The Rhode Island Business Coalition has concerns regarding the mandated paid sick leave proposal scheduled for a vote in the Senate Labor Committee this Wednesday. This legislation would create a mandate on every employer in Rhode Island to provide employees with 1 hour of paid sick leave for every 30 hours worked, up to 56 hours, or seven days, per year. This mandate would apply to every single employer in the state regardless of size, and to every employee regardless of full- or part-time status.
If this legislation passes, it would be the most onerous mandated paid sick leave policy for employers in the country. Currently only seven states (Arizona, California, Connecticut, Massachusetts, Oregon, Vermont, and Washington) and the District of Columbia have adopted such mandates. All seven states require fewer than seven paid sick days per year, including our New England neighbors in Massachusetts, Connecticut, and Vermont, which mandate up to 40 hours annually. Additionally, four states include accommodations for small employers. In Arizona, companies with fewer than 15 employees are only required to provide up to 24 hours of paid sick time per year, compared with 40 hours for employers with 15 or more employees. Massachusetts and Oregon only require companies with fewer than 10 and 11 employees, respectively, to provide 40 hours of unpaid sick time. And in Connecticut, organizations with fewer than 50 employees are exempted entirely. If Rhode Island were to adopt this policy, it would have the most generous state-mandated paid time-off policy, and would be the only other state along with California to mandate paid sick leave (though California only mandates 24 hours), temporary caregiver insurance, and temporary disability insurance.
If adopted as currently written, this legislation would impose additional costs on nearly every employer in the state, including those that already offer comparable paid time off. Employers that already offer paid leave will have to alter their policies, establish new systems for tracking employee hours and sick time accrual, and update their record-keeping to ensure their practices conform to the specific provisions outlined in the legislation. In a state already known for a burdensome regulatory environment, additional mandates like this one just increase the cost of doing business and make Rhode Island less attractive for companies to locate or expand.
Studies have shown there are real costs to these changes for businesses. A study by the Center for Economic and Policy Research at the City University of New York found that more than 53 percent of businesses reported increased costs resulting from the passage of Connecticut’s mandated paid leave policy, with some reporting increases of 5 percent or more. The report also found that the hardest-hit employers were those that had a large number of part-time employees.
Some Rhode Island employers will be unable to afford the costs associated with this new mandate, especially when combined with other employer mandates likely to pass this session, including the 50 cent hike in the minimum wage included in the House’s budget. In response to the ever-increasing cost of doing business in Rhode Island, some employers may be forced to close down entirely, or cut jobs, reduce hours, offer less flexibility, and/or reduce other benefits like retirement contributions, health care, and vacation. This legislation would also make Rhode Island less competitive nationally, undermining any efforts to incentivize companies to locate or expand here. Economic growth in the Ocean State has been less than robust since the end of the Great Recession, and more work must be done to promote growth and development that is long term, sustainable, and broadly based. This legislation, however, would undoubtedly move us in the wrong direction.
The Rhode Island Business Coalition, a diverse group of business associations, is committed to the adoption and implementation of public policies that improve Rhode Island’s economic competitiveness and overall business climate. John C. Simmons is the executive director of the Rhode Island Public Expenditure Council.
