San Francisco Tries New Sick Leave Policy

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San Francisco began the nation's only mandatory paid sick leave policy one year ago. Now, a dozen states and the District of Columbia are watching San Francisco's progress as they consider whether to adopt similar policies.

STEVE INSKEEP, host:

And now let's look at the health care system as it is now. About 40 percent of the nation's private sector workers have no paid sick leave. That's according to the Bureau of Labor Statistics. One year ago, San Francisco attempted to address that problem by becoming the first city in the nation to mandate paid sick days for all workers. Business groups worried that rule would be costly and confusing.

One year later, Shia Levitt looks at how local employers are dealing with the change.

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SHIA LEVITT: At a taqueria in San Francisco's Mission district, employees slice meat and prepare salsa for the lunchtime crowd. Francisco Hernandez has co-owned the El Metate taqueria for five years. When the paid sick leave rule passed, Hernandez worried it might cost him so much he'd have to close down.

Mr. FRANCISCO HERNANDEZ (Co-Owner, El Metate): My biggest concern was the people taking advantage of it. You know, taking time off, abusing it.

LEVITT: Under the law, workers can earn one hour of paid sick leave for every 30 hours worked. Hernandez had offered five vacation days per year. Now his employees accrue up to nine sick days instead, but he'll let workers with leftover time use it as vacation or cash it out at the end of the year. He says, so far, his 10 workers have used much less sick time than he had expected, just $700 worth for one year.

Mr. HERNANDEZ: I think we overreacted, even myself. I thought it was going to be worse.

LEVITT: Donna Levitt oversees the city's Office of Labor Standards Enforcement and says overall implementation has been smooth.

Ms. DONNA LEVITT (Office of Labor Standards Enforcement): We haven't heard of any rampant paid sick leave abuse. We also haven't heard that the costs of paid sick leave have ended up being anything that employers couldn't manage.

LEVITT: But some larger companies with regional delivery drivers or roving temp workers say it was no easy task to ensure workers with irregular hours earn the right amount of leave. Craig Nelson of Nelson Staffing says he paid out fewer sick hours than he expected, but it cost him at least $50,000 to create a system to track the leave earned and spent by the 20,000 temps placed by his agency last year.

Mr. CRAIG NELSON (Nelson Staffing): We have consultants that might work half their time in San Francisco and then half their time in another county right next to us, so we had to make sure we were only accruing for those hours that they worked in San Francisco.

LEVITT: The city already puts a burden on local businesses by mandating everything from a higher minimum wage to health care. Bill Stone owns Atlas Cafe, a couple blocks from El Metate in the Mission District. He says sick leave hasn't been as expensive as expected, but it's piled onto the city's already high business costs.

Mr. BILL STONE (Owner, Atlas Cafe): There's payroll tax here in the city and then there's high minimum wage. Beginner employees get paid $9.36. So it's kind of - it was just one more thing, you know, are we going to be able to handle this without raising our prices past what people are willing to pay?

LEVITT: In fact, the cumulative cost of these policies make it hard for local businesses to compete, so says city Chamber of Commerce spokesman Jim Lazarus.

Mr. JIM LAZARUS (Spokesman, San Francisco Chamber of Commerce): We're best served by common work rules. The broader geographic area that have similar benefits, similar mandates on business make us, you know, without a competitive disadvantage. And so, from our point of view, if I was telling other cities or regions in the country, deal with these issues at the state level and not at the city level.

LEVITT: Business leaders fear paid sick leave mandates will hurt bottom lines and will drive businesses away. So far, that doesn't seem to have happened. Still, no study has yet isolated the impact on business or job growth, and it may take some time for many new and part time hires to fully accrue and use the maximum amount of leave. Now some dozen states and the District of Columbia are watching San Francisco as they consider whether to adopt similar policies. For NPR News, I'm Shia Levitt in San Francisco.

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