Mandate madness.

Pruning government regulations, which carry an estimated $600 billion annual price tag, has long been high on corporate America's wish list. Last November, U.S. voters signed on with a new trimming service in the form of a Republican-led Congress. But the machetes the House Republicans took to the federal government quickly turned into blunt nail-clippers in the Senate. As the end of 1995 approaches, proposed and new regulations listed in the Federal Register promise to top 33,000 pages, down less than 15 percent from the year before, and 8 percent more than when President Clinton assumed the White House in 1992.

This regulatory climate is stunting the growth of America's economy. James S. Herr, chairman and CEO of Herr Foods in Nottingham, PA, testified before Congress about the real-world implications of over-regulation. In 1951, a fire razed Herr's company, but within six months the executive acquired a farm and built another plant. By contrast, in 1989, it took two years for Herr to get all the permits to build a 15,000-square-foot warehouse in Elkridge, MD. "If the 1989 regulations had been in place in 1951, we never would have been able to retain our customers and start up again," Herr said.

As the regulations continue to pile up, one mandate in particular is emerging as a potential corporate backbreaker: the 1993 Family Medical Leave Act. This act requires companies with more than 50 employees to give up to 12 weeks of unpaid leave for serious illness, caring for a child or relative, or maternity leave. Few are willing to oppose the FMLA, because it sounds so reasonable and serves such a noble purpose. But companies such as Phoenix Products and Southwest Airlines quickly are finding that this uncompromising regulation wreaks havoc with scheduling, benefits packages, productivity, and employee/employer relationships. Ultimately, the FMLA will raise the cost of employing Americans and, thus, contribute to unemployment, decreased economic growth, and a more inefficient business sector.

At the two-year mark, the FMLA, which covers roughly 40 percent of U.S. workers, has not elicited many public complaints. Employees have only filed 3,016 grievances, according to the Department of Labor, and few companies are grousing openly about the law. "It is the right thing to do," Ronald Compton, CEO of Hartford, CT-based Aetna Life and Casualty Co., told a Congressional Committee on Family and Medical Leave. Indeed, Compton testified that Aetna experienced a 50 percent decrease in turnover among its female employees after voluntarily instituting a six-month family leave policy in 1988.

But signs of wear and tear already are starting to show. The Labor Policy Association, a nonprofit association of corporate human-resources executives, recently surveyed 123 Fortune 500 companies. Fifty-seven percent reported concern about employees abusing leave time; 26 percent felt the law hampered productivity.

A big problem with the FMLA is its one-size-fits-all mandate. For example, the act requires employers to grant employees leave in the smallest increments their accounting systems accommodate. While an insurance company may have few problems granting a worker an hour off to see a doctor, Southwest Airlines employees, who work in four-day shifts, cannot take a segment off without disrupting the whole shift.

Raymond Arth, president of faucet maker Phoenix Products in Avon, OH, had to cut his company's benefits package because of the FMLA's inflexibility. Before the act, Arth offered his 75 employees up to six months' leave for serious illness. Today, employers, including Arth, complain that the government's new, expansive list of "serious medical conditions" allows employees to turn earaches, sinus conditions, asthma, and epilepsy into reasons for extended leave. Thus, Arth says, he was forced to reduce his policy to the mandated three months.

The FMLA has inserted yet another area of tension into the employee/employer relationship. Says Libby Sartain, vice president at Dallas-based Southwest Airlines, "Employees are demanding what they perceive to be their right under the law rather than working out a solution with their local leadership."

Once employees perceive medical leave as a right, businesses can hardly expect them not to exercise that right, especially in our litigious society. Today, the FMLA may be only a minor inconvenience for most businesses. This will not be the case in five years, when employees and advocate lawyers begin pursuing their FMLA "rights" in court.

Sally C. Pipes is president of the Pacific Research Institute for Public Policy, a San Francisco-based think tank that analyzes national economic and social problems and proposes free-market solutions.