Crains New York - August 13, 2012 - (Page 11)

LINDA BARAN T Sick-days bill is unhealthy for owners he City Council’s paid-sick-days bill is well intentioned, but I’ve heard from many small business owners who are extremely concerned about this legislation. And they are right to be concerned. The owner of a local spa in Staten Island, for instance, tells me her employees typically have five appointments per day, three of them regular clients.With an average charge of $80 per appointment, her business faces a revenue loss of $400 when one of her employees takes a day off due to illness. The owner can shrink that loss to $228 for the day if she pays someone to cover the two nonregular clients,paying $18.50 per hour for an eight-hour shift ($148 total), and reschedules the three regulars (and their $240 in revenue) for future appointments.If this bill passes, she will have to pay an additional $148 to her sick employee,increasing her loss for the day to $376. I’ve heard from owners who offer three paid sick days because that is what they can afford; owners who have 21 employees and would face an additional $33,000 annual payroll cost under the new law; and owners who note that proponents of the measure are trotting out people claiming they were fired for calling in sick but have never asked the business owner her side of the story (perhaps the employee had other issues and the sick day was the last straw). There is no consensus on the impact this bill will have on New York City’s small businesses. What we do know is the entire cost of this legislation will be borne by the employer.To absorb the cost, employers will have to raise prices, delay hiring, cut other benefits or,worse,finally pack up and leave for nearby counties or states where they can still take advantage of the New York market and not be sub- ject to such costly mandates. The bill also creates a perverse disincentive to hire.There are three tiers of companies based on the number of workers—five or fewer employees,six to 19, and more than 20.Why should company size affect the number of sick days? Moreover, why grant five to nine paid sick days depending on company size when the national average for sick days taken by workers with paid sick leave is four days? Finally, this bill is a litigator’s dream come true, as it provides a three-year private right of action for any claim against an employer. It can also interfere with existing policies, such as those that allow leave for reasons different from the ones described in this bill. A growing number of employers in this city are small startups. These are today’s job creators—the ones that will be hurt the most by the extra costs associated with a paid-sickleave mandate. City government should not be taking actions that discourage entrepreneurs in a struggling economy. We all support the laudatory intentions behind paid sick leave, but this remains the wrong approach, the wrong time and the wrong bill. Speaker Christine Quinn is right to withhold the measure from a full City Council vote. Linda Baran is chief executive of the Staten Island Chamber of Commerce. T Nothing public about these IPOs hey are called “confidential initial public offerings.’’ The words “confidential” and “public” form an oxymoron,right? Well,they are coming to New York,and investors should pay attention. Here’s the story. After the Enron fraud scandal, Congress imposed many new requirements on publicly held companies in the Sarbanes-Oxley law.Corporate executives,investment bankers and conservative pundits have been griping ever since, blaming the new rules and their costs for a sharp decline in companies going public. So earlier this year Congress passed what’s known as the JOBS Act, which created these confidential IPOs.It allows firms with less than $1 billion in sales to tell the Securities and Exchange Commission that they want to sell stock to the public without making that information public. Companies only have to release financial data and other information three weeks before they begin a road show to persuade investors to buy stock, which means about a month before the offering takes place. They have to give only two years of audited results, not the traditional three, and are exempted from some other provisions of Sarbanes-Oxley. These IPOs have gotten much less attention than another provision of the JOBS Act, which allows companies to raise small amounts of mon- GREG DAVID ey online through a process known as crowdfunding. That’s a shame, because confidential IPOs are more important—and more dangerous. We don’t know, for example, exactly how many companies are interested in participating in these IPOs. An SEC official said in late May that about 30 companies had submitted plans,but there’s been no update since then. Bloomberg News, the go-to source for all information financial, isn’t tracking them, although it has published three press releases from companies (identical except for the names) announcing confidential IPOs—SolarCity of San Mateo, Calif.; Intematix of Fremont, Calif.; and FleetMatics of Boston. New York’s famed Fairway chain did the same earlier this month. Online searches last week turned up two others. This is not good. Neither is the fact that all the information anyone needs to decide whether to buy stock in these companies remains secret. Let’s look at Fairway as an example. The 10-unit supermarket chain has been on an expansion tear financed by its majority owner, the private-equity firm Sterling Investment Partners. Analysts estimate sales will reach $700 million this year. They also note that a similar North Carolina grocer has been a big success since going public in 2010. That’s not enough. Is Fairway profitable? What is its debt load? Will the money raised from the IPO be used to finance expansion? Or is the private-equity firm cashing out? Is management doing the same? Fairway deserves credit for at least admitting it is conducting a confidential IPO.But investors need answers to those questions above. Because Fairway is so well known in New York, much attention will be paid to its offering.I hope so,because even if you think Sarbanes-Oxley is onerous (and I do), confidential IPOs create big risks for investors. August 13, 2012 | Crain’s New York Business | 11

Table of Contents for the Digital Edition of Crains New York - August 13, 2012

Crains New York - August 13, 2012
Table of Contents
IN THE BOROUGHS
IN THE MARKETS
THE INSIDER
BUSINESS PEOPLE
CORPORATE LADDER
OPINION
GREG DAVID
REAL ESTATE DEALS
FROM AROUND THE CITY
REPORT: SMALL BUSINESS
THE LIST
CLASSIFIEDS
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crains New York - August 13, 2012