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GOOD FOR BUSINESS? The Case of Paid Sick Leave in Connecticut

GOOD FOR BUSINESS? The Case of Paid Sick Leave in Connecticut. Eileen Appelbaum , CEPR Ruth Milkman, CUNY. On July 1, 2011, Connecticut became the first state to require employer-paid Paid Sick Days; law took effect on Jan. 1, 2012.

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GOOD FOR BUSINESS? The Case of Paid Sick Leave in Connecticut

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  1. GOOD FOR BUSINESS?The Case of Paid Sick Leave in Connecticut Eileen Appelbaum, CEPR Ruth Milkman, CUNY

  2. On July 1, 2011, Connecticut became the first state to require employer-paid Paid Sick Days; law took effect on Jan. 1, 2012 • Covers about 400,000 of the state’s 1.7 million employed workers • Many carve-outs, including manufacturing and most nationally-chartered nonprofits, as well as per diem and temporary workers • Covers most non-exempt service sector establishments employing 50 or more workers, including part-time workers • Those covered accrue one hour of paid sick leave for every 40 hours they work; can draw on the benefit after 680 hours’ work • Can accrue up to 5 days per year • Can use leave for own illness, injury, or medical care, for a child’s or spouse, or for care related to family violence or sexual assault • The law prohibits employer retaliation against workers who request or use paid sick leave

  3. We surveyed 251 covered CT employers and conducted 15 site visits/interviews with managers • Survey: • Dun and Bradstreet sample, stratified by employer size • Oversampled large establishments • 36% response rate (AAPOR RR 3) • Interviews with a convenience sample

  4. Businesses concerned about negative impact, but for most, a non-event with minimal burdens • Carve-outs limited the impact • Employers that already offered paid sick days made minimal or no adjustments • Minimal abuse reported (and what little abuse there is was reported before as well as since the law took effect) • But coverage did increase: 88.5% of employers surveyed had offered 5+ PSD before the law took effect; by mid-2013, 93.7% did so • Number of days offered also rose slightly from an average of 6.9 days prior to the law’s implementation to 7.7 days in mid-2013

  5. Main Impact on Hospitality, Retail, Health, Education & Social Services

  6. Most workers use fewer Paid Sick Days than available • Employer respondents reported that about 2/3 of their workers had used the PSD benefit • Of those who did use it, average take up was 4 days (of 7.7 days available on average) in the previous year • Half of employers reported that employees used 3 days or less • This evidence suggests workers save PSD for when they are really needed, treating the program as a type of insurance

  7. PSD law interacts with “progressive discipline” in unanticipated ways • The law’s anti-retaliation provision protects covered workers from discipline for the first 5 days they are absent from work if it is for a purpose covered by the PSD law • Employers that punish absences with warnings leading to termination were more likely to report abuse than those without progressive discipline • Interesting exception: if progressive discipline was limited to UNEXCUSED absences, less abuse was reported than in cases with no system of progressive discipline

  8. Employer-reported positive effects of PSD law

  9. Most covered the work of absent employees at minimal cost

  10. Minimal cost impact • Only 10% of employers reported the law increased payroll costs by 3% or more • Biggest cost impact was on employers with lots of part-time workers; indeed the main benefit of the law was to these workers employed in establishments that previously offered PSD only to full-time workers • Unionized establishments half as likely to report cost increases as non-union ones • Record keeping burden was minimal as well, once system set up to track the benefit. • “It’s easy. It takes ten minutes” (nursing home payroll manager) • Only 29% of respondents tracked PSD costs separately from other benefits • “It would cost us more administratively to track the costs ... No hardship whatsoever!” (entertainment industry HR manager)

  11. Few changes in operations due to increased costs (N=240, multiple responses could be reported )

  12. Employer Support for the Law has increased since implementation • We heard employers complain about legislators’ lack of understanding of business operations, and various other anti-regulation rants • Yet 18 months after the law took effect, most employers surveyed were supportive: • 39.5% were “very supportive” of the PSD law • 37.0% were “somewhat supportive” • Overall: a non-event for employers with real benefits for covered workers, especially part-time service workers

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