Small businesses are bracing for another year of costly compliance change and complexity from Washington, D.C. While expecting a cascade of regulations, focus is on three priorities—the Affordable Care Act, Fair Labor Standards Act overtime regulations and mandatory paid family and medical leave.



Proposed Legislation Means Smaller Businesses Would Be Required to Provide Unpaid Sick Leave Similar to The Family and Medical Leave Act

If one word could explain in a single word the sentiments of employers toward federal paid leave legislation, that word would be “mandatory.” Most employers, including small business, try to tailor paid sick and family leave benefits to their workforce and business conditions.

However, in addition to many states considering paid sick leave, they are concerned about federal legislation that would require employers to provide a specific paid leave formula, subject to federal oversight, enforcement and penalties, as well as potential employee lawsuits in federal courts.

President Obama and a number of lawmakers have endorsed the Healthy Families Act, HR 932, legislation that imposes a federal mandate on almost all employers to provide employees up to 56 hours or 7 days of paid sick leave per year.

Under the bill, employees would accrue one hour of paid leave for every 30 hours worked and would be entitled to use earned paid leave beginning on the 60th calendar day after their start date. A “Covered Employer” would be any employer that employs 15 or more employees.

Even the smallest of businesses would not be exempt; the proposed legislation mandates that employers with fewer than 15 employees “may” provide paid sick time, but if they do not, they must provide no less than 56 hours of unpaid sick time to each employee per year—essentially gutting the existing small business exemption in the Family and Medical Leave Act by requiring small employers to provide unpaid sick leave time each year.

A number of employer organizations have gone on record in opposition to the proposal, with the Society for Human Resources asserting it was “the wrong approach” and would “limit employer flexibility” and “stifle workplace innovation.”

To the relief of most employers, particularly smaller businesses, congressional Republicans have said they have no plans to bring up mandatory paid leave legislation this year. Indeed, House Speaker Paul Ryan (R-WI) recently characterized the legislation as “another federal entitlement” and made clear the bill would not be approved in 2016.

Meanwhile, a number of states and localities have enacted or are considering mandatory paid leave laws. These include California, New Jersey and Rhode Island, as well as cities like San Francisco, Seattle and New York. Washington, D.C. is considering a 16-week paid family and medical leave entitlement that would provide 100 percent of pay for employees making up to $52,000 a year, financed by a new payroll tax on employers.

Upcoming Elections Renews Focus on These Issues

Election 2016 has begun to focus on the Affordable Care Act, new FLSA overtime regulations and mandatory paid family and sick leave. Meanwhile the U.S. economy seems to be slowing, as fourth-quarter GDP expanded at only a 0.7 percent annual rate and 2015 registered growth of just 2.4 percent. Employers need to keep an eye on both the economy and the costly burden of regulatory compliance. They can only hope political candidates do the same.

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