Monday, March 10, 2008

A Family-Friendly Small Business Nightmare

My friends at the Acton Institute published my article on the need to reform the Clinton-era Family Medical Leave Act. I have posted my full article on my site as well. The Act has been subject to abuses that cry out to be corrected:
The Act provides leave not only for maternity or the care of a new born, but also for care for a dependent with a serious illness. Unfortunately, the Department of Labor has issued conflicting opinions on what constitutes a serious illness. While the legislative history clearly indicates that the leave was not supposed to be used for minor sniffles, employees have obtained certification for minor conditions such as allergies, migraines, or back problems.
Compounding the problem, the FMLA allows for intermittent leave: that is, people can take leave in "separate blocks of time due to a single qualifying reason." According to the Small Business Administration, intermittent leave is the most challenging part of the FMLA for small businesses. The regulations require that leave increments have to be awarded in the "shortest period of time the employer's payroll system uses to account for absences or use for leave, provided it is one hour or less."
Some small manufacturing businesses track time in increments as short as six minutes. The Employment Policy Foundation found that 50 percent of leave-takers provide notice either the day the leave begins or the day after. The administrative and scheduling challenges this presents are a nightmare. And the program hurts overall employee morale, when other employees have to do the work of the absent employees.

The Acton Institute is interested in this because of my free market conclusions:
Small businesses want to retain skilled and dedicated employees without giving slackers an opening to abuse the company's good will. When problems arise, the firm and its employees can work out issues together. By contrast, when problems arise with federal legislation, there cannot be a carefully tailored, personalized response. The abuses and unforeseen consequences of the FMLA have to be dealt with by the federal government: litigation to determine the exact requirements of the law; further regulation to change the law; and a complex process of fact-finding in between.
Small competitive firms need not limit their scope to providing generic "family leave." Firms try to create a menu of ways to tailor policies to the specific needs employee needs. Firms would try various combinations of leave policies, job sharing, flex-time and telecommuting. Companies might try one approach for new mothers, something different for people with elderly parents, and something still different for people with minor chronic illnesses—assuming the law would allow you to "discriminate" in this way. But as things now stand, the government has preempted a lot of experimentation with programs that might possibly be better for the workers and cheaper for the companies.

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