Mar 25

With the Court of Appeals upholding Milwaukee’s paid sick leave ordinance yesterday many of us who have employees will be impacted to some degree, at least until the state legislature enacts a bill to prevent such ordinances.

How will this affect us and what can we do to minimize the impact at a time when many owners are struggling just to survive?

We knew this referendum would pass at the ballot box. Why wouldn’t it pass? The referendum was presented in a way that made is sound like you were voting for free beer or free rent.

On the surface it would appear that it could cost my company $35-45k in direct wages and probably $2-3k in compliance cost such as developing an effective method of tracking the hours earned.

A couple of years ago I was discussing this with another business owner. His reaction was similar to mine; move as much of the company as possible outside the city limits.

But once you read the ordinance it seems the impact can be much less.  We ultimately decided we could integrate the mandate into our business at minimal cost to us.  Two and a half years ago, the day after the referendum passed, we implemented a paid time off policy that complies with the ordinance without negatively impacting our costs nor negatively impacting our employees.

The ordinance’s language allows for any paid leave policy that allows at least one hour paid leave per thirty hours worked and can be taken at will.  Before the changes our company gave all employees a week of vacation after a year and six paid holidays.  For a total of eleven paid days off.   We have always allow employees to take the vacation time in half day increments and have allowed them to do so without advance notice for personal emergencies.  There is no law that requires paid holidays or vacations. So we reduced our paid holidays to two, Thanksgiving and Christmas.  The other nine days are now available as paid time off.

This reduces the impact to just the admin costs.  We did this change through a software change so the impact was 6-10 programing time.

New employees that would not have vested vacation time under our old policies presented a potential cost, especially as so many new employees start of strong to impress their new employers and then revert back to the ways that probably led them to looking for a new job in the first place. .  So we reduced our starting wage for laborer type employees by 75¢, which represents the cost for new employees when you take into consideration the percent that wash out before they would have earned vacation time.

One owner I spoke to is taking it a step further and eliminated all holiday pay to compensate for his compliance costs, giving the employees just the mandated nine days paid time off.  I have also heard from some employers that they are reducing wages across the board by 4% to offset the costs. For me the preference was to do this with zero impact on the employees, but also zero impact on our company.

Actually I feel a general paid time off policy is much more equitable for all employees.  If you framed it as sick days some employees would never take a minute and others would take every minute available.  Also an open time off policy eliminates debates between employer and employee over what is a legitimate sick day.  Here you go – one hour for every 30 worked. You don’t have to pretend you’re sick, so don’t call in with a fake cough when I can hear the tailgate party starting in the background. Nope, the time is yours.  Use them it at will, but when they’re gone they’re gone.

Beyond this however I think many of those who voted for the referendum will have regrets.  This will force open some union contracts at a time of a serious economic downturn.   Timing could not be worse for those workers affected.

The worse impact is that businesses that may have considered locating in or expanding to Milwaukee will perceive our city to have an anti business climate thereby reducing overall jobs in the city. Mayor Tom Barrett gets this one right.  By impacting only Milwaukee it will have a terrible effect for on workers as well as  all of us that have invested heavily in MIlwaukee.

The businesses that will be most affected immediately are places like restaurants  where there is often no paid time off. Fast food workers and dishwashers will see a benefit, but where the wait staff’s primary source of income is tips the wage portion is typically just two something an hour.

The temp agencies that are so prevalent throughout the city, such as those on Mitchell Street and Greenfield Ave will also face challenges that may force them to the burbs .  They employee huge numbers of area residents.  Most of these firms operate out of rented storefronts.  I am certain you will see many, if not all of these firms packing up and moving to West Milwaukee, West Allis, Glendale, etc.  While many of their employees will follow them it will create a glut of vacant store fronts on already struggling commercial districts.

Finally I wonder if the leadership at Manpower are kicking themselves in the butt for taking a $78 million dollar gamble and moving INTO Milwaukee a couple of years ago year.

While I have not read the lawsuit I also question how this ordinance can coexist with Wisconsin Statute §108.04(5)(g)(b) and (c) (Denial of UC benefits) You can read the ordinance in a manner that seem to conflict with these sections of the law

108.04(5g)(b) For purposes of this subsection, tardiness becomes excessive if an employee is late for 6 or more scheduled workdays in the 12-month period preceding the date of the discharge without providing adequate notice to his or her employer.

108.04(5g)(c) For purposes of this subsection, absenteeism becomes excessive if an employee is absent for 5 or more scheduled workdays in the 12-month period preceding the date of the discharge without providing adequate notice to his or her employer.

So rather than a give away, most employers can simply restructure current benefits and be in compliance.

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