SB 1383 is Bad Medicine for a Sick Economy

John Kabateck
President, Kabateck Strategies

Small businesses, of all economic sectors, have been hardest hit by the Covid-19 pandemic. The most stricken industries – restaurants, hospitality, tourism, entertainment and personal services, and their supply chains – are disproportionately served by small businesses. 

According to Homebase researchers, “While large corporations have largely been able to avoid mass layoffs, the same can’t be said for small businesses. Most hourly workers cannot work from home. As a result, they felt the impacts of lockdown orders at a disproportionate level.”  

But instead of seeking every opportunity to lighten the load on small business owners desperate to recover, the Legislature is instead rushing to create a costly new mandate, even as the pandemic is again resurging in many areas of California. 

This week the state Senate is debating SB 1383, by Sen. Hannah-Beth Jackson, which would require any employer with as few as five employees to provide 12 weeks of protected leave each year for employees’ medical care, or family members’ medical care. 

It gets worse. Even an unintentional mistake in complying with this difficult new mandate could subject small businesses to litigation. Now is hardly the time to place such burdens on employers who are struggling to reopen and rehire their workforce.

According to the Employment Development Department, some 400,000 small businesses employ between five and 50 workers. Few of them have the systems and resources to track and manage leave, while at the same time needing to hire a temporary replacement or pay existing employees overtime to get the job done.

Providing leave is not as simple as just counting out 12 weeks on a calendar and providing that time off.  For medical conditions, employees can take the leave in increments as small as one to two hours at a time.  An employee is only required to provide an employer with “reasonable notice,” which is subjective and can literally be minutes before a shift begins – leaving an employer with limited employees in a challenging situation. 

Even though the required leave is not “paid” by the employer, the employer will inevitably endure added costs. The leave is “protected,” meaning an employer must return the employee to the same position the employee had before going out on leave, requiring the employer to hold a position open for three months or more. While an employer can temporarily fill the position with a new employee, short-term employment usually costs a premium. A short-term replacement inevitably will be less committed to the organization and is more likely to leave on short notice for a better opportunity. Also, many jobs require costly and time-consuming training for new employees. And while employers may not be paying the salaries of employees on leave, they are very likely to be maintaining health benefits while the employee is out. 

Perhaps most cruelly, legislative passage of AB 5 in 2019 has restricted or even eliminated the option to hire an independent contractor to fill the position. 

This proposed 12-week leave of absence on small employers cannot be viewed in isolation. It is the latest leave proposal, and probably the most burdensome, but should be considered in light of more than a dozen other protected, mandated leaves – each of which an employer must track and juggle, ranging from pregnancy disability leave, to paid sick leave; from jury duty leave to school activities leave.

The coronavirus pandemic has created the greatest disruption to the California workplace in generations. The solution to our economic crisis is to nurture those workplaces back to health, not to inflict on them more expensive, disruptive mandates. The Legislature should reject SB 1383.

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