Last month the Department of Labor & Industries (L&I) released the final rules for paid sick leave in Washington. Voters approved I-1433 in 2016; the initiative increased the minimum wage and mandated that all employers provide paid sick leave. Paid sick leave will accrue beginning Jan. 1, 2018. Lane Powell has a good summary of the rules. As they note, “Most employers doing business in Washington will need to update their handbook policies to comply with this new law.”

I wrote here about the proposed rule. Changes made in the adopted rule are listed on page 3 and 4 of the Concise Explanatory Statement. For example, the adopted rule includes a commitment by L&I to provide model notification policies for employers. (Draft sample policies are available here.)

As adopted, WAC 296-128-630(4) requires employers to allow sick leave to be taken in increments that match the increments used in the employer’s payroll system, but the sick leave increments can’t exceed one hour. L&I recognizes that this may be problematic in WAC 296-218-640: The rules allow employers to request a variance from the increments rule for “good cause.” (L&I will determine what that means on a case-by-case basis.)

Under RCW 34.05.328, before adopting significant legislative rules, agencies must determine whether their benefits would exceed their costs. L&I determined that for paid sick leave, the recordkeeping requirements, the increments in which paid sick leave is used, and the notification and reporting requirements are significant legislative rules.

The cost-benefit analysis for the rule considers the costs of these requirements as well as those from variances from the increment rule, reasonable notice, verification for absences, shared leave, and frontloading.

L&I estimates that complying with the rule requirements will cost businesses a total of $48–54 million a year (including the costs of optional programs increases the range to $62–87 million). Note that these are just the costs of complying with the rule:

With regard to this report, any compliance costs that can be attributed to the passed initiative are not considered costs of complying with the rule, thus will not be analyzed in this report. For example, the cost of paying at least one hour of sick leave to employees for every 40 hours worked will not be analyzed in this report, as it is a requirement from the law, although it is the biggest cost component of the paid sick leave program.

However, L&I takes a broader look at the potential benefits: “when it comes to assessing benefits we are unable to disentangle those that arise from the rule compared with the initiative and we assume that the benefits granted by the initiative are the benefits of the rule.” L&I included the benefits of less job turnover and fewer people coming to work with the flu. It estimates that the benefits of the paid sick leave law will be $327–348 million per year.

The small business impact statement concludes, unsurprisingly, that the paid sick leave rule “will impose disproportionate impact on small businesses.”

Finally, L&I decided to undergo a separate rulemaking process for the enforcement of the paid sick leave requirements. The draft proposed rule is available, and the process is expected to be complete by Dec. 19.