Business Issue Update
The Healthy Families Act - Mandatory Paid Sick Leave
By Jim Evans
If you haven’t yet heard much about the Ohio Healthy Families Act, there’s a good chance you will soon. If passed into law, the act would require Ohio employers, with twenty five or more employees, to guarantee seven days of paid sick leave each year to employees working 30 hours or more per week, and a prorated amount to other employees. The general assembly has failed to act, and time has run out. The Service Employees International Union (SEIU), who submitted the original petition, will now need to gather one hundred twenty thousand more signatures to place the issue on the November ballot for voters to decide. That process is starting on May 8th.
Voters tend to support employment mandates where employees are the beneficiaries. Concern is escalating, as people become more aware of the proposed sick leave entitlement. It’s not just employers who are worried. The Ohio Chamber of Commerce has come out against the anti-job creation proposal stating that it is not good for the business environment in Ohio. The SHRM Ohio State Council, a group of HR professionals, also opposes it. For more details of the act, check out the Ohio Chamber’s web site at www.ohiochamber.com. Issues and consequences of the act, supplemented by some of my own thoughts, are bulleted below:
Paid leave is one of the various benefits that employers voluntarily provide. It’s a recruitment tool, and a benefit that helps retain employees. Standardizing sick leave packages universally, through a minimum sick leave entitlement, reduces an employer’s competitive edge.
The proposed law would limit employer’s flexibility to design compensation packages, tailored to meet the needs and preferences of their employees. Mandated paid leave removes choices, and risks loss of flexible benefit packages that employees value, and which helps them balance work and life.
Mandated paid leave will increase employer costs significantly. Because employers would be prohibited from reducing vacation and other leaves currently offered, they would be forced to seek other ways to re-coop costs. Employees could find themselves on the receiving end of reduced wage increases, scaled back hiring and staffing plans, increased share of medical benefit costs, and other cost-saving measures. Common sense tells us that employers can’t blindly absorb the increased costs. Although the mandate is intended to benefit employees, there’s likely to be unintended consequences that may end up hurting them instead.
The proposed law duplicates and sometimes conflicts with current state and federal family leave laws that are already difficult and costly to administer. The proposed mandate is loosely written, and it presents more questions then answers about how it will interact with current laws, and how employers will be required to administer it.
The proposal will be a factor in deterring organizations from doing business in Ohio. Currently, there are no other states that require mandated paid sick leave. Why would a company move to Ohio where sick leave is mandated, and where the minimum wage exceeds the federal law? Businesses conducting due diligence will question what further mandates Ohio has up its sleeve. Ohio and our local communities have enough trouble attracting business. We don’t need another roadblock to job growth and retention.
Our country was built on the entrepreneurial spirit and continues to thrive, in part, due to a competitive business environment. Over regulating and burdening small business with government mandates stifles creativity and ingenuity, and hampers employers’ ability to be profitable.
There’s a good chance that we’ll be casting a vote in November, either for, or against mandated paid sick leave. While voting, the question of a mandated benefit will be foremost in most voters’ minds. The real ballot issue, however, would more accurately be characterized as a vote cast for, or against Ohio’s economic and employment future.
Jim Evans is President of JK Evans & Associates LLC, a Zanesville-based human resource-consulting firm serving throughout Ohio. Jim can be reached at jime@evansandassociates.com