The number of protections being extended to workers across the country these days seems to be growing, and a number of states are consequently moving to adopt new laws that give added flexibility to workers. Massachusetts, for instance, recently instituted a law that would potentially endanger many smaller businesses financially.
Under the law, which passed as a ballot initiative in the state late last year, employees are entitled to paid sick time at any company with more than 11 employees, to be accrued up to 40 hours over the course of the year, according to a report from Watchdog.org. And while this is mostly targeted at massive companies with a massive footprint and workforce – those that tend to hire workers at the minimum wage or close to it – the fact that the number of employees can be as low as 11 could have a major impact on small businesses in the Bay State. And if the law catches on elsewhere, the issue could spread.
What’s the issue?
A recent poll found that nearly 2 in every 3 employers in Boston will be trying to expand in the next few years, and almost half will try to hire more, the report said. But at the same time, those entrepreneurs are making personal sacrifices to do so; more than 2 in 5 also say they either delayed or decided to entirely forego their own pay for at least two weeks, a number that’s up considerably from the 31 percent on a national basis who responded similarly.
So while larger companies can, theoretically, absorb the financial impact of such a law with little effect on their bottom lines, smaller ones probably cannot, the report said. And these companies tend not to have the influence of their bigger counterparts, so their lobbying power to better protect themselves from these rules is likely to be limited.
Implementation and impact
A recent study by the Massachusetts Attorney General’s office did not, as is required by law, examine the exact financial impact of the new rules for businesses large and small, but simply noted that it did not believe the law would deter the formation of companies in the state going forward, the report said. And while that may be true state-wide, there is some concern about what companies within a short drive from the New Hampshire border might end up doing in the near future. The Granite State is known among Massachusetts residents as having a very relaxed tax code, meaning that some owners might see fit to pick up stakes and move across the border if the cost becomes too onerous.
In the meantime, entrepreneurs who are concerned about more costs as a result of new regulations might want to think about the benefits of finding other ways to save money. That could include shopping around for more affordable small business insurance, including errors and omissions insurance, to potentially free up thousands of dollars per year.