AN ACT MANDATING EMPLOYERS PROVIDE PAID SICK LEAVE TO EMPLOYEES.

Agency Affected	Fund-Effect	FY 12 $	FY 13 $
Labor Dept.	GF - Potential Cost	None	$0-$169,720
Comptroller Misc. Accounts (Fringe Benefits)¹	GF - Potential Cost	None	$0-$40,235
Various State Agencies	GF - See Below	See Below	See Below
Labor Dept.	GF - Revenue Gain	Potential Significant	Potential Significant

Explanation

The bill requires employers with 50 or more employees to provide their service workers with paid sick leave under certain circumstances. The bill does not apply to day or temporary workers.

Full-time and permanent part-time state employees currently receive paid sick leave. As this bill excludes day and temporary workers it is not clear how many, if any, state or municipal employees this bill would potentially impact. Any fiscal impact to the state or a municipality would be equal to the cost of the absent employee's wages and associated overtime costs, if applicable, and is expected to be minimal.

The bill requires the Department of Labor (DOL) to utilize wage information already submitted to the department to determine which employers meet the criteria established in the bill. Making this determination is not anticipated to result in a fiscal impact to DOL.

The bill allows complaints to be filed with DOL if an employer violates any of the bill's provisions. Whether the department will incur costs depends on the number of complaints filed and the resources required to handle them, these estimates range from $0 - $169,720 (plus fringe benefits) in FY 13. ²

Potential Costs -- Low Range

The low range of potential costs is based on the City of San Francisco's experience with paid sick leave. The City of San Francisco implemented a paid sick leave ordinance in 2007. This ordinance applies to employers of all size; covering an estimated 548,000 employees. According to the division manager of the Office of Labor Standards Enforcement, there have been 228 complaints filed since 2007, or 4. 75 complaints monthly. No additional staff was hired to investigate and hear complaints from this ordinance. Based on the San Francisco complaint experience, the bill would result in a minimal number of complaints which would not require additional resources for DOL.

Potential Costs -- High Range

The high range of potential costs is based on the number of complaints received by DOL for the Family and Medical Leave Act (FMLA). Two Staff Attorneys review approximately 100 cases annually for probable cause hearings under FMLA, resulting in approximately 20 hearings per year.

Based on the volume of complaints received by DOL for FMLA, it is estimated that DOL may incur costs up to $169,720 in FY 13 to hire two staff positions, plus fringe benefits costs of $40,325. ³

Civil Penalties and Appeals

The Labor Commissioner's decision to reward appropriate relief for a complaint may be appealed in Superior Court. Any administrative appeals could be accommodated by the Judicial Department and the Office of the Attorney General without requiring additional resources.

The bill provides a $500 civil penalty and a $100 civil penalty for certain violations of the bill. This results in a potential minimal revenue gain to DOL.

Notice Requirements

Finally, the bill requires employers of eligible service workers to provide notice to such employees, which may result in minimal costs to the state and municipalities as employers. DOL may develop regulations regarding the means by which employers must provide notice. The development of such regulations could be accommodated by DOL without requiring additional resources.

Senate “A” strikes the original bill and its associated fiscal impact. The amendment becomes the bill and its impact is discussed above.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

¹ The fringe benefit costs for most state employees are budgeted centrally in accounts administered by the Comptroller. The estimated non-pension fringe benefit cost associated with personnel changes is 23. 76% of payroll in FY 12 and FY 13. In addition, there could be an impact to potential liability for the applicable state pension funds.

² The earliest a service employee can begin accruing sick leave is January 1, 2012. Employees must work at least 680 hours after the leave begins accruing before they can use it. Assuming a 40 hour work week, the earliest an employee could use such leave would be May 2012. It is assumed that any complaints, investigations and probable cause hearings would not commence until July 2012, which is FY 13.

³ A Wage Investigator annual salary is $71,108, with fringe benefits of $16,895. A Staff Attorney II annual salary is $98,612, with fringe benefits of $23,430.

Municipalities	Effect	FY 12 $	FY 13 $
Various Municipalities	STATE MANDATE - Potential Cost	See Below	See Below