Paid Sick Leave from the Business Owner’s Perspective

You may think offering sick leave will cost you, but here's how it may pay off.
sick-leave-definition
Offering paid sick leave at your small business could benefit owners in the long run. (Photo: TungCheung/Shutterstock)

Recently the Department of Labor finalized a rule that will require employees of businesses doing work on federal contracts to earn up to seven paid sick days a year. And more and more private sector workers — now 64 percent — have access to paid sick leave.

Should you offer paid sick leave to your employees if you’re not doing so already? And can you afford it?

Some cities, such as Seattle, and a handful of states (Connecticut, Vermont, California, Massachusetts and Oregon) have laws mandating that employers offer paid sick leave to their employees. But even if yours doesn’t, offering paid sick leave probably makes sense.

The hidden benefits — to you

The advantages of paid sick leave for the employee are obvious. But it can benefit you, too.

“We found that people without paid sick leave do miss fewer days,” said LeaAnne DeRigne, PhD, associate professor in the School of Social Work at Florida Atlantic University and lead author of a study on the impact of paid sick leave.

The study compared employees with and without paid sick leave and found — no surprise — that workers without paid sick leave are more likely to go to work sick. While having an employee who shows up for work every day no matter what sounds like a good thing, do you really want someone spreading the flu to other staff members — and possibly infecting customers or their food (if you’re in the restaurant business)?

“Food industry workers have the lowest rate of paid sick leave benefits,” said DeRigne. She noted workers in food service often report they went to work sick to prepare and serve food. “The public health implications of that are huge.”

Take restaurant chain Chipotle, for example. Sick employees were apparently responsible for the norovirus outbreaks at several locations. Chipotle announced in 2015 that it would begin giving hourly workers paid sick leave (which salaried workers already had).

Employees in DeRigne’s study who lacked sick leave were three times more likely to forgo medical care for themselves and 1.6 times more likely to forgo medical care for sick family members. The result could be more missed days and possibly even a hospital stay (paid for by your health insurance) if, say, a chest cold turns into pneumonia or angina turns into a heart attack.

Staffers who show up sick also tend to be less productive. You probably recognize “presenteeism” even if you don’t call it that. It’s that lethargic worker, feeling awful, leaning against the counter and coughing every 20 seconds for the three or four days it takes to recover from a virus.

Reduced on-the-job injuries

Here’s a benefit you may not have considered: fewer injuries.

“Working while sick may increase workers’ probability of suffering an occupational injury,” said Abay Asfaw, senior economics fellow at the National Institute for Occupational Safety and Health (NIOSH). Illness may impair their concentration, coordination or judgment.

A NIOSH study found that workers with access to paid sick leave were 28 percent less likely than workers without such access to suffer a nonfatal occupational injury.

Even in a relatively low-risk environment, sick employees bring greater potential for injuries. Imagine a feverish and dizzy employee falling off a stepladder or a delivery driver falling asleep at the wheel under the influence of OTC medicine.

Accidents and injuries affect your bottom line. If an employee is injured or hurts someone else, you could be on the hook for a lot more than a day’s pay.

DeRigne suggested that for business owners, the decision comes down to this: “Do you want your employees working while they are sick?” And, “What are the implications of that for your business?”

How to offer paid sick leave

If you choose to offer paid sick leave, the next step is to define your policy.

How many days should you offer? The average for workers in private businesses is seven days after one year of service, according to 2015 U.S. Bureau of Labor Statistics.

You can offer a set number of paid sick days all at once, or have employees accrue it based on hours worked. An accrual method will require additional accounting.

To simplify accounting, some businesses grant their employees a set number of PTO days annually (including vacation, personal and sick days). This is known as banked PTO. By establishing a cap on the total number of paid days off, employers discourage abuse, as days beyond the allotment are unpaid.

Banked PTO gives employees control over how they use the total time off — but some employees may resent having to use up what would otherwise be vacation time in the event of an illness. Consider how generous the number of total days you’re offering is, and learn what your competitors are offering.

Remember this: According to a 2016 CareerBuilder study, 76 percent of full-time employees are looking for a new job or open to being hired away. A generous amount of PTO, along with other benefits, such as a 401(k), are among the factors that get people to stay.

If you’ve outsourced your HR, that firm can help you make the right paid leave decisions for your business.

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