Contractors seek Sacramento help with COVID sick leave

Mike Ghilotti, president of Marin County-based general engineering contractor Ghilotti Bros., is among the California employers who feel caught between moves in Sacramento meant to alleviate the financial burden when suspected or actual COVID-19 infection keeps wage-earners off the job site, and demands from customers to keep work flowing.

He recently joined a group of union contractors in the state to speak out against the way recently enacted state law was framed to provide up to 80 hours of paid sick leave for workers who come in contact with someone infected with the coronavirus, test positive, get shots or boosters, or care for close family who do.

“We all do value our employees, and we care about them. And we want them to be compensated when bad times and bad things happen to them,” Ghilotti said during a press conference Feb. 25 put on by San Ramon-based United Contractors, which has over 400 member companies. “But clearly, small business isn't capable of weathering the storm and carrying the load when it comes to paying the benefits, especially when the state of California has a surplus that they can tap into.”

Senate Bill 114, which was signed into law early last month, applies to companies with more than 25 workers and applies retroactively to sick leave taken since Jan. 1. It renews through the end of September this year pandemic sick leave that expired last fall, before the surge in omicron variant cases.

“If I wasn’t in a generational business and didn't have 108 years in California, we would be in Texas — for sure,” Ghilotti said.

He said he’d rather operate in a “better business atmosphere that is more aligned with small business.” That means Sacramento would make decisions in collaboration with companies its laws and rules would be affecting.

One issue the contractor association has with the COVID sick leave is the low bar for workers to claim exposure and the impact that has on project time frames, which have deadlines for completion milestones and penalties for missing those. Bryn Burke, president of Pasadena-based Dees Burke Engineering Contractors, said during the media event that of the 45 employees in the company, 13 were out on COVID leave alone in January, and all the cases didn’t involve an infection cluster from a job site. The company runs seven job crews with five craft specialties on each crew, so any workers sitting out have to be replaced with a worker with that trade to keep its part of the project moving, else the company faces $33,500 a day in liquidated damages for not meeting its schedule, she said.

“This is a huge punch in the gut,” Burke said.

The contractor group plus trade organizations for the state’s retailers, restauranteurs and other business sectors hard-hit by the pandemic have been calling for Sacramento to dip into the $45.7 billion estimated fiscal 2022–2023 budget surplus (nearly $21 billion of which is discretionary) to reimburse employers for the COVID sick leave.

Meanwhile in the State Assembly, lawmakers have been considering parallel COVID leave bill AB 84, put forward by that house’s Budget Committee. Its vice chairman, Vince Fong, R-Bakersfield, is introducing legislation that seeks excess state money to backstop employer outlays for the COVID sick pay.

And U.S. Sen. Alex Pedilla, D-California, has called on Congress to reinstate the federal reimbursement of employers for COVID-related sick leave.

But employers wanting that relief aren’t the only ones calling for immediate access to California’s projected budget bounty. With the jump in fuel prices amid the Ukraine-Russia conflict, there now are calls from Republican state lawmakers to tap the surplus to pause for six months the state’s gasoline taxes, which amount to 51 cents per gallon. That proposal so far has not been embraced by Democrats, who hold the majority in the Legislature.

Jeff Quackenbush covers wine, construction and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at jquackenbush@busjrnl.com or 707-521-4256.