The paid sick leave ordinance, approved last year and under review by a  Council-appointed commission since April, will cost San Antonio’s small businesses an estimated $16 million annually, say local economists. But some benefits may come as well.

In its first complete review of proposed changes to the petition-initiated paid sick leave ordinance, City Council on Thursday learned for the first time the economic impact of the ordinance and asked the city attorney to make additional changes to the law ahead of a scheduled vote next month.

The Council’s first look at the Paid Sick Leave Commission’s final draft prompted questions about time limits mandated in the ordinance and whether employers could be required to provide paid sick leave for contract labor, transient employees, and student interns.

The Council, which approved the paid sick leave ordinance in August 2018, is scheduled to vote on the revised ordinance Oct. 3. Before then, it will hear from the public during two feedback sessions, Sept. 23 and 25, and review responses to an online survey.

Legal challenges to similar ordinances in Austin and Dallas are pending. In San Antonio, a group of local businesses in July filed a lawsuit against the City of San Antonio to block its paid sick leave ordinance from being implemented Aug. 1, and a judge approved an agreement to delay implementation until Dec. 1.

On Thursday, Assistant City Manager Colleen Bridger presented the findings of an economic impact report on paid sick leave laws produced by economists Steve Nivin and Belinda Roman.

They reported that the total cost of paid sick leave to small businesses in San Antonio is projected to be $16.4 million a year, or 0.05 percent of revenues. But businesses will benefit from reduced turnover and increased productivity resulting from paid sick leave, the report states.

The studies Nivin and Roman reviewed found that employees without sick leave are more likely to attend work with a contagious illness, productivity declines in the workplace due to illness, workplace injuries decrease when employees are allowed time off, and employers report less turnover when paid sick leave policies are in effect.

These benefits to business are estimated at $10.9 million, the report stated. Fewer emergency room visits and skilled nursing stays will result in savings for the community as a whole at $33 million, according to the report.

Nivin and Roman found that the net benefit to the San Antonio community of the paid sick leave ordinance is projected to be $27.7 million per year.

They also reported that abuse of paid sick leave policies is rare nationwide and the entire community benefits when the use of emergency room services declines, because employees suffering illness are more likely to see a doctor earlier.

“I think the study … showed that paid sick time is beneficial to the community and will make us healthier, safer, and benefit workers and people across San Antonio,” said Drew Galloway, executive director of MOVE Texas, one of two organizations that petitioned for the ordinance. “We were really excited to see that.”

Concern for public health is what guided the City’s Paid Sick Leave Commission in its recommendations, commission Chairwoman Danielle Hargrove said in outlining for City Council the proposed changes.

Charged by the Council in April to shape an enforceable and legally defensible ordinance, the commission discussed potential changes to the ordinance over the course of 15 meetings and three times as many subcommittee meetings.

The primary changes made to the ordinance, besides renaming it the Safe and Sick Leave Ordinance, revolved around how to define employee, employer, and family member; the difference between small, medium, and large employers; how many hours of leave can be accrued; and when an employee is eligible to request paid sick leave.

But the recommendations that Council members questioned most consistently on Thursday had to do with limits on filing complaints and eligibility.

The commission recommended that an employee who believes his or her right to sick leave was denied should have 60 days from the time of “discovery” to file a complaint with the City. The commission also voted to allow employers who already have in place 180-day probationary periods – during which employees can’t request leave – to maintain those. Other employers couldn’t exceed 90 days if they don’t already have a 180-day probationary period in place.

Members of the Texas Organizing Project and MOVE Texas sit in City Council chambers during a special work session about paid sick leave.

Mayor Ron Nirenberg said that although he was “overall pleased” with the recommendations, he felt both the complaint and probationary limits should be more generous. He also requested, based on conversations with the City Attorney’s Office and requests from local union members, that a section of the ordinance regarding employers with collective bargaining agreements be reinstated in the ordinance.

“I’m pleased with the recommendations the commission has made to strengthen the ordinance, keeping with the intent of the petition, but also addressing the legal concerns brought by the plaintiffs,” Nirenberg said.

Councilman Manny Pelaez (D8), who chaired the Council’s ad hoc committee on paid sick leave, said he has received calls from major employers in his district wanting to know if they would be required to provide paid sick leave for interns who are paid stipends.

“That’s no small thing. Internships are a big deal,” he said. “We have big companies signing up to come to San Antonio, and all of them came with economic development agreements” that require employing interns through the City’s workforce development programs.

The ordinance as it is written, Deputy City Attorney Ed Guzman explained, would require an employer to provide earned sick leave to paid interns.

Pelaez also posed the same question about contract labor brought to San Antonio for major events and projects. “This is kind of a bowl of spaghetti we’re trying to tease out, and this ordinance still needs some work,” he said.

Councilman Roberto Trevino (D1) asked if gig economy workers, such as those who drive for Lyft and Uber, would be covered by the law. “[They] are employees, they have employers, and it applies to them as well,” Hargrove said.

Councilwoman Adriana Rocha Garcia (D4) said she was most concerned about the effects on low-wage workers. She pointed out that the economic impact report also cited a study by the Heritage Foundation that stated the paid sick leave ordinances force employers to spend more on benefits than wages and in some cases results in job losses.

Councilman Clayton Perry (D10) said he still has “grave concerns about this paid sick leave … especially for businesses here in San Antonio.”

Natalie Griffith, president and CEO of Habitat for Humanity of San Antonio, attended Thursday’s Council meeting to hear what direction the ordinance would take for nonprofit organizations like hers. Griffith supports the paid sick leave ordinance, as do most area nonprofits, she said, but believes it needs some tweaks.

For example, based on the current maximum accrual rate of 56 hours, she believes Habitat’s 76 part-time employees will be earning paid sick leave hours at a faster rate than full-timers despite the fact part-timers have more shift flexibility already.

In addition, Griffith said, Habitat will be forced to upgrade its timekeeping system and possibly hire a human resources employee. To cover those costs, the organization may need to eliminate some intern positions and training programs.

“We looked at other city ordinances,” Hargrove said of the commission’s work. “None of this is a slam dunk. We recognize there may be some legal challenges there, but our hope was to make it better and not fall into the trap of our sister cities. … We have a pretty good ordinance to withstand scrutiny.”

Guzman told the Council that their requested changes would be incorporated into the ordinance and a draft provided for their review by the end of day Monday.

Shari Biediger

Shari Biediger

Shari Biediger is a journalist and writer in San Antonio, and a business reporter for The Rivard Report.