New Rule Could Push Small Businesses Out of Federal Contracting

Date: April 11, 2016

Mandatory Paid Sick Leave Adds to Administrative Burdens

For Immediate Release
Andrew Wimer, 202-314-2073 or 703-298-5938 (cell)
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Washington, DC (April 11, 2016) – A new federal rule requiring federal contractors to provide paid sick leave would be costly for many small businesses and could push them out of federal contracting all together. The National Federation of Independent Business submitted comments to the Department of Labor expressing concerns with the new rule and asking for it to be withdrawn.

“The Department of Labor is rushing this new mandatory sick leave requirement into effect without fully understanding what it could do to small contractors,” said Dan Bosch, NFIB Senior Manager of Regulatory Policy. “The cost and complication to small businesses could give larger contractors a big advantage in the coming years. The end result will be fewer small businesses able to compete for federal contracts and possibly greater expense to taxpayers.”


The new rule would mean increased costs and complications both for small businesses who do and who do not currently have a paid sick leave program. NFIB research has shown that 73 percent of small businesses already provide paid leave. Many of these businesses allow workers to take paid leave for any use. Government mandates could force some employers to actually be less generous with their leave policies.

“Small businesses that can afford leave typically aren’t restrictive with how employees use their time,” said Bosch. “An employer could be forced to cut back on vacation in order to ensure they are providing enough sick leave. A firm with only a handful of employees simply can’t get the job done is they don’t have staff available.”

Additionally, the NFIB is concerned that the rule was rushed through the regulatory process without proper time to consider its effects on small business. The typical 60 day comment period was shortened to 47 days. The DOL also underestimated the amount of time a typical small business owner would need to understand and implement the new policy.

“Bureaucrats at the Department of Labor seem to think that it is easy to sort through the new red tape they’ve created,” said Bosch. “For example, they think it would only take an hour for a typical business to understand the rule. Just reading the pages of guidance could take that much time, let alone understanding it well enough to implement or make changes to paid leave policies.”


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