Cherry Street Coffee brewed up some media attention Feb. 4 when owner Ali Ghambari posted signs informing customers that he would collect a 1.5 percent surcharge on every order to pay for Seattle’s new paid sick leave law.
Ghambari predicts that Seattle’s paid sick leave law, which requires employers to provide staff members 40 hours of paid sick time a year, would cost him a total of $25,000 a year for the 45 people he employs at seven locations. He says he posted the signs in the name of transparency, he says.
Customers saw it differently. To some, it looked like a protest against the new law. Within three days, Ghambari took the signs down. Soon after, he removed the 1.5 percent surcharge and is considering making price adjustments to the menu to compensate for what he projects will be increased operating costs.
Seattle businesses that previously did not offer paid sick leave are now trying to figure what, if anything, the law will do to their bottom line. Ghambari assumes a worst-case scenario: that most employees will take a full 40 hours of sick leave. For a business with almost 50 employees, that adds up to a year in wages.
But advocates who are pushing similar legislation across the country say most employees won’t take that much time. Vicki Shabo of the National Partnership for Women & Families, said on the whole paid sick is a break-even investment for businesses and a cost savings for the community through fewer emergency room visits and better health.
“Employers generally don’t see this law as problematic once it’s in place,” Shabo said.
Paid sick leave around the nation Seattle’s law took effect Sept. 1. A handful of other jurisdictions, including San Francisco, Milwaukee, Washington, D.C. and the state of Connecticut, have similar laws.
But advocates are fighting for paid sick leave legislation in more than 20 cities, counties and states, including Portland, Ore. and a new statewide effort in Washington state.
The first law, enacted in 2007 in San Francisco, was a “sleeper,” said Donna Levitt, division director of the San Francisco Office of Labor and Standards Enforcement. Young Workers United, a nonprofit that advocates for young immigrant workers, pushed the ballot measure, which passed with little opposition. The lack of opposition was likely due to the fact the law posed a small financial impact, Levitt said.
“It’s a couple of days here and there,” she said. “We’re not talking huge sums of money.”
According to a 2011 report by the Institute for Women’s Policy Research (IWPR), 70 percent of San Francisco businesses said the law had no effect on their finances. Half of one percent said the law actually helped their budgets grow.
Employees typically don’t take the maximum amount of time allotted to them, and the law does not cost employers much, Levitt said. In San Francisco, people typically take about 3.5 days off a year, similar to the national rate. A quarter of employees in San Francisco took no time off.
Over time, San Francisco businesses have adjusted to the new law. Since 2007, San Francisco’s Office of Labor and Standards Enforcement received 69 employee complaints the first year, with fewer complaints almost every year since.
In total, the city received just 304 complaints from employees since the law took effect.
Creating savings Recent studies indicate that businesses and communities save money by enacting such policies, said Claudia Williams of the IWPR.
“Savings for the community are really big,” Williams said. “Savings for the employer are small, [but] it’s not a huge imposition.”
The group did a cost-benefit analysis for a similar law being proposed in Philadelphia and found that it would reduce the spread of illness, saving an estimated $24 million a year.
The cost savings would come from fewer ER visits and reduced demand for health care at senior nursing homes.
IWPR predicted that Philadelphia businesses could save $500,000, or about 10 cents a week per worker, because of reduced turnover and increased productivity.
“Sick leave is really one of those benefits that really does pay for itself,” said Marilyn Watkins, policy director for the Economic Opportunity Institute, which helped craft the law in Seattle.