Statistics reported the average employer cost to provide paid sick leave in 2012 was 25 cents-per-hour, or 0.9% of total compensation for private-industry workers.

 “Montgomery County estimates expenditures increase between $462,000 and $694,000 to provide earned sick and safe leave for temporary employees,” according to the Fiscal Note. Maryland’s general fund expenditures were projected to increase by $518,100 in FY 2015 due to additional staffing needs for the Department of Labor, Licensing, and Regulation, and Maryland’s Judiciary could face expenditure increases of $900,000 annually.

For merit shop construction industry employers that already provide discretionary leave for their employees, another concern is the uncertainty of how SB0040 will affect leave policy already in place.

As with previous proposed legislation, there are several provisions in SB0040 that conflict with the FMLA. The majority of business-oriented organizations opposed the previous bills, including Associated Builders and Contractors, the Maryland Chamber of Commerce, the Retail Merchants Federation, and the National Restaurant Association.

 “With restaurants already reexamining hiring plans and benefits structures in light of the health care law, the NRA believes arbitrary mandatory provisions that require new benefits without giving flexibility to businesses will come at the expense of other benefits and affect the restaurant industry’s ability to create jobs,” according to a National Restaurant Association statement.

In the last few years, paid sick leave has become mandated in Connecticut, San Francisco, Seattle, and the District of Columbia. For DC-area contractors, the mandated paid sick leave has become an administrative headache, a prime example of why it is not working. Employees earn the paid sick leave based on the number of hours the employee works in the District. Because construction work for these employees may take place within the greater DC area, including Maryland and Virginia, tracking who works when and where adds to administrative costs.

The bill will go through a first hearing by the Finance Committee on February 3. We urge small business owners everywhere to continue to say “No” to legislation that would add yet another burden on Maryland businesses as they try to emerge from an anemic economy.