Paid sick-days: Managing a small business in New York City is about to get more expensive!

By | January 19, 2014

title insurance, New York,New York City,Long Island,Michael HaltmanNew York City Mayor Bill de Blasio, in conjunction with City Council Speaker Melissa Mark-Viverito, has proposed a law to expand paid sick-days to firms with five or more employees!

At about the same time businesses are facing the economic uncertainties that the implementation of the Affordable Care Act will have on their cost of doing business, the new administration in charge of New York City is adding to that angst with a revision to a bill that will mandate paid sick-days for all employees.

For small businesses already operating on slim margins any additional, unexpected and therefore non-budgeted for expenses could mean: the difference between profit and loss, between adding additional workers or actually having to cut staff and even between continuing to locate in New York City or to perhaps make the short move across the river to New Jersey.

As the article below from Crain’s New York explains businesses that will be affected numbers in the thousands as the new provisions in the bill brings the employee threshold from the previous minimum level of 15 down to 5.  Implementation for these small businesses is slated for April 1.

To put the potential impact into dollars and cents, take a business with 10 employees paying employees on average $20 an hour for a 40-hour week ($20 does not take into account any of the additional expenses such as Social Security taxes and other benefits).

That would mean 400 extra hours needed to be paid or an added hit to the firms bottom-line of $8,000 a year. While to many that may not sound like an much, for many businesses that are struggling day-to-day to stay above water it could be a death knell (assumes that each employee will use all of the additional sick-days)!

From Crain’s New York:

Sick-days expansion blindsides

The clock is ticking for tens of thousands of small business owners who must prepare for an expansion of the city’s paid-sick-days law.

Business executives were shocked last week that Mayor Bill de Blasio and City Council Speaker Melissa Mark-Viverito would unveil, without any public discussion, a new law that eliminates hard-fought exemptions meant to protect vulnerable enterprises.

While large firms have had a year to comply with the changes, small businesses will have only until April 1 to ready themselves for the expanded version of the law, whose passage by the City Council is now a mere formality. The proposed revision, to lower the threshold to firms with five or more employees, leaves retail shops and restaurants that pay by the hour scrambling to make financial arrangements to cover the unplanned expense.

“Having employees take off and still be paid—that will definitely push us over the edge,” said Rakan Ammouri, owner of the West Village’s Path Café, which employs fewer than 10 people. “I would love to pay the employees to rest when they are genuinely sick, but unfortunately, I just can’t afford it as an employer and have the restaurant stay above water.”

The existing law, passed last spring, gives workers at least five days of paid time off per year. Its planned implementation in April had applied only to companies with at least 20 employees. Businesses with between 15 and 20 workers were given until 2015 to comply.

The deal announced last week eliminates those changes. It also does away with “economic trigger” language that would delay the legislation if the economy slumps. An exemption for the manufacturing sector will be removed, and grandparents, aunts and uncles will be added to the definition of family members allowed to take days off to care for sick children. The Department of Consumer Affairs will still be the enforcing agency, even though it currently lacks the capacity of a regulatory body.

In Manhattan alone, the expansion will hit more than 28,000 additional businesses that have between five and 20 employees, according to census data compiled by real estate firm Studley Inc.

The de Blasio administration said the law will cover an additional 355,000 New Yorkers, 200,000 of whom do not currently have any paid sick leave.

Business groups, like the Manhattan and Brooklyn chambers of commerce, fought the bill for years. Yet last week, they released statements applauding the mayor and City Council for addressing the needs of workers, offering only the most tepid protestations (see Insider). “We do continue to be concerned with the costs of doing business in New York City and the burdens placed on the backs of the small business owners,” said Nancy Ploeger, president of the Manhattan chamber.

A better threshold

Some wonder if the law may be too harsh for companies that are just starting out. Offering paid days off would have been impossible for Christina Ha, who opened Macaron Parlour on St. Marks Place in 2012 with her husband, Simon Tung, during the shop’s first few months in business.

“The budget just wasn’t there,” said Ms. Ha, who is opening a second location on Columbus Avenue next month. “We probably couldn’t have done this when we were at five employees without taking a real financial hit, so I understand how tough it can be.” She noted that 10 employees might be a good threshold to allow employers more flexibility.

Because many small businesses, such as restaurants, pay workers by the hour, having an employee out sick often means paying twice for busy shifts, like the lunchtime rush.

“It’s a huge burden for the restaurant industry,” said Andrew Schnipper, co-founder of Schnipper’s Quality Kitchen, a local chain known for its burgers and milkshakes. “I have to spend the money for that shift whether that employee is there or not.” He feared that paid sick leave will be abused. Schnipper’s already provides vacation time for employees who work at least 40 hours a week and plans to convert that benefit into the new mandated sick leave. “I can’t afford both,” he said.

Advocates say that tipped workers are unlikely to take off work unless they are truly sick.

Some businesses applauded the change. Young Cheng, manager of Cafe Hestia, a deli on Third Avenue, noted that his company, which will be affected by the law’s revision, has a sick-leave policy for employees. “[Five paid-sick-leave days] is just a little thing,” he said. “Employees are human beings as well.”

Many companies, of course, already offer sick leave, but business owners say they prefer to make that decision themselves. Alex Woo, who founded a namesake jewelry company in Manhattan more than a dozen years ago, said she was surprised that there even needed to be a mandate. Her 15 employees get sick days off.

“People get sick, and I understand it,” she said. “We’ve always wanted a good work-life balance for all of our people in not having to worry about not getting paid when they’re actually sick.” (Source)

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