Regulation Authority:

R.I. Gen. Laws 28-57-1, et seq.

Purpose and Reason:

To provide clarity on the sick and safe leave provisions pursuant to the Healthy and Safe Families and Workplaces Act, R.I. Gen. Laws Chapter 28-57. The following changes were made between the proposed and the final version of the regulations: 1. Definitions - Added a new definition for the term "Written notice or In writing." 2. Exemptions - Clarified how employees working for employers with paid time off policies must accrue paid sick and safe leave hours. 3. Accrual - broadened the timeframe by which employers establish if they offer paid leave or unpaid leave time. 4. Covered Employees - added a look back period to determine if an employee is covered by these regulations. 5. Accrual and Discharge - clarified that employers may impose a waiting period only for the use of benefits and not for the accrual of said benefits. 6. Accrual and Discharge - deleted the requirement to obtain written permission from employees at the time loans of sick time are made. 7. Accrual and Discharge - clarified that sick time accrues for all hours worked and paid by the employer. 8. Accrual and Discharge - clarified that employers that have employees who work irregular schedules, like those without a definite end time, may use a reasonable method to determine the amount of hours of leave to provide. 9. Documentation - added a new provision which states that when in conflict with the RI Food Code, the documentation provision contained in 5.6.3(5) shall not apply to Food Employees. Arguments that were rejected: 1. Definition - Member of Employee's Household - argument was that the definition was too broad and should be limited to persons claimed by an employee for tax purposes. We rejected this argument as the statutory purpose was to provide this new benefit to working Rhode Islanders to help support themselves and their loved ones, including those they reside with. 2. Definition - Argument was to add a definition for the term "Public Health Emergency." This term is not defined by the Department of Health. 3. Employer Size - Argument was that there were less costly alternatives available to determine which employers must offer paid leave versus unpaid leave. This argument was rejected because the option selected provides paid sick and safe leave benefits to a greater amount of people in furtherance of the intent of the legislation. 4. Accrual of Paid Leave - argument was that employees should not accrue paid sick and safe leave benefits while collecting paid leave. This argument was rejected because the statutory definition of "Same Hourly Rate" requires employers to provide the same rate of pay with the same benefits to their employees while collecting paid sick and safe leave benefits. 5. Covered Employees - argument was that an employer should have a physical presence in RI in order to have their employees be considered RI employees under these regulations. This argument was rejected because employees that spend the plurality of their time working in RI are already covered by various RI labor laws. In addition, employers must have 18 people working in RI for their employees to receive a paid benefit under these regulations. 6. Confidentiality - argument was that the regulations prevent employers from being able to defend themselves by requiring them to maintain all information pertaining to their employees' use of paid sick and safe leave benefits as confidential. We rejected this argument because the regulations do allow employers to share some information in such proceedings on a limited basis. Cost Benefit Analysis Introduction The Department of Labor and Training (Department) proposes to adopt regulations regarding the implementation and enforcement of the Healthy and Safe Families and Workplace Act (Act), R.I. Gen. Laws Chapter 28-57. This analysis estimates the societal benefits and costs that result from the adoption of the proposed regulation. Pursuant to the Administrative Procedures Act (APA), R.I. Gen. Laws § 42-35-2.9, the Department has conducted a regulatory analysis for the proposed regulation. The Department used the best available information at the time of publication to estimate the benefits and costs of the proposed regulatory provisions. This analysis does not attempt to generate benefit and cost estimates solely attributable to the passage of the Act. The following analysis examines the costs and benefits of the discretionary decisions made by the Department. Background In 2017, the Act required the Department to promulgate regulations mandating that all employers of eighteen or more employees provide paid sick and safe leave. The Act was intended to address the gaps in current state and federal paid leave benefits. The Rhode Island Parental and Family Medical Leave Act and the federal Family and Medical Leave Act (FMLA) require employers with fifty (50) or more employees to provide unpaid leave to employees who meet stringent, statutory eligibility requirements. Additionally, most Rhode Island employees have access to paid leave in the form of Temporary Disability Insurance (TDI). While these laws have benefited the labor force, limitations regarding the number of hours worked and length of employment before leave may be taken diminish the value and utilization of these programs. Regulatory Development The Act has an effective date of July 1, 2018. Beginning in mid-November, the Department conducted four public listening sessions to solicit input as to which provisions of the Act required clarification. In response to stakeholder input from both the business community and labor force, the Department determined the following statutory provisions require further clarification to allow for uniform implementation of the Act by all affected parties: Point of Clarification Statutory Citation Regulatory Citation Definition of “adverse action” against an employee for using leave R.I. Gen. Laws § 28-57-4(c) § 5.3(A)(1) Definition of “member of employee’s household” R.I. Gen. Laws § 28-57-3(9) § 5.3(A)(4) Definition of “unreasonable burden or expense” R.I. Gen. Laws § 28-57-6(g) § 5.6.3(A)(3) and (4) Definition of “public employee” R.I. Gen. Laws § 28-57-4(d) § 5.3(A) 6 Applicability to “food employee” and food industry R.I. Gen. Laws § 28-57-4(a) §§ 5.3(A)(3) and 5.4.2 Definition of “same hourly rate” R.I. Gen. Laws § 28-57-3(11) § 5.3(A)(7) Employer determination of whether they are an “employer of eighteen (18) or more employees” R.I. Gen. Laws § 28-57-5(a) *also note R.I. Gen. Laws § 28-57-4(c) § 5.5.1 Amount of time an employee must spend working in Rhode Island to qualify as a Rhode Island employee R.I. Gen. Laws § 28-57-5(a) § 5.5.2 Employer notification/policy requirements for newly hired employees regarding the establishment of up to a 90 day waiting period before usage of accrued leave R.I. Gen. Laws § 28-57-5(d) § 5.5.3(A) Employer notification/policy requirements regarding an advance on leave R.I. Gen. Laws § 28-57-5(i) § 5.5.3(B) Employer notification/policy requirements regarding foreseeable/unforeseeable leave R.I. Gen. Laws §§ 28-57-6(c) and (d) § 5.6.2 Employer notification/policy requirements regarding documentation R.I. Gen. Laws §§ 28-57- 6(c), (d) & (f) § 5.6.3 Accrual of additional paid leave hours during the use of already accrued paid leave R.I. Gen. Laws § 28-57-3(11) § 5.5.3(C) Enforcement R.I. Gen. Laws § 28-57-10 § 5.7 Confidentiality R.I. Gen. Laws § 28-57-11 § 5.8 The Department has determined that the above provisions must be addressed in regulation to ensure uniform applicability and compliance throughout the state. Analysis of Regulatory Impacts The majority of the above areas of statutory ambiguity addressed in the proposed regulation do not place significant financial burden on the regulated community. The Department has identified two provisions in the proposed regulation that significantly drive the distribution of costs and benefits to Rhode Island. The first provision addresses how an employer determines if they have eighteen (18) employees. The Act (R.I. Gen. Laws §28-57-5(a) only states, “In determining the number of employees who are employed by an employer for compensation, all employees defined in § 28- 57-3(7) shall be counted.” The Department proposes to require that all Rhode Island employers assess the quarterly average number of unique positions. If in one year, the employer has an average unique position count greater than eighteen in two quarters, they must provide paid sick and safe leave. The Department had sufficient data detailing employment numbers for Rhode Island employees to determine the effect that this provision has on firms. The second provision addresses how to determine whether an employee would be considered a “covered employee.” The Department has aligned requirements with regional approaches to determining if an employee is considered a “covered employee;” an employee must spend the plurality of their time working in Rhode Island. While the Department has access to some aggregate statistics regarding employee residency and location of employment, there is a paucity of data detailing the percentage of time employees spend working in Rhode Island versus another state. Therefore, the Department cannot quantify the economic effects that this provision will have during implementation. The analysis below attempts to both quantitatively and qualitatively assess the impact of determining which employers qualify as “covered employers.” The monetized benefits and costs are predicated on the Department’s estimate of the number of employees who would be shifted from unpaid to paid sick and safe leave benefits due to the regulatory options selected. Regulatory Options Pursuant to the APA, R.I. Gen. Laws § 42-35-2.9(b)(1), the regulatory analysis must include “the benefits and costs of a reasonable range of regulatory alternatives.” During the public listening sessions, the Department received four regulatory options for determining which employers counted as “covered employers” and must provide paid leave: 1. If an employer has at least eighteen (18) unique positions in every quarter of the previous calendar year; 2. If the average of the number of [monthly] unique positions in the previous calendar year is eighteen (18) or higher; 3. If the average of the highest two quarters of employment in the previous calendar year is eighteen (18) or higher; or 4. If an employer had eighteen (18) or more unique positions at any point during the previous calendar year. The Department did not select alternative regulatory options for the other discretionary provisions because they are not included in the quantitative portion of this analysis. Transfers One of the principal challenges of this analysis is differentiating actual costs and benefits from transfers among groups in Rhode Island. In economic terms, transfers occur when entity/group “A” pays another entity/group “B” within the same economic system. Though the resources paid constitute real costs to “A,” “B” receives the resources as a benefit, yielding a net of zero. Within the current analysis, a key example of a transfer are the wages paid from Rhode Island firms to Rhode Island workers. Similarly, the inevitable increase in the costs of goods and services in Rhode Island are also transfers since those impacts simply redistribute wealth from consumers to employees. This analysis makes every effort to differentiate transfers from costs and benefits to avoid conflating the separate effects. Benefit-Cost Analysis Below, the Department analyzes the quantitative and qualitative costs and benefits resulting from the regulatory provisions exclusive of those attributable to statutory provisions. Baseline Setting the baseline for this analysis required an assumption about the appropriate comparison state of the world. The Department assumes that the baseline cost for the definition of “covered employer” is not the status quo, but rather the least inclusive of the options considered (alternative one in the “regulatory alternatives” section above). The reason for doing this is to avoid erroneously ascribing to the regulation those costs and benefits that are mandated by the statute. The analytical baseline for this provision, therefore, is a theoretical state of the world where an employer is considered “covered” if it had at least 18 unique positions in every quarter of the previous calendar year. Estimating Costs Quantifiable Costs Using the Department’s data collected from Rhode Island employers and wage data from the Bureau of Labor Statistics (BLS), the following quantitative analysis represents the cost to employers who must comply with the Act under the proposed regulation and the alternatives. The analysis estimates the societal cost of the three alternative methods of measuring firm size on the productivity of Rhode Island firms. The size of the firm determines whether a firm must provide paid or unpaid sick leave. The analysis assumes that employees who receive paid sick leave will use more time than those who receive unpaid sick leave. Because the alternative methods of determining firm size will shift workers into the paid category, a greater number of hours of sick time will be used, resulting in additional productivity loss. The analysis uses quarterly employment data from DLT, aggregated by industry. The four options were compared to determine whether the number of covered employees varied with different calculation methods: • Option 1 (Baseline): firms that have at least 18 employees in every quarter. • Option 2 (Annual Avg.): firms that have at least 18 employees as the annual average. • Option 3 (Highest 2-Qtr Avg.): firms that have at least 18 employees as the average of their highest two quarters. • Option 4 (Maximum): firms that have at least 18 employees in any of the past four quarters. The following data was also used in the analysis: • Percentage of employees without paid sick days by industry o Adjusts employment data to exclude employees who currently already receive paid sick days.1 • Wage Information by industry o Wage Data from DLT by Industry - establishes a base for per-hour productivity costs. o Fringe/Payroll Tax factor - adjusts the wage to account for the additional non- wage hourly labor costs, to ensure that the per-hour productivity cost more closely reflects the full value of compensation for that time. o Productivity Loss Factor - adjusts the per-hour cost to account for the costs of productivity loss associated with missed work, since those costs are often greater than the wage.2 This is due to difficulty in replacing workers, time sensitivity of work, and the inefficiency of replacement worker on a team. Used to generate upper-end of estimate range. o Annual Growth Rates - adjusts employment estimates and wage estimates to account for growth over the next 10 years, using sector-level forecasts from IHS Markit. • Sick Time Usage Assumptions o Assume that at full implementation, employees who receive paid sick time will use 30 hours of time, and employees who receive unpaid sick time will use 15 hours of time.3 1Based on national data used in NFIB Massachusetts Paid Leave study, derived from BLS studies. http://www.nfib.com/Portals/0/pdf/allusers/research/studies/massachusetts-paid-leave-nfib-study.pdf 2 Nicholson, Pauly, et. Al. in Health Economics, 2006. https://www.ncbi.nlm.nih.gov/pubmed/16200550 3 https://engagedscholarship.csuohio.edu/cgi/viewcontent.cgi?article=1030&context=clsowo_facpub Annual Average Productivity Cost Estimates Option Low Estimate (Wage + Benefits) High Estimate (Wage + Benefits + Productivity Loss Factor) Annual Average $2,253,517 $2,884,502 Average of 2 Highest Quarters $3,281,558 $4,200,395 Max $3,776,211 $4,833,550 These figures are the annual average of the present-value cost estimates for the 10 years under analysis. This methodology yields an average annual cost over the next 10 years ranging from $3.3 million to $4.2 million for the regulatory option selected (option 3). The considered alternatives have annual average costs over the next 10 years ranging from $2.2 million to $4.8 million. For the description of cost estimate assumptions, see Appendix One. Qualitative Costs Depending upon the elasticities of supply and demand in any given industry/market, the following effects will also appear. First, some employers on the margin of counting as “covered” may make the decision not to hire additional full-time employees. The threshold effect on labor costs is significant when an employer moves from 17 to 18 employees. This will have a suppressive effect on the demand for labor, causing firms to either artificially under-produce what the market demands or hire fewer employees (but working longer shifts). Second, for firms that are counted as “covered” the additional labor costs will reduce regional, national, and global competitiveness. The costs of production for these employers will rise, thereby forcing higher prices and/or reductions in marginal profit. The full cost of this effect will vary by industry type, so actual values are empirical questions that can only be answered with data after the rule has been in effect for a period of time. Note that this will also have a suppressive effect on attractiveness to future businesses in certain industry/size segments. Estimating Benefits The following quantitative and qualitative analysis represent the benefits that covered employees receive and the benefits to society resulting from the proposed rule. Quantifiable Benefits The Department used a best-practices framework for estimating the societal benefits of paid leave. The Department uses the estimated number of new hours of sick time used under each of the alternatives studied in the cost analysis. The Department used a best-practices framework for estimating the societal benefits of paid leave that are associated with the regulatory options considered above. The analysis assumes that employees afforded paid leave are more likely to stay home, thus decreasing the spread of influenza. Employees who are not afforded the benefit of paid leave are more likely to go into work sick (contagious presenteeism), especially those in low-wage employment positions, resulting in an increase in flu contagion. The flu is among the most common drivers of illness- related employment leave. The analysis estimates the benefit related to the averted productivity costs of missed work due to influenza and other contagious diseases spreading at the workplace. More hours of sick time are used when a greater number of employees receive paid leave; a portion of this sick time will be used for contagious diseases, which will limit the spread of those diseases. The analysis uses the estimated number of new hours of sick time used under each of the alternatives studied in the cost analysis. The analysis also uses the wage, compensation, and productivity loss assumptions that were used in the cost analysis. Assumptions regarding flu contagion rates were derived from estimates from the Center for Disease Control and Prevention and other analyses of sick leave benefits. The analysis does account for averted healthcare costs, injuries, or deaths. Annual Average Benefit of Averted Illness Estimates Option Low Estimate (Wage + Benefits) High Estimate (Wage + Benefits + Productivity Loss Factor) Annual Average $503,087 $643,951 Average of 2 Highest Quarters $723,620 $926,234 Max $826,315 $1,057,684 These figures are the annual average of the present-value cost estimates for the 10 years under analysis. This methodology yields an average annual benefit over the next 10 years ranging from $0.7 million to $0.9 million for the regulatory option selected. The considered alternatives have annual average benefits over the next 10 years ranging from $0.5 million to $1.1 million. For the description of benefits estimate assumptions, see Appendix Two. Qualitative Benefits Safe Leave: Impact of Domestic Violence, Sexual Assault, and Stalking Though the Department did not attempt to quantify the effects associated with domestic violence in Rhode Island, the Centers for Disease Control and Prevention estimated that the economic impact on women in the United States exceeds $8.3 billion annually for intimate partner-related incidents alone (in 2003 dollars). Additionally, women cited that they lost anywhere from seven to ten days of paid work.4 The Rhode Island Coalition Against Domestic Violence estimates that one in four Rhode Islanders are victims of domestic violence.5 The Department recognizes that while the majority of domestic violence incidents are directed toward women, men are also subject to domestic abuse and will also benefit from paid safe leave. However, there is limited data regarding the number of incidents directed toward men. Day One estimates that one in eight Rhode Island [women] have been sexually assaulted in their lifetime.6 Studies conclude that economic independence is a key factor in enabling an abuse victim to secure a safer environment. Of particular concern to victims is the inability to take time off of work to go to court, receive medical attention, and/or secure safe living arrangements. Paid safe leave will enable these people to retain steady income and job security while ensuring the safety of themselves and their families. Increased financial security through lessened rates of job separation During the legislative session, proponents of the Act often cited that the lack of job-protected sick and safe leave caused financial strain on employees, especially those in low-wage and -low- skilled employment positions. As any form of paid leave is often not offered to low-wage employees, taking time off from work due to illness or domestic violence may often result in the employee losing employment. A recent study suggests that “paid sick leave decreases the probability of job separation by at least 25%.”7 The primary benefit accrues from the absence of stress and/or uncertainty to employees who would have potentially experienced jobs separation anxiety. Reduced long-term health issues and workplace accidents An employee is three times more likely to delay seeking medical attention if they do not have access to paid sick leave.8 This may lead to lead negative, long-term health effects for workers, which could later result in lower productivity or job separation. Another study found that worker’s access to paid leave decreased the likelihood of non-fatal occupational injuries. The effect varied across industries, with construction, manufacturing, and agriculture seeing the greatest reduction in incidents.9 4 “Intimate Partner Violence: Consequences.” Centers for Disease Control and Prevention. https://www.cdc.gov/violenceprevention/intimatepartnerviolence/consequences.html 5 “No More Silence.” Rhode Island Coalition Against Domestic Violence. http://www.ricadv.org/en/what-we- do/communications/public-awareness-campaigns 6 “Facts and Stats.” Day One. https://www.dayoneri.org/get-informed/facts-stats 7 Hill, Heather D. “Paid Sick Leave and Job Stability.” PubMed. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3825168/ 8 DeRigne, LeaAnne, Patricia A Stoddard Dare, and Linda M. Quinn. “Workers without paid sick leave less likely to take time off for illness or injury compared to those with paid sick leave.” Cleveland State University. https://engagedscholarship.csuohio.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&ar ticle=1030&context=clsowo_facpub 9 Asfaw, Abay, Regina Pana-Cryan, and Roger Rosa. “Paid Sick Leave and Nonfatal Occupational Injuries.” PubMed. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3482022/ Bridging resource gaps between socio-economic classes According to Departmental and BLS data, approximately 60-73% of employees in private industries have access to paid sick leave. However, this statistic masks the distribution of the benefit’s prevalence among low-wage industries. It is widely accepted that high-wage employment leads to increased access to leave benefits, while low-wage employment typically offers limited or no paid benefits. By affording all private industry employees the opportunity to take paid leave, the gap in equality between total compensation packages and the wage alone shrinks, guaranteeing access to sick and safe leave benefits to all Rhode Island employees. 10 Determination The Department’s analysis indicates that the proposed alternative generates quantifiable costs ranging from $3.3 million to $4.2 million and quantifiable benefits of ranging from $0.7 million to $0.9 million. However, the reader is cautioned not to interpret the above numbers as a comprehensive accounting of all relevant costs and benefits. The impacts of the non- quantifiable costs and benefits are likely to drive the true net benefit of the regulatory options under consideration. The lack of data prevents the Department from accurately predicting the full economic impacts, particularly in those areas related to benefits such as human dignity, happiness, and equity considerations. 10 “The Economics of Paid and Unpaid Leave.” https://obamawhitehouse.archives.gov/sites/default/files/docs/leave_report_final.pdf Appendix One: Quantitative Cost Assumptions Cost Estimate Assumptions: First Year Industry Information Estimated Number of Hours of Sick Time Used, and Hourly Compensation Value Ranges NAICS Industry Estimated Total Number of RI Employees in Industry, 2018 Es ti ma ted Percent of Workers wi thout Pa i d Si ck Da ys Na ti ona l l y Annual Hours Sick Time used, <18 Annual Hours Sick Time Used, >18 Tota l Hourl y Compens a ti on (i ncl udes wa ges a nd non-wa ge benefi ts ) Tota l Hourl y Compens a ti on wi th Producti vi ty Los s Fa ctor 11 Agriculture, Forestry, Fishing, and Hunting 784 67% 9 18 $ 24.71 $ 31.63 21 Mining 195 52% 9 18 $ 40.04 $ 51.25 22 Utilities 1,142 15% 9 18 $ 73.71 $ 94.35 23 Construction 18,616 75% 9 18 $ 41.47 $ 53.09 31 Manufacturing 6,790 48% 9 18 $ 39.88 $ 51.05 32 Manufacturing 9,877 48% 9 18 $ 39.88 $ 51.05 33 Manufacturing 24,598 48% 9 18 $ 39.88 $ 51.05 42 Wholesale Trade 16,816 29% 9 18 $ 49.90 $ 63.88 44 Retail Trade 34,288 55% 9 18 $ 20.96 $ 26.82 45 Retail Trade 13,237 55% 9 18 $ 20.96 $ 26.82 48 Transportation and Warehousing 6,836 44% 9 18 $ 28.76 $ 36.81 49 Transportation and Warehousing 3,235 44% 9 18 $ 28.76 $ 36.81 51 Information 8,056 26% 9 18 $ 51.37 $ 65.76 52 Finance and Insurance 25,185 18% 9 18 $ 69.41 $ 88.84 53 Real Estate Rental and Leasing 6,140 33% 9 18 $ 32.45 $ 41.53 54 Professional, Scientific, and Technical Services 24,181 31% 9 18 $ 50.85 $ 65.09 55 Management of Companies and Enterprises 13,719 23% 9 18 $ 84.29 $ 107.89 56 Administrative and Support and Waste Management and Remediation Services 28,706 69% 9 18 $ 25.67 $ 32.85 61 Educational Services 19,268 32% 9 18 $ 35.67 $ 45.66 62 Health Care and Social Assistance 81,107 29% 9 18 $ 32.57 $ 41.69 71 Arts, Entertainment, and Recreation 9,216 65% 9 18 $ 21.92 $ 28.05 72 Accommodation and Food Service 48,667 78% 9 18 $ 13.66 $ 17.49 81 Other Services (except Public Administration) 18,143 51% 9 18 $ 22.53 $ 28.84 Cost Estimate Assumptions: First Year Industry Information Percentage of Employees in Firms Larger than 18 Employees NAICS Industry Scenario 1: Min Firms that have at least 18 employees in Every Quarter Scenario 2: Annual Average Firms that have at least 18 employees as their annual average Scenario 3: Highest 2-Qtr Average Firms that have at least 18 employees as the average of their two highest quarters Scenario 4: Max Firms that have at least 18 Employees in any 1 Quarter 11 Agriculture, Forestry, Fishing, and Hunting 6.6% 25.5% 33.0% 37.2% 21 Mining 34.2% 65.9% 75.1% 83.4% 22 Utilities 87.8% 90.0% 90.0% 90.0% 23 Construction 39.4% 43.9% 47.1% 48.3% 31 Manufacturing 82.3% 83.4% 84.4% 85.2% 32 Manufacturing 80.9% 83.9% 84.9% 86.0% 33 Manufacturing 83.9% 86.3% 87.4% 88.1% 42 Wholesale Trade 55.0% 58.9% 60.1% 60.5% 44 Retail Trade 74.7% 77.2% 78.4% 79.1% 45 Retail Trade 74.8% 79.7% 80.9% 81.1% 48 Transportation and Warehousing 72.0% 75.9% 76.4% 77.4% 49 Transportation and Warehousing 85.1% 85.1% 87.8% 88.5% 51 Information 74.7% 78.9% 80.1% 80.3% 52 Finance and Insurance 87.0% 87.7% 87.9% 88.0% 53 Real Estate Rental and Leasing 49.4% 51.8% 53.2% 54.6% 54 Professional, Scientific, and Technical Services 53.6% 56.2% 57.4% 58.3% 55 Management of Companies and Enterprises 95.9% 97.0% 97.1% 97.3% 56 Administrative and Support and Waste Management and Remediation Services 71.7% 74.4% 76.0% 76.8% 61 Educational Services 91.3% 92.6% 93.3% 93.6% 62 Health Care and Social Assistance 84.0% 85.4% 86.0% 86.3% 71 Arts, Entertainment, and Recreation 64.4% 77.7% 80.3% 82.1% 72 Accommodation and Food Service 67.8% 74.9% 78.0% 79.3% 81 Other Services (except Public Administration) 40.6% 44.0% 45.2% 45.7% NOTES: • Employment counts and hourly wage data are derived from Department of Labor and Training estimates. To calculate Total Hourly Compensation, 31% is added to the wage rate for each industry to account for non-wage benefits. After the first year, these employment counts and hourly wages are grown using the February 2018 Rhode Island forecast from IHS Markit. • National estimates of percent of workers by industry without paid sick days is derived from the National Federation of Independent Business paid sick leave analysis, which is based on Bureau of Labor Statistics data and Institute for Women's Policy Research analysis. • Annual hours of sick time used assumes that that workers with paid sick time will use more leave than workers with unpaid sick time. Because the statute phases in over three years, the analysis assumes increased sick time usage over the phase-in period. The first year assumes 9 hours of usage for unpaid workers and 18 hours for paid; year two assumes 12 hours of usage for unpaid workers and 24 hours for paid; year three and all subsequent years assume 15 hours of usage for unpaid workers and 30 hours for paid. • Hourly Compensation with Productivity Loss Factor is a sensitivity analysis that accounts for the premise that the cost of an employee absence is greater than that employee’s compensation. This is due to the difficulty of substituting workers, the time-sensitive nature of some types of work, and the dependence on teams at many employers. This sensitivity analysis applies a multiplier of 1.28 to the hourly compensation for each industry. This multiplier is derived from a study by Nicholson, et al. in Health Economics titled “Measuring the effects of work loss on productivity with team production.” Appendix Two: Quantitative Benefits Assumptions Benefit Estimate Assumptions, First Year Category Assumption 2018 Explanation Compensation Estimates Hourly Compensation $35.20 Weighted average wage, derived from cost estimate analysis. Future years account for growth by using wage forecasts from IHS Markit. Hourly Productivity $45.06 Wage figure adjusted to account for productivity loss multiplier. Assumes that productivity loss from a worker is greater than their wage, due to difficulty in replacing worker, the time sensitivity of work, and the inefficiency of replacement worker in team. Flu/Illness Assumptions Percentage of Time spent for Flu/Norovirus/other contagious diseases 15% Estimated percentage of sick time used for flu and other contagious diseases. Flu Contagion Rate 18% U.S. Influenza Surveillance Report Assumed number of close daily work contacts 5 U.S. Influenza Surveillance Report Contagion Multiplier 0.9 Contagion multiplier uses flu contagion rate and average number of daily work contacts to estimate the number of averted sick leave hours due to leave usage, similar to methodology developed in other paid sick leave analyses. Date Signed by Director Scott R. Jensen: 5/11/2018