January 15, 2009

January 15, 2009 | WebMemo on Jobs, Jobs and Labor Policy

Mandatory Paid Sick Leave: The Heritage Foundation 2009 Labor Boot Camp

What Is Mandatory Paid Sick Leave?

  • The Family and Medical Leave Act (FMLA) requires companies with more than 50 workers to provide eligible employees with up to 12 weeks of unpaid leave a year when they or an immediate family member have a serious health condition or after the birth or adoption of a child.
  • Employers must reinstate the worker at the end of the leave and may not discipline or fire employees taking FMLA leave.
  • The Healthy Families Act (HFA) and similar legislation before Congress would require employers to provide employees with paid sick leave benefits. The HFA would require employers to provide at least seven days of paid sick leave.

Policy Concerns

  • The vast majority (86 percent) of full-time workers are already provided paid leave, which they can use should they fall ill.[1]
  • The Healthy Families Act would not increase workers' total compensation. Companies respond to mandated benefits by reducing cash wages. Mandatory sick leave requires workers to take less of their compensation as cash wages and more as time off, whether they want to or not.
  • By requiring employers to provide paid sick leave, preventing them from challenging a suspect certification, and preventing them from disciplining employees who abuse leave, the HFA would encourage irresponsible employees to game the system and dump tasks on their co-workers while still receiving full pay.
  • This harms both co-workers and customers:
  • When a worker takes intermittent leave or takes off work without providing advance notice, employers may not be able to find a replacement worker in time. Instead, two-thirds of employers respond by reassigning the absent worker's tasks to the conscientious employees still working. Workers who misuse sick leave thus force responsible co-workers to cope with a heavier workload.
  • Sometimes, however, jobs cannot be reassigned and replacements cannot be found on short notice. In these cases, the job goes undone--to the detriment of customers. For example, in just one month, intermittent FMLA leave use forced one Verizon office to leave over 8,900 customer calls unanswered.[2]

Economic Effects

  • If Congress makes paid sick leave mandatory, workers total compensation will not rise. Companies respond to higher benefit costs by reducing workers' pay by approximately the cost of providing the benefit. Companies will spend more on leave benefits and less on wages.[3]
  • Mandated benefits have many of the same labor market effects as raising taxes on workers. Therefore, Congress should not raise taxes on workers during the middle of a steep economic downturn.
  • Abuse of the leave granted by HFA would have a detrimental effect on productivity, thereby increasing the cost of business while decreasing incentive for capital investment.

James Sherk is Bradley Fellow in Labor Policy in the Center for Data Analysis at The Heritage Foundation.

About the Author

James Sherk Research Fellow, Labor Economics
Center for Data Analysis

Show references in this report

[1]James Sherk, "Mandatory Paid Sick Leave Need Not Cut Workers' Pay," Heritage Foundation WebMemo No. 2189, January 7, 2009, at http://www.heritage.org/Research/Labor/wm2189.cfm.

[2]James Sherk, "Mandatory Paid Sick Leave Invites Misuse That Harms Co-Workers and Customers," Heritage Foundation WebMemo No. 1450, May 10, 2007, at http://www.heritage.org/Research/Labor/wm1450.cfm.

[3]Sherk, "Mandatory Paid Sick Leave"; Sherk, "Congress Should Consider Alternatives to Mandatory Paid Sick Leave," Heritage Foundation WebMemo No. 1457, May 15, 2007, at http://www.heritage.org/Research/Labor/wm1457.cfm.