Should Small Businesses Have a Sick Leave Program?

Should Small Businesses Have a Sick Leave Program?

Beverly Unrath confided in me that recently she and some friends were discussing whether or not they should have a sick leave program for their small business (5-10 employees). She thought this would be an interesting blog topic, and asked me to research sick leave programs, the pros and cons, and “What’s the average number of sick days small businesses offer?” After 2 hours of online research, I discovered that I would much rather participate in a discussion on the topic than spend time reading the scant, mostly out-of-date and boring information that’s currently “out there.” Let’s turn this post into a discussion, where many of you small business owners in this industry can help each other by sharing your own stories! Add your comments below.

To get the discussion started, I’ll share a few of the things I found that you may or may not know, or that you might be able to shed more light on.

The Law

Currently, there are no federal legal requirements for paid or unpaid sick leave for companies with less than 50 workers. However, a few states have passed their own laws and others are considering doing so.*

Whether your company is bound by the law or not, you can prevent future legal problems by having a very specific sick-leave plan spelled out and consistently adhered to. Otherwise, you could be sued for terminating someone on the basis of poor attendance, when they can rightfully claim that they didn’t know what the policy was or that another employee received preferential treatment. The policy should include the reasons for which paid or unpaid sick leave can be taken.

The Cost

A 2010 survey of New York City employers found that small businesses and nonprofit organizations would be faced with almost 20 percent of the cost of a city-wide sick leave mandate.[30] The United States Bureau of Labor Statistics reports that the average cost of sick leave per employee hour worked is 23 cents. However, the Bureau considers sick leave a necessary benefit for all employees, because without it, health problems and the spread of illness would accelerate, lowering productivity and morale.

The Benefits Sick employees who come to work make co-workers sick and increase absenteeism. Some statistics show that employers are able to hire more qualified workers who stay with them longer when benefits that include sick leave are offered.

Some small businesses do not have sick leave and personal day policies because many of their employees are paid by the hour. In most cases, this discourages employees from taking unnecessary time off, because if they do not show up for work, then they do not get paid. It also encourages them to come to work with what might be a contagious illness.

The Number of Days

San Francisco guarantees up to five paid sick days to workers in businesses with 10 or fewer employees. Washington, D.C. guarantees 3 days of paid sick time for employees in businesses with 24 or fewer workers. A contributor to said, “I work for a very small company, less than 10 employees. My boss gives me 5 paid holidays, 4 sick days and 10 vacation days. I have been at my job for 5 years. I got 5 vacation days after 1 year and at 5 years it went up to 10 days.”

My friend is the director of a small private college with 6 full-time and 32 part time employees. Full-time employees have five paid sick days per year. They also have up to three personal days (24 hours) per year. The intent of the personal leave time is to allow for doctor and dentist appointments, funerals, children’s illnesses and events, family crises, etc.

A “Sick Day Entitlement Survey” conducted in 2008, determined that paid sick days are given to 58% of  U.S. workers, 40% of workers in small companies (fewer than 25 employees), and the average number of paid sick days per year granted to employees of private companies is 10.

The 3 Types of Employees

In an article for Business First, Dr. James D. Levy discussed employee attendance issues and described the three employee types that most businesses have to contend with.

  1. “On average, a small portion of employees will rarely, if ever, be absent because of illness. They pride themselves on being the iron man or iron woman and prove that people can, and do fulfill their responsibilities even when they don’t feel well,” he explained.
  2. “A second group, the great majority, will use a few sick days a year, well within most organizations’ guidelines.
  3. The third group, usually only 5 percent or so, use their sick days plus most or all of their vacation time and additional lost time because of illness. It’s this group that blurs the line between actual illness and the kind of ‘not feeling well’ that can be an excuse for poor performance or absences.”

The PTO Alternative A concept that many employers find useful in cutting down on unscheduled absences is known either as a Paid Leave Bank (PLB) or a Paid Time Off program (PTO). This program requires employees to consider all of their vacation, sick, and personal days as one unit to be used either for PTO or serious catastrophic situations. It forces an employee who is abusing their sick day privileges to subtract them from their vacation time or personal days.

Join the Discussion

Small business owners, please help us add to the shallow pool of information available to companies trying to make a decision about adding paid or unpaid sick leave to their benefits programs. Adding a short comment on one or more of these questions could help many people make a wise business decision:

  • How many employees does your business have?
  • Do you include paid sick days in your benefits package? Why or why not?
  • Do you allow unpaid sick days? Why or why not?
  • How many paid or unpaid sick days do you guarantee?
  • How do you prevent abuse of sick day privileges?

Add a comment…

*Unpaid sick leave is required for companies subject to the Family and Medical Leave Act (FMLA)—those with more than 50 workers and for employees who have worked there for at least 12 months. The small businesses we’re discussing are not subject to FMLA.

by Nancy Lender, The National List of Attorneys

Categories: Business Relationships, NL Insider


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