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March 29, 2018

What’s your sick leave strategy?

It seems like a monthly occurrence that another state or locality passes a new sick leave law, requiring employers to offer paid time off for sick leave. While there are no federal laws on this subject, the trend of states and localities mandating this requirement is rapidly gaining momentum.

Currently, 15 states and the District of Columbia require paid sick leave. Some of the laws are state-wide, while others only apply to cities, counties and other localities within those states. Some laws are even limited to certain industries.  

As this trend toward sick leave requirements continues, now is the time to evaluate your company’s current plan (see my previous post on classifying time off) and how these requirements might impact it.

How new sick leave requirements may affect your current policies:

  • If you currently have a paid time off (PTO) policy: Laws allow PTO to count toward the sick leave requirement, with some specifications. As an example, if you offer 10 days of PTO, but the law requires six days of sick leave (the average time required by these laws is 48 hours), you are able to absorb this requirement within your policy. In essence, the six day requirement would be fulfilled by the 10 days of PTO currently offered. However, from an employee morale perspective, that leaves only four days for vacation, and you may find yourself struggling to compete in the benefits area for this reason.
  • If you currently have a vacation and sick day policy: Financial concerns may arise due to the increase in sick leave requirements. For example, if you offer 10 days of vacation time and three days of sick time, and the new sick leave law requires you to offer three additional days, you now must increase your overall accrual allocation from 13 days to 16 days. That’s three more days per employee, which will cause a financial increase, unless you take from vacation days; however, similar to the above scenario, this can cause a morale issue for employees.

How to adjust your current plan to prepare for future sick leave requirements:

  • Evaluate your plan from both a financial and morale perspective. If sick leave were to be required, what would that plan look like? Review that plan per year of employee tenure to see if any one group of employees could be negatively impacted. 
  • Make small changes first. See if you can make minor adjustments now to move toward this new trend. An example of this could be rolling out a new tier of leave for new hires that reduces your vacation liability, while grandfathering current employees.
  • Before making a drastic change, examine your current usage to determine which approach (e.g., PTO policy or sick and vacation policy) works better for your people and your company. Make sure you look at what is working and isn’t working. But caution – don’t change plans because of a few bad instances. You don’t want to punish everyone because a few individuals found a loophole.

It’s likely only a matter of time before sick leave laws impact your company. It’s better to be ahead of the curve and prepare for this event, rather than try to rush to comply with new requirements later on. As with any changes, keep your employees and organization top of mind. By doing so, you will be able to adjust to an evolving landscape while keeping your business profitable and competitive.

 

 


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