Senate Strikes a Blow to California’s Smallest Businesses by Mandating Family Leave

As if small businesses weren’t hurting enough, California’s senate voted last week to pass Gov. Newsom’s proposal to mandate job-protected family leave for businesses with as few as five workers.  If SB 1383 becomes law, very small business would be forced to hold open a job for up to three months for employees who become new parents or who want to care for a sick family member.

Currently, companies with 50 or more employees are required to provide three months of leave for employees to care for a family member.  The requirement for parental leave has a lower threshold at 20 or more employees.

There’s a good reason for leaving out very small businesses from these requirements.  A business with five employees is already running on a tight ship.  Guaranteeing three months of leave means that at any given year, a business owner could see labor cost jump as much as 25 percent for an employee because the owner would need to hire a temporary replacement for that worker.  With California small businesses already struggling to pay rent, insurance, and other costs due to the coronavirus, this new mandate may force many small business owners to throw in the towel altogether.

SB 1383 also exposes business owners to massive legal liability, not to mention administrative headaches.  An employee, for example, doesn’t have to take the entire 12 weeks at one time. He or she could go on leave for a few weeks, a few days, or even a few hours. And the leave must be tracked to ensure compliance, or risk litigation.

Liberals have long excoriated the “big bad corporation” in this country.  But now California has taken the lead in going after the naughty little business owner.  Sacramento’s professional politicians lack the imagination for, (or in Newsom’s case, conveniently forgot), what it’s like to own a small business.  More often than not, very small businesses are comprised of family members, friends, school chums, and former business associates.  For these folks, it’s personal.  They often bend over backward to accommodate a valued employee who needs extra time to take care of a new baby, an elderly parent, or deal with a personal illness.  Small business owners want lifetime employees, long years of experience on the job, and people willing to stay on during thick and thin.  A nanny government isn’t required to tell business owners how to treat their employees.

Apparently, even some Democrats were squeamish about the bill.  They urged fellow legislators to stop fast-tracking it in order to allow more input from small businesses. But SB 1383 was passed as part of the 2020-21 budget bills, which means that it skipped the typical policy debate. But proponents of the bill like Sen. Hannah-Beth Jackson (D-Santa Barbara) pushed forward anyway, “This issue has been analyzed for years, for decades.”

That’s probably why it never became law, until perhaps now.

Rowena Itchon is senior vice president of the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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