Nebraska Initiative 436: Costly burden to small business

Nebraska Initiative 436, on the ballot in November 2024, seeks to mandate paid sick leave for all employees. While it may seem beneficial, this measure imposes significant costs, particularly on small businesses.

First, it is important to note that two-thirds of full-time workers in Nebraska already have access to paid sick leave. The initiative primarily targets small, “mom and pop” businesses, many of which have informal agreements in place with their employees—a system that has worked for decades. Mandating paid sick leave will disproportionately burden these businesses, which operate on tight margins and lack the resources to absorb additional expenses.

Furthermore, paid sick leave is widely recognized as one of the most abused fringe benefits. Often used for non-medical reasons such as extending vacations, handling personal matters or simply “mental health days.” The abuse of sick leave puts employers in the difficult position of trusting the claims of illness without any means of verification and strains the employer-employee relationship.

In contrast, many businesses have moved toward Paid Time Off (PTO) systems, which eliminate the need for employees to claim sickness as a reason for time off, promoting transparency and fairness in the workplace. Mandating separate sick leave disrupts this trend, forcing employers back into a system that invites abuse and puts them in an uncomfortable position of judging the legitimacy of an employee’s illness.

Supporters of Initiative 436 highlight endorsements from 200 businesses. While those endorsements are presented as a significant backing, they represent a minuscule fraction of Nebraska’s estimated 179,000 small businesses that employ more than 412,000 people—around 46% of Nebraska’s private workforce. The small group of politically driven endorsements is not reflective of the vast majority of small businesses, many of which are already struggling to remain adequately staffed and financially viable in today’s challenging economic environment.

Implementing mandatory sick leave could also have serious economic repercussions. Just as Nebraska’s recent minimum wage hike led to increased consumer prices, Initiative 436 will inevitably force businesses to add the costs of paid sick leave to the higher prices that already present financial challenges for Nebraska consumers.

Moreover, mandatory sick leave will increase employee absenteeism. When employees know they have guaranteed paid time off, they may adopt a “use it or lose it” attitude, taking sick days when not genuinely needed. For businesses already struggling with labor shortages, particularly in essential services like healthcare, hospitality, and retail, this absenteeism could cause significant disruptions, impacting both the quality of services and customer safety.

Perhaps the most troubling consequence of Initiative 436 is its potential to reduce entry-level job opportunities. Faced with rising costs, small businesses may be forced to reduce staff, automate operations, or even outsource jobs. Entry-level workers, who rely on these positions for income and experience, will be disproportionately affected. As businesses adapt to increased labor costs, they will inevitably look for ways to operate with fewer employees, leading to limited opportunities for young or inexperienced workers.

At a time when Nebraska’s small businesses are already burdened by rising costs and labor shortages, Initiative 436 threatens to pile on additional, unnecessary regulations. At The Gazette, we have not observed widespread support for this measure among our readers or local business owners. Time and again, Nebraska’s small businesses have shown their ability to take care of their employees without the heavy hand of government intervention. Mandatory sick leave, like the minimum wage increase before it, will create higher consumer prices, reduced job availability, and increased absenteeism.

We urge Nebraska voters to consider the long-term consequences of this measure. A “no” vote on Initiative 436 is a vote to protect Nebraska’s small businesses, keep consumer prices manageable, and preserve opportunities for entry-level workers. Let’s allow the free market to continue addressing these issues without unnecessary mandates that harm more than they help.