Thanks to an economy that is increasingly interwoven, more businesses than ever before are operating across local, state and even national borders. This development is even true for small businesses, which aim to take advantage of new markets outside their communities. As the owner of a cookie business that sells product in every state across the country, I know this to be true.
Unfortunately, there are major drawbacks to operating in different areas and empowering multiple local economies. Chief among them is the patchwork of local and state regulations that must be abided by; one example being paid leave laws.
While paid leave regulations—or policies that mandate employees to be offered a certain amount of paid time-off—are beneficial to employee morale and job satisfaction, the rules change from one area to another. Therefore, it can be very challenging and expensive for a small business to comply.
In fact, a recent survey of human resources and labor law professionals found that 69 percent of respondents are worried about compliance issues arising from this minefield of paid leave mandates. This can be an even bigger challenge for small businesses, which operate within a limited budget and cannot absorb these additional costs and legal fees with any degree of ease.
The core issue is that paid leave policies are signed into law as “one-size-fits-all” measures that apply to all enterprises. However, there’s a huge difference between the local family-owned business and the multinational corporation with a skyscraper downtown.
Small business owners already know we need to be competitive to attract the best talent. We usually do this by offering higher wages and strong benefits packages to begin with. But when we’re told we must comply with onerous paid leave policies that vary by municipality or state boundary, many small business owners have to funnel resources into compliance efforts—funds that could have been better spent on business expansion and employee compensation.
For example, one report found that the average small business spends $12,000 per employee on efforts to navigate the long and complicated list of government regulations. And if businesses aren’t able to fully comply, entrepreneurs face legal costs averaging $125,000—a figure that doesn’t even consider the validity of the claim. For operations already on a tight budget, these expenditures can be backbreaking.
It’s clear that a one-size-fits-all approach is far from ideal, given the wide variance in business structure and the empirical data showing the costs incurred.
Policymakers should adopt a more flexible approach when it comes to paid leave regulations. Thankfully, this is a direction that continues to be explored.
In 2018, the House Education and Workforce Committee considered legislation that would encourage employers to offer paid leave and other workplace flexibility benefits. More specifically, depending on company size and employee tenure, the Workflex in the 21st Century Act, would allow business owners to voluntarily offer these benefits to employees in exchange for being exempt from varying local and state paid leave laws.
By granting employees more control over their schedule without creating further burdens on small business owners, this measure would give employees the opportunity to maintain a better work-life balance. Compressed work schedules, telecommuting, job sharing, and other aspects make this sensible policy a win-win for employers and employees alike.
At the end of the day, 85 million Americans rely on small businesses in order to make a living. It’s a cruel twist of irony that paid leave policies that are meant to help families end up acting as an obstacle to the success of the small businesses that countless families depend on.