New report reveals ‘unintended consequences’ of Seattle’s paid sick leave law

Another report claims that some small businesses are already making moves, such as raising prices, to compensate for increased costs linked to Seattle’s mandatory paid sick leave law.

The law, which took effect last September, requires businesses with more than four employees to provide paid time off. The Employment Policies Institute, a non-profit group that studies employment issues, is the latest to survey business owners about the impact.

Even though the sick leave law applies to about 11,000 businesses in Seattle, Research Director Michael Saltsman says this survey focused on 301 service industry businesses – essentially restaurants.

The survey asked about the impact of the law on the cost of doing business.

“About a third of the businesses reported no increase in the business cost, a little more than one in four, 27 percent, said it was causing a big increase and some group in between said small increase,” Saltsman said.

The EPI survey found that businesses take different approaches to make up for higher costs associated with the new law.

“About one in five businesses had taken some steps to basically offset those costs, and that was either raising prices, reducing staff, or increasing the costs of other benefits or eliminating benefits,” Saltsman reported.

The sick leave law was written, in part, based on the notion that workers should not have to show up on the job when they’re sick. The survey asked employers about the “sick worker” issue. Saltsman said 83 percent responded that the problem was “not serious at all.”

“I do think that’s a pretty interesting statistic just because it suggested that the case that was being made in the run-up to the law being passed that employees were coming to work sick all time and that customers were in danger was, to put it charitably, was exaggerated,” concluded Saltsman.

Seattle City Councilmember Nick Licata sponsored the sick leave law and calls this new survey biased.

“You’re dealing with folks in that industry that fought this legislation, they did not want it, and one of the things they kept saying was ‘Oh, our workers are fine, they never take sick leave,'” recalled Licata. “Well, they probably didn’t because they didn’t want to lose their job.”

Saltsman conceded that EPI receives support from the business community.

After the law was approved, restaurateur Ethan Stowell told KIRO Radio’s John Curley he was “okay” with the paid sick leave mandate.

“I’d rather have people take it (the day) off and get better and come back to work strong. I’m fine with that,” he said. “I think all that’s gonna shake down as to how it’s going to financially impact restaurants, but I’m not too worried about it myself.”

Licata said the survey is speculative, when it comes to the financial impact on business of the sick leave law.

“Fifty-six percent said it would increase their cost of doing business. That’s a ‘would’ statement. It doesn’t say it did. And you’re asking someone who, again, has a vested interest that would not necessarily want to support this legislation,” argued Licata.

A report last month from the University of Washington found that about two-thirds of employers were not complying with the new law, so far. A large minority of businesses, about four in ten, were not aware of the law.

This just-released survey talks about “unintended consequences” of mandatory sick leave, but conceded that it’s too early to draw conclusions about the impact of the law on business.

Licata said the law is working but admits it might need adjustment. The city, he said, obviously must do a better job educating both employers and employees. The city’s Office of Civil Rights is tracking the law and its impacts. Another city-sponsored survey gets underway this month.