Beyond borders: Does firm‐level exposure to state and local paid sick leave mandates lead to intra‐firm spillovers?

Abstract States and localities have passed labor standards to raise the floor on job quality, including mandating employer provision of paid sick leave (PSL). However, contemporary political polarization makes the enactment of national labor standards and of state standards in many states unlikely. Prior literature has examined how labor standards may “spill over” spatially to affect firms, jobs, and workers in nearby places who are not covered by labor standards. We motivate and empirically examine the potential for “intra‐firm spillovers.” We argue that multi‐state firms facing a patchwork of labor standards may align company labor practices with the most stringent regulatory environments that they face given the geographic distribution of their establishments. To test this possibility, we take advantage of new employer–employee linked data from The Shift Project and focus on the case of paid sick leave. We find that state and local paid sick leave mandates spillover through multi‐state employers to provide workers in places without mandates effective access to paid sick leave, and these findings survive a placebo test using other fringe benefits. Companies act as conduits through which the reach of local mandates that raise the floor on job quality are expanded to a broader set of workers.