Employee Benefits: Will Paid Sick Leave Increase Absenteeism?

By: Melanie Berkowitz, Esq.

When it comes to employee benefits, a paid sick leave policy raises questions for all types of businesses.

Will the law increase absenteeism? How much will it cost? Is it complicated to coordinate paid sick leave benefits with other types of paid leave?

For smaller businesses that lack a formal HR department and who struggle with employee performance and absenteeism, these concerns can be daunting.

The good news: a little advance planning and clear employment policies will help minimize the burden on employers.

Paid Sick Leave: A Growing Trend in Employee Benefits

With Connecticut recently becoming the first state to require employers to give their service workers paid sick leave, businesses all over the country are taking notice.

While the CT law will require businesses with at least 50 employees to rethink their benefits and recordkeeping procedures, other states are considering their own variations on the law. California's legislature has introduced paid sick leave legislation three times since 2008, and Massachusetts lawmakers are currently considering their own version of the law.

Similar measures are gaining ground in other major cities including Denver and Milwaukee, while the mayor of Philadelphia recently vetoed a law passed by the City Council.

San Francisco and Washington D.C. have both had paid sick leave laws since 2007 and 2008, respectively. In contrast to Connecticut, San Francisco's paid sick leave law applies to businesses of all sizes.

While state paid sick leave laws contain variations, all similarly offer most employees the right to accrue a number of days off with pay to be used for personal illness, family illness or doctor's appointments. Employees at small businesses generally accrue fewer paid sick days (if any) than employees at larger companies.

Avoiding Absenteeism

In San Francisco, the law has expanded the population of workers entitled to paid sick leave to include those who traditionally never received it, such as part-time, temporary and service workers. These employees no longer have to choose between coming into work sick and getting a paycheck.

But what about those employees who take advantage of their new benefit, resulting in absenteeism -- just for a paid day off?

"Abuse is easier to curtail if your written leave and absenteeism policies define employee responsibilities clearly," advises Christian Rowley, San Francisco employment attorney at Seyfarth Shaw, LLP. "Inform employees that you reserve the right to request a doctor's note to document an illness and require that foreseeable sick leave be requested as early as possible."

Rowley did not see a great increase in sick leave abuse after the San Francisco law was passed. "Employees who falsely called in sick on a Monday or Friday (to extend their weekend) before the law was passed are still the ones most likely to cheat now," he says.

The penalties for employers who deny employees paid sick leave have made some businesses wary about questioning employees who seemed to have a lot of Monday and Friday "illnesses," says Rowley. As with other employee disciplinary issues he says, "careful documentation and consistency are key to supporting your actions."

Rowley also notes that for restaurant workers, there is little incentive to call in sick anyway. "Tipped workers don't earn tips for days they don't work even if they get paid their base salary. So the financial burden from the law -- while there -- is not as large as many originally feared," he says.

Balancing Work-life Benefits

Teal Backus, Human Resources Generalist for Wentworth, Hauser and Violich, has managed paid sick leave for two very different San Francisco companies and seen it work in both environments.

Her current company paid sick leave and vacation benefits beyond what the law required even prior to its passage, finding that it helps employees feel in control of their work-life balance. "We rarely see abuse of the benefit," notes Backus. Yet employers who only provide what the law requires can promote a strong work-life balance for their employees.

Backus cites her previous employer -- an aviation company -- as example. "Rescheduling a flight crew is expensive, so we had to be very aware of absences surrounding first days on and last days off of rotations, which could signal leave abuse," she said.

Rather than resort to discipline, the company first revamped the way that pilots were scheduled, which allowed them to work more favorable hours and use their paid sick leave for true illness. "Managing use of paid sick leave from an employee well-being perspective allowed us to address our workers needs first and then discipline continued abusers within our regular absence policy," explains Backus.

The result: a win-win for both employees and employers.