NFIB Testifies Against Paid Sick Leave

Chairman McGee and Chairwoman Coakley-Rivera and members of the Committee on Labor and Workforce Development:

My name is Bill Vernon. I am the Massachusetts director of the National Federation of Independent Business. A non-profit, non-partisan organization, NFIB is the nation’s and our state’s largest small business advocacy group. In Massachusetts, NFIB represents thousands of small and independent business owners involved in all types of industry, including manufacturing, retail, wholesale, service and agriculture. The average NFIB member has five employees and annual gross revenues of about $450,000. In short, NFIB represents the small Main Street business owners from across our state. On behalf of those small and independent business employers in the Commonwealth, I urge you to oppose House Bill No. 1815 and Senate Bill No. 688, proposals that would require employers to provide paid sick leave.

Massachusetts is already a high-cost state for employers with energy costs, development costs, taxes, unemployment insurance costs, health insurance premiums, and employee salary and benefit costs at or near the highest in the nation. Massachusetts employers are currently implementing the state’s health insurance reform experiment where costs have increased 45% during the three years since implementation in 2006 for small employers and their workers with more costly regulations and mandates pending. Unemployment insurance is projected to jump a minimum of two schedules and stay there for the foreseeable future, increasing Massachusetts employers' costs by more than $200 per employee. This Legislature has -- over the past two years -- increased taxes on corporations, sales, meals, lodging, cigarettes, alcohol and telecommunications, and has given municipal governments the authority to further increase taxes on lodging and meals. New regulations on securing private information will require many small employers to shell out thousands of dollars to be compliant. These costs and mandates are reflected in our state’s slow job growth over the past several years, particularly in the small business sector which has traditionally been the state's job incubator. Small business owners are not a bottomless pit. Now is not the time to impose a new mandate on employers for paid sick leave for employees -- a mandate that will make the state less economically competitive.

Unlike unemployment insurance or workers' compensation, which cover losing a job through no fault of the employee or incurring an accidental injury on the job, having sick leave is unrelated to the employment relationship. Paid sick leave is more akin to health insurance or other voluntary benefits.

Mandated sick leave significantly impacts productivity and operations in small businesses and it is costly. One employee on sick leave would require the average-sized NFIB member business (with five employees) to operate without 20 percent of their total workforce for the duration of the leave or to hire a temporary replacement worker -- a difficult, costly and likely ineffective remedy. 

A new state mandate that prescribes specific employee benefits, like paid sick leave, would restrict the flexibility of employers to provide the wages and benefits that their employees want, and that the employer can afford. If employers are required to pay for sick leave, there are fewer resources available for other optional benefits such as health insurance, retirement programs, or wage increases -- benefits that most would consider to have a more fundamental relationship to the workplace and that impact all workers. Particularly in small businesses, employees appreciate an employer that can tailor their benefits to their particular needs and desires.

In short, paid sick leave is not an essential benefit, or even useful, to many workers. If mandated in Massachusetts, paid sick leave would leave Massachusetts employers in a less competitive position. Time-off issues are currently worked out in thousands of small businesses in the Commonwealth every day without government intervention. The government mandate is an economically dangerous imposition of additional costs on many Massachusetts employers.