Paid sick leave law making some Michigan businesses feel queasy

Susan Onan-Swartz, executive director of BrickWays in Traverse City, says she may have to lay off employees if forced to offer paid sick days.

Update: Michigan minimum wage, sick leave bills dismantled. Will Gov. Snyder sign?​
Update: Group behind Michigan paid sick leave vows 2020 ballot drive if law gutted

It’s easy to see how a state law mandating paid sick leave would help lots of Michigan families.

Low- and middle-income workers now without this benefit would be able to stay home when they or their children are ill without losing money needed for rent and groceries. Cash-strapped workers would be less likely to go to work when they are sick, keeping their illness from spreading to coworkers.

Susan Onan-Swartz sees, and lives, another side of the issue. She is executive director of BrickWays, a nonprofit that provides housing and services to disabled youth and adults in Traverse City. She says her organization barely scrapes by now.

If a Michigan law now on the books mandating paid sick days goes into effect in March, as planned, BrickWays’ 18 employees, who currently do not get paid sick days, would get up to nine days of paid sick leave per year. That’s the good news.

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The bad news, she says: There would be fewer workers.

With no place left to cut in the budget, Onan-Swartz says she would be forced to lay off workers to cover the cost of paid sick time. Laying off employees would also inevitably mean cutting services for the disabled, she said.

“It would be devastating to our clients,” Onan-Swartz said.

That’s the balancing act small businesses and nonprofits across Michigan say they grapple with, as employers who don’t currently offer paid sick days pour over spreadsheets gauging who will benefit, and who will suffer, from a policy passed by the Legislature and set to take effect next March.  

“When they legislate that, you’re taking money out of someone else’s pocket,” Onan-Swartz said, referring to business owners. “We can be inventive and proactive, but there is only so much we can absorb.”

BrickWays in Traverse City says it would have to cut services for the disabled, like riding horses, to cover the cost of mandatory paid sick leave, which is set to go into effect statewide in March.

A sympathetic ear in Lansing

There is ample evidence the Republican-led Michigan Legislature already hears, and shares, the business community’s concern.

In September, legislators approved the citizen-initiated initiative mandating that employers offer paid sick leave. The reason: so lawmakers can more easily kneecap the measure later.

The Republican majority didn’t want the initiative, or a similar initiative that lawmakers passed to increase the minimum wage, to go onto the November ballot, where political insiders considered them likely to be approved.

Voter-approved initiatives can only be amended by a three-quarters majority vote of the House and Senate – a heavy lift even for the majorities Republicans now enjoy in both chambers. By approving the sick pay initiative in the Legislature, lawmakers can then amend it with just a majority vote.

The law, as written today calls for:

  • Up to 72 hours (nine days) of paid sick leave for all employees, full-time and part-time. Sick leave is accrued at a rate of one hour for every 30 hours worked.
  • The law applies to all employees, and applies to all employers – profit and nonprofit. Employers with fewer than 10 workers are required to offer 40 hours of paid sick leave and 32 unpaid.

You can read an analysis of the law by the nonpartisan House Fiscal Agency here.

Republican leaders make no secret of their plan to water down the law – likely as early as the lame duck session, which runs from after the Nov. 6 election until a newly elected legislators take over in January.

Rob Fowler, president of the Small Business Association of Michigan, said his organization is advising members not to worry about the paid sick leave law until they see what changes are made by the Legislature.

Little fat to cut in Traverse City

Onan-Swartz said she hopes the law is changed to lessen the impact on her organization, which has struggled with its budget for years.

In 2001, the executive director of BrickWays was paid $80,000, Onan-Swartz said; today, Onan-Swartz earns $55,000. The organization used to pay for employee health insurance that had a $100 deductible for services; today, employees pay 50 percent of the premium on health insurance that has a $1,000 deductible.

The number of employees at BrickWays has plummeted from 34 to 18.

The cuts have been caused partly by payments from the state Community Mental Health Services program that have not kept up with rising costs, Onan-Swartz said.

We’ve been really frugal,” said Onan-Swartz, who drives to work in a 20-year-old car. “Our staff has worked with us. We already have our backs to the wall because we’ve been doing this for years. We have no revenue to offset this because we’re a nonprofit. There’s no profit going to some rich owner that can be cut.”

Onan-Swartz said she told her staff in a meeting recently that if BrickWays is required to restore paid sick leave (72 hours for full-time employees), the non-profit will lay off employees and/or turn some full-time positions into part-time jobs.

“A couple people said, if this goes through, if they lose their full-time position, they will have to look for another job,” Onan-Swartz said. “I told them I understand, they have families.

“We are an exceptional organization. We offer flexibility for school schedules for moms, staff can trade shifts when they are sick,” Onan-Swartz said. “I think forcing any employer to offer paid time off is ridiculous.”

Low-paid workers more likely to lose pay  

Nationally, 62 percent of private industry workers in companies with fewer than 100 workers have paid sick leave. That figure rises to 79 percent in companies with 100-499 employees, and to 87 percent of workers at large companies, according to the U.S. Bureau of Labor Statistics.    

In Michigan, one survey found 42 percent of Michigan workers do not have access to paid sick leave. And low-income workers, the ones who can least afford to it, are far more likely to go unpaid when they are ill. Among those earning less than $15,000 a year, the survey showed 68 percent lose their pay when they are sick.

Ten states require paid sick leave, though none besides Michigan are in the Midwest. One difference in Michigan’s law as it is currently written is that it requires paid leave for more types of employers, and also requires more hours of paid time off, according to an analysis by the nonpartisan Citizens Research Council of Michigan.

Critics say paid sick leave will force layoffs and cause some small businesses to close. But that wasn’t the experience in Connecticut, where business closures were flat and business openings increased 7 percent in 2012, the first year of statewide, mandated paid sick leave.

Advocates of paid sick leave argue it helps provide job and income security to low-income workers, the group least likely to already have the benefit, while opponents point to the economic burden it imposes on employers.

While no specific changes to the law have been put in writing yet, Senate Majority Leader Arlan Meekhof, R-Olive Branch, suggested at the time the Senate passed the initiative that one possible change would be to eliminate the “paid” part of the law – and instead model the state policy on the federal Family and Medical Leave Act.

That law allows workers to take up to 12 weeks off for the birth of a child, medical care for a spouse, child or parent who has a serious medical condition, or a serious medical condition of the worker, but does not require a business to pay workers for that time away.

The Family and Medical Leave Act is also something the Small Business Association of Michigan’s Fowler mentions as a model. “Our mindset is to make it align with Family and Medical Leave Act,” Fowler said

Aside from not requiring paid leave, the FMLA does require an employer to give workers time off for serious health issues, a nebulous term that may or may not include, say, the flu, and may or may not require a doctor’s note.

The FMLA already applies in Michigan, so it’s unclear what additional benefits workers would receive if the state law is changed to mirror the federal law.

Running a business

Proponents of mandated paid sick leave, said Onan-Swartz, don’t realize what it’s like to make budgets balance in a workplace now, without more strains created by a state policy.  

“When these laws take place, people think that we can magically make it work,” Onan-Swartz said. “We already have to have donor funding to make ends meet. If necessary, we’d have to terminate some of our programs for individuals with disabilities that we don’t receive compensation from.

“I am sure the international mega-corporations can take this in stride, but the non-profits, small business owners and professional workers in the middle class have been hit beyond their capacity to recover.”

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Comments

Human
Thu, 10/18/2018 - 9:51am

Businesses around the globe are capable of treating their laborers like human beings with bodies that need to be cared for, why are businesses in the US so incompetent? Are our owners just that greedy or just that ignorant?

Rob Pollard
Thu, 10/18/2018 - 9:54am

I run a business. And I can also do math. So, I'll need an explanation of this statement, "the non-profit will lay off employees and/or turn some full-time positions into part-time jobs."

At the *very* most, Brickways 18 employees (assuming all are full-time) would take 1296 hours of paid leave (18 people * 72 hours). That's the a cost of about 0.6 FTEs (i.e., about 1 part-time employee) . So where is she getting she'd have to lay off employees and/or turn multiple positions part-time?

Heck, it is far more likely that most employees wouldn't take all their sick time -- some would, but others would not. So much more likely, it would be something like 500-750 hours (about 0.3 FTEs) unless she has hired an unusually illness-prone workforce -- unlikely in general, but especially so for what I assume is a workforce that believes in Brickways nonprofit mission.

Is that a cost to be managed? Sure. But her scare tactic solutions show she hasn't looked closely at how to manage it.

Matt
Thu, 10/18/2018 - 12:23pm

I seriously doubt you run a business, if you think that employees will leave unused sick time $'s on the table. It will not take very long for them to figure it out, and sicknesses will spike in December! I or you don't know her exact situation but the 1300 hours easily can look like a $15,000 ++ hole in her budget. It's got to come from somewhere, contrary to most Bridge readers thinking , its not fairy dust.

Bones
Thu, 10/18/2018 - 3:25pm

You know, I think I've figured it out. Conservatives can't imagine a world in which people aren't terrible and abuse the system in every way possible because they are those people

Matt
Thu, 10/18/2018 - 7:35pm

Or maybe leftists think everyone out there is so stupid, unmotivated, helpless and lazy that they can't move on to better opportunity when need be because that's the way they are?

Bones
Fri, 10/19/2018 - 10:18am

Or maybe we believe that most people are hard working and want to be productive, but our current economic system exploits them at every turn. There are so many reason why people are locked into bad jobs. Perhaps they live in a depressed area with few employment opportunities. Perhaps they can't afford to look for a new job because they already work 80 hours. Perhaps they can't afford risking employer healthcare if they're lucky to have it. You let your Libertarian ideology blind you to the cruel realities and non-idealities of the market. But hey, what else is new

Matt
Fri, 10/19/2018 - 9:52pm

The fact that there's a help wanted sign every 200 yards makes any reasonable person skeptical that anyone is trapped in any job if it's really that terrible. No one is trapped unless it's by their own choices. Seems strange that moving for new and better opportunities was common yet in your world today an impossibility. But clearly you have never in your life hired anyone. As they say those who can do, those who can't make excuses and blame others.

Rob Pollard
Fri, 10/19/2018 - 10:35am

Ah, another fake "realist" among the cons -- if you don't believe logic (i.e., most people know if they take a sick day, at least some of the work will still be there when they get back, so taking sick days when you are not sick just makes work pile up) perhaps you can focus on reading. From the link in this story:

"According to a report from the US Bureau of Labor Statistics, employees participating in plans with a fixed number of paid sick days per year used an average of two or four of their sick days annually, depending on industry."

2-4 days. That's it.

This businesswoman is uniformed about the actual costs, and I'll say it again, hasn't demonstrated by her comments that she knows how to plan for them.

David Waymire
Sat, 10/20/2018 - 4:27pm

Actually, I do run a business. And I have to literally remind my staff to use their time or face losing some of it at the end of the year. If you run a business well, your teammates understand they all have much to gain by working together for each other. If you treat your workers like widgets, they will probably not put their heart into their work.

Tom
Thu, 10/18/2018 - 4:51pm

So what happens when three employees at a day care center decide to stay home for some reason (sick, kid's sick, uncle George doesn't feel well) all on the same day. The law says it's mandatory and the hours can be used retroactively. The day care center has mandatory worker to children ratio that it now cannot meet. So parents are called to come pick up their kids and now the have to stay home and so on and so on. Most companies have some paid sick leave policy. These issues are better left to the employer and the employee.

Forensics
Fri, 10/19/2018 - 1:12pm

"So what happens when three employees at a day care center decide to stay home for some reason (sick, kid's sick, uncle George doesn't feel well) all on the same day." This can happen now without having paid sick leave offered! All three workers would still be off work, just not getting paid.

Angela Hill
Wed, 11/28/2018 - 11:54am

This is true, but if the daycare may have people that are employed on a "on call, as needed" basis for those type of situations so they do not have to call parents to pick up their children. If that happens, now they are paying 2 employees, not just one. Regardless, the costs for the building, utilities, etc. will be the same and less kids means less revenue to cover those costs as well.

Nora
Thu, 10/18/2018 - 10:15am

The first thing employers threaten is that people will lose their jobs every time the employees ask for something more. How about you work for the same wages and no benefits, then say they are asking for too much? How about you give up some of your benefits to them?
If you don't pay sick days, people cannot afford to take time off, and so workers suffer.
We come to work every day, and put our all into our jobs. Working hourly for lower wages and no health care or any thought to us. If you have workers coming to work sick, they spread it and are forced to either stay home or feed their families. Workers have been the last thought always, and always the ones looked over-they are basically warm bodies with strong arms.
How about putting your employees first for once?

Gregg Smith
Thu, 10/18/2018 - 10:16am

Having worked with Brickways, I'm familiar with the uncommon level of compassion and care its special needs residents have been beneficiaries of for years. For our legislature to include already strapped NPO's with this kind of legislation speaks to just how out of touch they are with reality. Here's a suggestion: Step away from the rubber chicken reelection circuit for a bit and spend some time at facilities like Brickways---where staff place care and love of our special needs community above already subsistence level and below paychecks.

Jerry
Thu, 10/18/2018 - 10:28am

Our small business has 27 employees. After a year of full time work (defined as at least 30 hours a week) they get Paid Time Off (PTO) to use however they want based on how many hours they have worked. Most get 40 hours a year, some less if they are very part time. The number of hours of PTO doubles at 5 years of employment here. This covers about 60% of employees. If the Paid Leave Time stands as it is the current PTO system will have to stop. We can't afford both, especially combined with higher mandated minimum wages (which we are well above the current minimum).I may need to lay off 3 employees as well.

Susan
Thu, 10/18/2018 - 11:19am

If the legislature is going to change this (and I suspect they will), I would support a change that specifies that PTO, which can be used for illness, would qualify as meeting the law.

Richard Cole
Thu, 10/18/2018 - 10:33am

I am not entirely unsympathetic to the difficulty small businesses often have in making payroll. I have been in that position myself much earlier in my career. But I’ll tell you what make me queezy.

Imagine that a service worker — be they a clerk in a donut shop or a line cook in a restaurant — depends on their weekly paycheck to pay rent or a car note or for food for their family. Now, imagine that he/she wakes up one morning, vomits with a case of stomach flu and then, given no alternative, heads to work to get your donut and coffee, or scramble your eggs and butter your toast. Now, imagine that three days later you wake up and vomit. Would you have paid a dime more for your donut and coffee, or a quarter more for your eggs and toast to avoid getting a stomach flu along with your order?

Joe
Sat, 11/17/2018 - 8:38pm

Here is the problem with your example. If a food service worker is vomiting, they cannot work period. That's the health code, thus it's the law. My employees know that all they have to say is that they are vomiting and can't come in. And I pretty much can't do anything about it. No matter if it's true or not...

Only in the US
Thu, 10/18/2018 - 10:56am

I recently had to undergo Hepatitis shots because I ate in a restaurant where a cook came to work sick!
Really tired of owner crying about lost jobs-why are we so greedy in the US that we can't do the minimum for all our working folks?

Frank Koob
Thu, 10/18/2018 - 10:58am

I'm more aggressive fundraising plan needs to be put in place. The attitude of the nonprofit employer seems to contradict the mission of the organization that person runs. It would be better to say we need to support our workers and their health so we need to either give them the benefit of an Aflac style program and pay for that or pay them for their sick leave time. Either way, we would need to put more energy into our fundraising initiatives to cover the added expense for the welfare of our workers home we treasure very much. I love charitable work, but those who are employed full-time in those services are often very underpaid and need to earn a living wage and have benefits for their future too.

Dan
Thu, 10/18/2018 - 12:04pm

I understand that Brickways is used as an example and may not demonstrate the potential effects that other businesses and orgs might have. However, the bottom line is that there isn't enough money to support the needs of their audience - disabled youth and adults. This is the issue that was there before the paid sick leave law was passed, and it continues after.

If we don't give employees proper wages, benefits, and job security, we just add to the list of those that need help from groups like Brickways.

Forensics
Fri, 10/19/2018 - 1:23pm

More scare tactics and ignorance. If a worker came in and worked on Monday, they will get paid. If that worker called in sick on Monday, they would get paid (under the new law). How is this business woman out more money because of the new law? The work for that day can be distributed equally to others if it's such an emergency. Otherwise, it would get done when that employee returned from sick leave. I just love the kneejerk reactions some of these business owners like to use as scare tactics.

Can't win for losing
Sat, 10/20/2018 - 10:05am

What about the small business that only needs 4 people to run it each day. someone calls in , you have to bring in someone to cover the sick call in and pay both of them. Tell me how that doesn't affect the bottom line ?

Jules
Tue, 12/04/2018 - 11:13am

It doesn't. The work waits for the next day or others chip in if it's an emergency. I run a company of 5. (3) office and (2) field people. Everyone is salary and we offer unlimited sick and vacation time. By doing this I have actually realized that most people take less time off than when we offered 5 sick days and 10 vacation days. In all actuality it does not affect the bottom line at all.

Doug
Sun, 10/21/2018 - 3:43am

A question that did not appear to be asked for this piece: does the NPO director get paid sick days?

Joe Ritzer
Sun, 10/21/2018 - 10:39am

As a former small business owner, I offered vacation time up to 2 weeks paid, paid holidays, and paid funeral time to my employees. Looks to me like vacation time would become sick time under these new guidelines. Government has no business dictating paid sick time.

Jason
Tue, 11/20/2018 - 8:46am

Good job on passing the sick leave law. Now all the companies just took vacation days away from their employees and replaced them with their "sick" days. So there is no new added benefit.

Angela Hill
Wed, 11/28/2018 - 11:45am

I am wondering how this will work with PTO programs that are already in place, especially since PTO may be used for any absence. We currently offer one to four weeks of annual PTO for full time employees that is based on length of service. In addition, we also have a paid Sick Time policy for all employees that allows up to 3 days (on an annual basis) as long as the employee provides a doctor's note. Employees are also allowed to take unpaid days with prior approval as long as the absences are not excessive.

JAS
Thu, 11/29/2018 - 10:38am

I know of a larger organization in town that will not pay sick days unless you are out three days in a row and have a doctor's letter. That means most go to work sick - so, now that sick person has transmitted some illness to every person he or she comes into contact with and a number of those individuals become ill. I am missing the logic of spreading illness.

I realize I am blessed working for a small employer that will pay for sick days if I need them. We don't have a formal sick leave policy. If I am sick enough to stay home - that means the flu and I can't move - I don't care if I'm paid or not and, at that point, I'm not getting out of bed to go to the doctor for a letter. Not everyone has that blessing and they do drag themselves to work, they are not overly productive and spread the illness to others.

Now having said all this, I don't abuse sick days and often don't use any during the year.