Last week, Bruce Clarke went to Washington. Clarke is the CEO of Capital Associated Industries ( www.capital.org), a Raleigh-based nonprofit that helps about 1,000 North Carolina employers manage worker benefits. He testified before a House committee considering a bill that would require employers to provide paid sick leave to help prevent the spread of contagious diseases such as H1N1 (to learn more about the proposed legislation, go to edlabor.house.gov/).
Clarke has worked in the human resources field for more than 20 years and served as chairman of the Labor and Employment Law Section of the N.C. Bar Association. Here are some highlights from his testimony Tuesday:
Our members are concerned about employee health, their own families' health and, yes, even business continuity in a pandemic. We understand the emergency and are adapting to it. But we also understand the longer-term issues caused by paid leave mandates. We survey our members on their benefits practices and link our survey data with similar groups around the nation.
When it comes to availability of paid time for absence due to illness, the glass is not just half full; it is over 80 percent full. I believe the marginal visible benefit of the proposed national mandates will create far more invisible and unintended consequences, and that the glass will actually be less full than it is today.
Here's why. Employers provide dozens of benefits that give employees paid time away from work. There are hundreds of mixtures and combinations, crafted to suit a specific workplace best. For example, we have a large food processor that provides no paid sick days as such. Instead, they chose to purchase a fully insured short-term disability policy for every hourly employee providing a wage substitute during an illness for up to six months. This is designed to prevent true financial ruin due to a medium-term illness. Who is to say this company should spend their benefits dollars on five or seven sick days instead? Who wins from that trade-off?
Employers are usually rational economic units. If told to carve out 3 percent of payroll dollars for a specific benefit, they will do so and then reduce spending on other pay and benefits.
This problem of benefit substitution may be most acute in paid time off policies which typically lump vacation/sick/personal days into one bank of time and allow use for any of those purposes. Employers that provide PTO time without labeling days as "sick days" must decide whether to add the new mandated benefit to the current benefit or to reduce one while creating the other. One quarter of employers use PTO accounts and would face this dilemma.
Anything that forces a PTO plan to carve out days specifically for illness punishes the people who want those days available for other personal reasons or desire privacy about their purpose.
Our own surveys of employers nationwide tell us that:
80 percent of employers provide a paid sick day benefit, with the average being seven to nine days per year where there is a defined number.
70 percent to 90 percent allow use of sick time for non-emergency needs like dental and routine doctor visits and for ill family members.
Vacation pay is provided by 95 percent-plus of employers, and virtually all allow its use for any reason.
More than half of the employers provide qualified part-time employees vacation and/or sick days on a reduced schedule.
Mandating paid sick time policies will force a new baseline from which all employers with more than 15 employees will be required to rewrite their many types of "pay when not working" policies. Flexibility will be reduced to balance costs. Examples of my members' recent flexible responses to H1N1 include:
Extra "pandemic flu" time off banks that go beyond current sick or PTO days.
Borrowing from future sick time accruals when current accounts are exhausted.
Making up lost paid time on other days and other projects.
Unlimited paid sick days for flulike symptoms whenever there is a national or local pandemic declared.
Granting extra paid sick days if the employee or family member took the flu shot.
Paying for flu shots.
Employers are working hard to treat employees as they would wish to be treated within the bounds of hard economic realities. We should not risk damaging the overall level and types of paid time off by favoring one or two specific kinds with a national mandate.
