Small employers generally don't have the capital and scale to provide paid leave to their employees. The lack of a national paid leave program hands the advantage to large corporations that can use their size and market power to offer such benefits, resulting in a hiring disadvantage for small business.
We can change this picture. My company provides a before-and-after snapshot that shows how. Before New Jersey adopted paid leave, I had an employee who left his job because of family needs. He didn't tell me at the time why he was leaving, but his mother was dying of cancer. He did not ask for help because he didn't know what would have helped, and my business couldn't have covered his salary even if he had. While my business is too small to be covered under the Family and Medical Leave Act (FMLA), which offers up to 12 weeks of unpaid, job-protected leave to address serious family and personal medical caregiving needs, I would have personally guaranteed his job back. But employees should not have to trust the benevolence of their employer in these situations.
So much pain and damage could have been avoided if the New Jersey Family Leave Act, which went into effect in 2009, had been there at the time. My employee would've been able to take paid leave without feeling like he was asking me for a personal favor, and my business would have retained a valuable employee.
But New Jersey didn't have paid leave yet, and my business paid the price. This employee had been the best on our team for several years. The costs in time and money to replace him were astronomical. I had to take time away from my responsibilities as owner, and my business suffered. Replacing employees is expensive, with turnover costs averaging one-fifth of an employee's annual salary.
Now for the "after" picture. Five years ago, an employee told me his wife was having twins. He needed paid time off, and I'd recently joined the Main Street Alliance, where I learned about New Jersey's paid family leave insurance program. The paperwork was straightforward. The employee and I filled it out, and he got some wage replacement while bonding with his twins. He's a very important part of my business, and taking time for his family was extremely important to him.
We made a plan for his time off. We moved a part-time employee to full-time, giving that employee an opportunity to acquire new skills. As it turned out, the business needed the extra help, and we kept him on full-time when the father of the twins came back.
From a business perspective, well-structured, comprehensive paid leave programs like New Jersey's, make leave simple and affordable. They spread the costs without creating significant new administrative requirements. When an employee needs time off from work, they draw income from the fund to get by until they return. Business owners can use the salary of on-leave employees as we see fit. Most importantly, workers with paid leave are more likely to return to their jobs, especially new moms.
New Jersey's program wasn't perfect out of the gate. Last year, we updated the definition of family to make it more representative of actual families. Now, for example, a person can take paid leave to care for a sibling. I know how important that is, because one of my sisters – who wasn't working at the time – cared for another one of my sisters until she passed away from stomach cancer.
We also expanded job protection and increased wage replacement so more workers can afford to use the benefit. All these changes are business-friendly. As recent research from the National Partnership for Women & Families shows, these changes are good for small businesses and help ensure that all working people – including low- and middle-income workers – are able to access and afford paid leave.
Without job protection, paid leave can end up being severance pay if people come back from leave to find their jobs filled. Strong job protection ensures that all companies – not just high road employers – do the right thing and it ensures that businesses who want to comply with these standards are not at a competitive disadvantage and forced into a race to the bottom.
New Jersey also expanded funding for program outreach. Without robust outreach, too many small businesses and employees, don't even know this is an option.
That's why I'm testifying in Congress this week to include the smallest businesses in the discussion on paid leave. My business is the perfect example of how robust outreach, meaningful job protection and wage replacement, modern family definitions, and including the smallest businesses all work together to make a paid leave program successful.
Tony Sandkamp is the owner of Sandkamp Woodworks in Jersey City, N.J., and a member of the Main Street Alliance