Crains New York - April 1, 2013 - (Page 6)

THE INSIDER by Andrew J. Hawkins Paid-sick-leave saga is hardly over “The City Council today, 2013, obviously can’t tell the City Council of 2017 what to do,” said Manhattan Councilwoman Gale Brewer, the author of the bill.“We can’t say to them, ‘OK, so if the economy is doing better you need to pass a new law.’ Or if the economy is not doing better, blah blah blah. By law, we can’t do that.” Grudging acceptance Business leaders last week grudgingly accepted that, for political reasons, a deal on the issue was inevitable.The legislation helps Ms. Quinn blunt criticism from the left as she runs for mayor. It also endears her to powerful labor unions that had pushed for the bill for more than three years and whose get-out-thevote operations could help pave her way to Gracie Mansion. The original legislation would have required all city businesses to provide paid sick days.That number was revised to businesses with five or more workers. Most private sector groups remained steadfastly opposed, although some said they were more concerned about frivolous lawsuits from disgruntled employees and the law’s enforcement rather than the threshold number of workers that would require employers to provide the perk. “Ten or 15 is a reasonable number,” said one private-sector insider. “But the reasonable bill—I think all ap/ wide world photos A year from now, in April 2014, businesses with more than 20 employees will be required to provide a week of paid time off under a landmark deal reached by City Council Speaker Christine Quinn and labor advocates last week. But that threshold will drop to 15 employees by 2015, and could fall further if the next council decides that the city’s economy is stable. Details are still being hammered out, but one provision could squeeze small business more. The legislation is expected to direct the Independent Budget Office in 2016 to study the bill’s impact on the private sector, which the council could use to justify dramatically expanding the number of businesses affected by the mandate—and the number of days off workers are entitled to. SICK-LEAVE SUPPORTERS got their wish: a veto-proof bill giving workers paid time off. sides would agree that the compromise is well worth it.” Curiously, the mandate is triggered only if the economy continues to recover, using the Federal Reserve Bank of New York’s Coincident Index as the metric (see the box). If the economy unexpectedly worsens, the bill would be delayed from taking effect until conditions improve. In an earlier version, the bill called for the mandate to be enforced by the city’s Department of Health. That drew the ire of the city’s many small businesses, especially restaurants. Under the deal hashed out by Ms.Quinn,enforcement now falls to the Department of Consumer Affairs. And fines for violations of the mandate were reduced by half during negotiations, from $1,000 to $500 for the first violation, and from $5,000 to $2,500 for the second. Ms.Brewer couldn’t say whether it would require more manpower to deal with enforcement,but noted that in other cities with similar laws, complaints against business owners per month numbered in the single digits. James Copeland, director of the Manhattan Institute’s Center for Legal Policy, testified at a March 22 council hearing that employers could find themselves the targets of “shake down” lawsuits if the revised legislation doesn’t provide for adequate protections. Political repercussions “There certainly will be workers with legitimate beefs,” Mr. Copeland said. “There will also be attorneys that will actively seek claims, who will go after small businesses.” Many of these bogus claims will result in costly settlements for businesses, Mr. Copeland said. The council said that in order to prevent unsubstantiated lawsuits against business owners, the new bill would require that complaints be filed directly to the enforcement agency. Business will also face added costs as a result of the paid-sick bill, said Michael Weber, co-chair of the Hospitality Practice Group at Littler Mendelson, the nation’s largest labor and employment law firm. “A shoe repair store or a restaurant or a takeout place—labor is a significant part of those businesses,” Mr. Weber said. “Every small business hopes to be a bigger business … But draw the line at a point where those businesses have some minimum amount of revenue that can assume that additional cost.” The one-year phase-in will also give businesses time to start adjusting their budgets, he said. “It gives them a year to plan: staffing needs, cost needs,” Mr. Weber said. “That was prudent on the council’s part.” On the political front,Ms.Quinn’s mayoral rivals are likely to use the compromise against her, saying she caved to business interests.Public Advocate Bill de Blasio, a candidate for mayor,claimed last week that approximately 300,000 workers would still lack paid sick time under the bill. His campaign called the bill “incomplete.” Paul Seres, owner of Manhattan hot spots the DL and Dinner on Ludlow, which both employ around 70 workers, said he is relieved that the final deal appears to be less onerous than the previous bill, but argued that it still amounted to a cost for doing business in New York. “It’s hard to keep the fabric of a neighborhood when you have everybody saying, ‘We want this, we want this, we want this,’ ” Mr. Seres said. “And between that and the landlords, nobody’s going to be able to afford to open up a business in New York City anymore.” Ⅲ INDEX FINGERED A QUICK GUIDE TO A LITTLE-KNOWN, SUDDENLY RELEVANT ECONOMIC INDICATOR Even if you’re the type who chews on economic statistics for breakfast, there’s a good chance you’re not familiar with the Federal Reserve Bank of New York’s Coincident Index. But if you own a small business, or work at one, this numerical stew just became relevant to you. The Coincident Index, created by Fed economists in 1999, plays an important role in a sick-leave bill agreement hammered out by the City Council and the business community last week. If the Fed index shows the local economy is slowing, companies won’t be required next year to offer their employees sick days. The Coincident Index is essentially a localized version of the index of leading economic indicators that the Conference Board has prepared for years. In addition to tracking monthly changes in New York’s unemployment rate, the Fed vehicle also examines wages and average weekly hours worked in the manufacturing sector. It also seems to be pretty accurate: Certainly, it captured the postLehman collapse of 2008-2009 and the dot-com bust early last decade. An online link tracking the index data can be found at http://www.newyorkfed.org/research/regional_economy/cei/nyc_cei.txt. And for all of you folks out there wondering—yes, Virginia, the Coincident Index is composed of simple-weighted and estimated-weighted indices. And here’s the formula, straight from the report that introduced this suddenly highly relevant indicator: —AARON ELSTEIN Suzanne and Lee, AC&C Adopters with Stan and George Meet Suzanne and Lee, two of New York’s Kindest with bff’s Stanley and George. Shy guy Stan watches the world from his windowsill while dapper George stalks ping-pong balls in his tux, but they all love movie night on the couch! Our nonprofit organization rescues thousands of New York’s homeless and abandoned animals each year. Our goal is to place every dog, cat and bunny in a new loving home. But we can’t do it without your help. BE ONE OF NEW YORK’S KINDEST: ADOPT VOLUNTEER DONATE nycacc.org Photo by Donna Svennevik © 2013 6 | Crain’s New York Business | April 1, 2013 OUR CITY, OUR SHELTER. http://www.newyorkfed.org/research/regional_economy/cei/nyc_cei.txt http://www.nycacc.org http://www.nycacc.org

Table of Contents for the Digital Edition of Crains New York - April 1, 2013

IN THE BOROUGHS
IN THE MARKETS
THE INSIDER
BUSINESS PEOPLE
OPINION
BOB PREVIDI
GREG DAVID
REAL ESTATE DEALS
HEALTH CARE REPORT
CLASSIFIEDS
SMALL BUSINESS
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crains New York - April 1, 2013