Paid Sick Leave Bill Bad for VT Business

March 9. 2016
Contact: Rep. Don Turner

 

Overreaching Paid Sick Leave Legislation Bad for Business in Vermont

 

Today Governor Shumlin signed the Senate version of the Paid Sick Leave Bill (H.187) into law. The new legislation, which passed without bipartisan support in a close 81-64 vote, requires Vermont employers to provide three paid sick days a year for the first two years that the law is in effect, and five days thereafter. House Republicans unanimously opposed the bill, citing several reasons why they viewed it as bad public policy.

The new law provides no exemptions for small businesses in Vermont – a group that accounted for 96.3% of all employers in 2013. When Connecticut mandated companies to compensate employees for sick days four years ago, it exempted businesses with under 50 employees. As a result, the law did not apply to the majority of employers in the state and no significant negative effects on the economy have been reported. In stark contrast, the Vermont bill does not even exempt businesses with under three workers.

In addition, the new law offers start-ups an insufficient grace period of only one year. The U.S. Department of Labor determines that only 50% of small businesses survive five years or more. As start-ups and small enterprises possess restricted margins to absorb the additional costs mandated by the law, they will be compelled to lower wages, reduce benefits, and lay off employees. Ultimately, mom and pop storeowners will bear the biggest brunt of this new tax.

House Minority leader Don Turner (R-Milton) emphasized the bill’s enormous fiscal strain as he expressed his opposition to it. He explained, “The Joint Fiscal office estimates the cost of this law to Vermont private employers to be $2.8 – $6.3 million in 2018 and between $4.8 – $11 million annually thereafter. The Democrats have passed several pieces of legislation this biennium that place an additional burden on Vermont employers. However, they have not supported steps to improve the business climate, which would allow businesses to prosper and Vermont’s economy to grow.”

The law also fails to account for the diverse landscape of the private sector workforce in Vermont. For example, questions regarding its effect on exempt workers (per federal regulations) and employees that follow non-traditional and flexible work schedules, as is common in the technology sector, remain unanswered. Will these increased regulations discourage multinational IT firms from hiring Vermonters in the future? By failing to address important issues of this nature raised by Bill H.187, Democrats abdicated their responsibility as elected legislators.

Additionally, the House Republican Caucus points to the overreaching nature of the law as another significant drawback. The law permits employees to ask and receive paid sick leave for a myriad of non-medical reasons including helping a victim of domestic violence to relocate and obtaining legal services for an extended family member.

In offering rationale for this initiative, Democrat lawmakers cite health concerns and the need to promote happiness at the workplace. This law seeks to prevent sick employees from infecting others at work, and incentivize workers to cultivate loyalty. In truth, Montpelier should not, and realistically cannot, attempt to legislate individual behavior and emotions. After all, what is to stop an employee from using paid sick days as vacation time and coming to work with the flu nonetheless?

Ultimately, the Paid Sick Leave Law will saddle enterprising and diligent Vermonters with more expenses, and render businesses susceptible to exploitation and financial dissolution.

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