Austin City Council Considers Prescribing Paid Sick Leave For Private Employers

Feb 13, 2018

Mornings at Hoover’s Cooking are spent hammering beef to make it thin enough for the restaurant’s best-selling dish: chicken fried steak.

“Other things that are good sellers are our fried catfish … and pork chops,” said Hoover Alexander, who has owned the restaurant on Manor Road since 1998.

Alexander said he’s weathered the highs and lows of the restaurant business, including recent trouble finding qualified workers. After losing a couple cooks in November, Hoover’s stopped serving breakfast on the weekends.

Now Alexander said he’s afraid he’ll have to cut back even more.

Austin City Council members are scheduled to vote Thursday on an ordinance requiring all private businesses in the city to offer at least eight paid sick days a year. Employees would accrue one hour of paid sick leave per 30 hours worked. Employers would be permitted to ask for verification of sickness if a worker takes more than three paid sick days in a row.

Under the proposed ordinance, employers can count any type of paid leave toward the eight paid sick days. Since employees at Hoover’s already get five days of paid vacation, Alexander would be required to offer only three more days.

But even that makes him uneasy.

“It’s not about what I want to do,” he said. “It’s my concern about what we can afford to do.”

Alexander hasn’t run the numbers on what it would cost to offer additional paid leave to his roughly 40 employees. But he said owners of similarly sized operations have told him it could run him a couple of thousand dollars.

“Our labor costs [are] as high as it’s ever been. Our margins are as low as they’ve ever been,” he said. “That’s the big concern.”

'A Basic Amount Of Sick Time To Everyone'

“Right now, our community is bearing millions of dollars in cost when people aren’t allowed to take sick time,” said Council Member Greg Casar, who has spearheaded the campaign.

Work Strong Austin, a coalition of groups fighting for paid sick leaves rules in Austin, has estimated that roughly 37 percent of the city’s workforce does not have paid sick days.

Council members passed a plan to gather input about an ordinance in September. A draft of what the Council will vote on became public in January.

“This gives just a basic amount of sick time to everyone that works inside of Austin city limits for a private employer,” Casar said

"There are so many variables that have not been accounted for, and the people that are going to have to account for these are the businesses that don't have the financial means."

And while at least two dozen small businesses have signed a letter of support, others have sounded the alarm.

“At this point in time, do I feel it is the best fit for small businesses? No,” said Regina Estrada, the general manager of Joe’s Bakery on East Seventh Street. “There are so many variables that have not been accounted for, and the people that are going to have to account for these are the businesses that don’t have the financial means.”

The Austin Chamber of Commerce has called for a study.

“We’re asking the Council to contract and find an unbiased third-party research institution that can use real local data to determine the cost to employers, governmental impact and some of the perhaps unintended or unknown consequences of this type of action,” said Tina Cannon, senior director of government relations for the Austin Chamber of Commerce.

A version of that came out Tuesday. The Institute for Women’s Policy Research, a progressive think tank in Washington, D.C., published a cost-benefit analysis of Austin’s proposed paid sick days ordinance. Researchers found the net savings, including savings to employers and the community, totals roughly $8.2 million annually in the Austin area.

But the report relies on a lot of national data and studies – including a 2014-2015 national health survey, which found the average number of paid sick days workers took was 2.65. The analysis assumes that’s the number of sick days workers would take. 

A spokesperson for the Chamber of Commerce said they’re looking at the study now

'Virtually No Effect On Business Operations'

Roughly 40 states, counties and cities require employers to offer paid sick days to their workers.

Eileen Appelbaum, co-director of the Center for Economic and Policy Research, has studied the effects of these rules on businesses, including in New York City and the state of Connecticut.

"Workers look at this as if it is insurance. The fact that you have auto insurance doesn't mean you're going to go out and smash your car, does it? You want that insurance in case you need it."

“What we found is that it had virtually no effect on business operations,” she said.

Two years after New York City adopted a paid sick leave ordinance in 2013, Appelbaum and her colleagues surveyed nearly 400 businesses. Eighty-five percent reported that providing at least eight paid sick days to their employees did not raise costs. For the majority who reported additional costs, it was less than 1 percent.

Businesses surveyed in Connecticut more frequently reported additional costs after a paid sick leave requirement passed there. Of the 53 percent of business owners who said offering paid sick days cost them, nearly a quarter said costs increased by less than 2 percent.

According to Appelbaum’s work, employers report little to no abuse of paid sick days. In her study of New York City, workers used an average of 4.6 out of eight sick days a year.

“Workers look at this as if it is insurance,” Appelbaum said. “The fact that you have auto insurance doesn’t mean you’re going to go out and smash your car, does it? You want that insurance in case you need it.”

Paycheck To Paycheck

Darnell Franklin works for LSG Sky Chefs, a company that contracts with the Austin airport, unloading trucks of food. Last month, Franklin wasn’t feeling great when a coworker stopped him.

“[He said,] ‘Hey man, what’s wrong with your face?’” Franklin said. “And I was like, ‘What are you talking about?’ ‘He was like, 'Man, you need to go look in the mirror. Your face is swole.'”

Franklin said his eyes were swelling. He finished his work shift. The next day, still not feeling better, he went to the hospital where he was diagnosed with the flu.

It was only January, but Franklin ended up having to use three paid sick days – all of his sick leave for the year. (In an email, LSG said it offers its employees four paid sick days. Franklin disputed this.) He had to miss additional days of work and go without pay.

“I live paycheck to paycheck,” he said. “Every paycheck is very valuable to me.”

Postponement, Changes Or State Preemption

Council Member Ora Houston has suggested she’ll ask for a postponement of Thursday's vote. On the Council message board Monday, Council Member Jimmy Flannigan posted changes he’d like to see, including a tiered system where smaller businesses are required to offer fewer paid sick days.

Then there’s the chance of state preemption. State Rep. Paul Workman released a statement Monday saying he would file a bill in the 2019 legislative session to prohibit municipalities from passing paid sick leave rules.

But Franklin, who has recovered from the flu, said he’s going to keep advocating for those eight paid sick days.

“I’m on a campaign to get people more sick days.”