St Luke’s Comes Out Against ‘Earned Sick and Safe Time’ Ordinance

DULUTH, Minn. — St. Luke’s — one of Duluth’s largest employers — sent a detailed letter to city councilors Wednesday with their disapproval of the proposed Earned Sick and Safe Time ordinance.  This comes after more than 20 restaurants in Duluth came together to oppose ESST.

April 3, 2018

Dear City Councilors:

Despite the robust process around the proposed Earned Sick and Safe Time ordinance, St. Luke’s continues to have significant concerns about the negative impact the proposed ordinance would have on our employees and our patient care operations. I have laid out our specific concerns below.

Economic Impact:
Employee Impact: St. Luke’s has 2869 employees and not even one single employee is paid at minimum wage. We have a generous benefit package that includes a defined contribution pension, 401(k) with matching contributions, health insurance, life insurance, dental insurance, short term disability, long term disability, tuition reimbursement, paid funeral leave and we send flowers to our employees who have a child, are hospitalized or have a death in their family. The unfortunate reality of passing this ordinance is that wages and benefits, such as those just mentioned, will likely be reduced for employers to bear the significant costs of implementing this ordinance.

Cost of Leave:
St. Luke’s has 314 staff in the City of Duluth who are not benefit eligible but would qualify under the ordinance1. The actual average hourly wage of the potentially affected employees is $26.88 per hour. If each person took the 5 allowed days per year, the annual cost would be $337,612 without replacement costs. If 25% of the shifts go unfilled but 50% of the shifts filled are at a non-overtime rate of pay, the annual cost increases $168,806. If we fill 25% if the open shifts at overtime, the cost is an additional $127,814. The total could exceed $600,000 per year. We realize that not all employees would use the full amount, but if even 50% of the available time was used the cost would exceed $600,000. Additionally, this amount does not include additional time taken by already benefit eligible staff members as a result of the incentive to use paid sick that is created by the ordinance. (Explanation below.)

St. Luke’s has 1230 part time employees in the City of Duluth who likely use their best effort to schedule medical appointments outside of work hours to avoid using vacation time. However, given that these appointments can now be taken on paid time, we would expect that many employees will elect to be paid to go to their appointments and will seek to schedule them during work hours. In addition to the disruption to patient care, the cost will be considerable. The actual average hourly wage of these 1230 employees is $35.41 per hour. If each employee only takes 4 hours of time in a year, the additional cost to St. Luke’s is nearly $175,000 per year.

1 St. Luke’s currently has 44 full time (1.0 FTE) and 45 part time benefit eligible (.6 to .9) positions posted in many areas and job titles. It is unlikely that a casual employee who wanted benefits or a full time position would not be able to secure it.

HRIS System programming.
St. Luke’s has over 150 different ways that people are paid. Different “buckets” of hourly accruals are built into the system for many reasons – tracking parental leave, tracking FMLA leave, seniority, life to date hours, vacation, sick, paid time off, personal days, funeral days, etc. Every time an accrual code is added, each of the ways that staff is paid has to be touched to include that accrual “bucket”. Once it is built, there is a significant amount of testing of pay scenarios that will have be to worked through to ensure all areas of the system are working correctly. Our system building and testing will be tens of thousands of dollars.

Ordinance Definitions:

Child:
The definition of “child” does not include “step-child”, but “sibling” “parent”, and “grandparent” all include “step” relationships. Step parents may or may not be legal guardians.
Domestic Partner: As is most appropriate, all individuals now have the right to marry without limitations based upon sexual orientation. As a result, domestic partner coverage should not be included in the ordinance. Alternatively, domestic partner should be as defined in Section 29D of the Duluth City Code.

Employee:
The definition of Employee includes anyone who works within the city for 50% of their working time in a rolling 12 month period. St. Luke’s has several locations outside of the City and a number of that staff also work at clinics within the City. Using a rolling 12 month period means we will have to calculate those hours every month and determine the location they worked
for the prior 12 months. Our payroll system tracks hours, department and position, but none of that is cross-referenced to physical address of the department.

Casual or “as needed” employees should not be covered under the ordinance. There needs to be a threshold number of hours. In negotiating with 10 different unions for decades, not a single one of them has proposed adding benefits for casual employees. There is recognition that wages and benefit packages are a give and take – and that employees who seek benefits need to make a greater commitment to their coworkers and employer.
Collectively bargained employees should be excluded from the ordinance. Employers and employees who have bargained the terms and conditions of employment in good faith should not be force by an outside party to modify the terms of their agreement. The union employees may have prioritized any number of economic considerations ahead of sick and safe time. The addition of an unbargained benefit without negotiation it is simply unfair to the employers and could very well violate the National Labor Relations Act. The most the ordinance should do is require the parties to bargain over it during the first possible negotiation period.

Safe Time.
The ordinance is unclear with regard to the definition of “safe time”. In 29E-2(i) of the ordinance, “Safe time” is defined by Minn. Stat §181.9413(b). However, in section 29E-4(b)(3) which specifies when time can be used, the definition of “safe time” provided in the ordinance is not used and the broader language of “An absence due to domestic abuse, sexual assault, or stalking of the employee or employee’s family member” is included. This is concerning because under Minnesota Statue §181.9413, leave must be for the purpose of providing or receiving assistance because of sexual assault, domestic abuse, or stalking. Unfortunately, we have had employees seeking leave for “reconciliation time” with their abuser (perhaps after release from jail) which is a use of ESST we would not be in support of. This appears to be a permissible use of ESST under the proposed ordinance.

Operational Concerns

Fractional Accruals:
The ordinance does not allow fractional accruals. A ratio of 1:30 is equal to .0333 per hour. If an employer has a payroll system that is built to accommodate that type of accrual there is no reason to not allow it. Perhaps that section can be amended to say “Earned sick and safe time can accrue in fractional hour or whole hour increments so long as the employer treats all similarly situated employees the same and the accrual rate is a minimum of one hour for every 30 hours worked.”

Rehire Provisions:
Reinstatement of ESST upon rehire within 90 days poses a burden on systems that purge an employee’s accrued hours after their final payroll is run. If there is a separation followed by a rehire, it was most likely a voluntary separation that the employee decided of his or her free will. The employer should not bear an extra burden of reinstating time if both decide that reentering an employment relationship is beneficial. It is also not good for either to force them to wait until day 91 to rehire.

Appointments and Preventative time.
This will have a considerable impact on St. Luke’s. 58% of our employees are less than full time and a large portion of our workforce works rotates shifts and weekends. This provision actually incents staff to make their appointments during working time. This poses an enormous patient safety risk as we cannot safely substitute patient care staff for only an hour or two. Such short durations do not allow for the safe hand off and transfer of care (nurses cannot complete report, clinical assessments and interventions in a 2 hour period). At an absolute minimum, there must be a requirement upon the employee to make a good faith attempt to schedule appointments outside of work hours and to minimize disruption to the employer.

Hardship Exemptions for Non-emergent Use of ESST.
Even if the use of ESST is not emergent (i.e., it could be rescheduled), there is no requirement that an employee reschedule if there will be a negative impact on the employer’s operations or co-workers. This is particularly true when many employees in a work area schedule or take sick and safe leave at the same time – such as over the holidays.

Prevention of Fraud and Abuse.
While many instances of sick leave are clearly appropriate, abuse of sick leave is already extremely costly to employers. According to the nationally published CCH2 Unscheduled Absence Survey, only 34% of ill calls are actually related to personal illness. 22% are related to “family issues”, 18% “personal needs”, 13% due to stress and 13% to an “Entitlement Mentality”. In addition, more than 37% of employers report a noticeable pattern of ill calls on Monday and Friday and 17% report a noticeable pattern of illness around holidays, such as Christmas or the 4th of July.

The failure to allow an employer to reasonably request documentation for absences less than three days in duration poses a hardship to all employees and employers. Nothing diminishes employee morale more than working short when others are abusing time. This is already occurring in the Metro area where there is repeated reference to the “3 free days” which allow an employee the unfettered ability to use ESST for any purpose without question. Even more discouraging is that it seems to actually encourage abuse of paid sick leave. An employer is now in a position of receiving a credible report of abuse and, because it cannot require documentation, it will have to make an employment decision based only upon the report without hearing the employee’s statement regarding the event. In other words, what else can an employer do but terminate the employee. It may actually lead to avoidable terminations. Most employers in this situation would likely reinstate the employee, but there is just no reason it should have to be that way.

Enforcement

City Enforcement:
We have considerable concern about the economic impact on the City to enforce the ordinance. The City Clerk’s Office has sole discretion to decide to investigate and pursue violations under the ordinance. However, there are no time limits placed on the Clerk’s office decision to investigate but the employer has only 20 days to respond. Similarly, there are no time parameters under which the Clerk has to issue a Notice of Investigation but again the employer is only allowed 30 days for a response. There are also no time parameters to issue a Determination of Violation. The entire process is of great concern to employers the employee has 1 year to file a complaint and if the Clerk’s office waits a year or two to notify the employer (perhaps due to backlog or other priorities), several years can pass before the employer is even notified of an alleged violation. Because the ordinance goes on to create a presumption of violation if the employer cannot produce records, there should be a requirement that the process occurs in a timely fashion to ease the burden of record production. There is also no explicit provision for the employee or employer to appeal an erroneous determination to District Court.

Summary

Our concerns are punctuated by the fact that there has been no assessment as to the need for ESST in the City of Duluth or the impact on Duluth employees and employers. In summary,

 The ordinance imposes an unacceptable burden upon Employers within the City of Duluth. The result will likely be the reduction of other employee benefits and a decrease in business growth and development within the City.

 Definitions contained in the ordinance need revision, including child, domestic partner and safe time.

 The definition of employee is cumbersome and it should not include casual or collectively bargained employees.

 Collectively bargained employees must be excluded so that any change in benefits for union members must be negotiated between the employers and union.

 The ordinance should be more flexible for the calculation of accruals.

 The rehire provisions have a negative impact on both the employee and the employer.

 There must be a requirement that employees minimize disruption to their employer and co-workers, including a requirement to attempt to schedule appointments outside of work hours.

 There must be a hardship exemption for foreseeable leave

 An employer must be able to address suspected fraud and abuse

 There must be appropriate time parameters on the City Clerk’s office related to alleged violations.

Thank you for your careful consideration of the concerns raised in this letter. If you have any further questions, please feel free to contact me.

Very Truly Yours,
Marla Halvorson
Human Resources Director

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