What Is Sick Leave, and What’s Your Plan for Employees?

April 21, 2021
What Is Sick Leave, and What’s Your Plan for Employees?

Did you know that roughly 1 in 4 working Americans, or roughly 34 million people, don’t have access to paid sick leave, according to the Federal Bureau of Labor Statistics? It’s important to understand that the amount of paid sick leave offered to employees varies by occupation, size of employer, and geography, but it is vital to include it in your benefits package. It's reasonable to assume that at some point, your employees or their family members will get sick. And when this happens, employees will need to take time off from their job to care for themselves or a child, spouse, or other family member. Creating a sick leave policy that’s aligned with the law is critical to managing your business effectively. Let’s take a look at a few key points to keep in mind when creating your company’s paid sick leave policy.

What is sick leave?

Sick leave allows an employee to take time off to take care of an injury, heal from a contagious illness or manage a serious health condition. In many companies, sick leave can be taken for an employee’s own personal illness or that of a family member. There are 2 types: unpaid and paid sick leave. Federal law entitles covered workers to unpaid sick leave under the Americans with Disabilities Act (ADA) and the Family and Medical Leave Act (FMLA). At the federal level, there are no mandatory paid sick leave laws. However, some states do require employers to provide a certain amount of paid sick leave, so it’s important to keep abreast of your state's laws. When paid sick leave is offered, it’s usually accrued. For example, for every 40 hours worked, the employee might earn 1 hour of sick time or roughly 2 hours of sick leave for every biweekly pay period.

Am I required to offer my employees sick leave?

The ADA and the FMLA both require employers to provide a certain amount of sick leave if they meet the criteria. It's nuanced, but essentially, covered businesses with 25 or more (ADA) or 50 or more (FMLA) employees must provide unpaid sick leave. It’s important to note that the ADA and FMLA only require unpaid sick leave to be offered by employers who meet the requirements, and that in order to be eligible, employees must also meet certain criteria. In addition to the ADA and FMLA mandates, some states and cities mandate a certain amount of paid sick leave allowance for any health-related reason. This could apply to the birth of a child, general family care, bereavement purposes, and any serious health conditions employees may be facing. It is your responsibility as the employer to make sure your organization adheres to all current and new laws regarding paid and unpaid sick leave.

Planning for your sick leave policy

As you plan your sick leave policy, you must adhere to any compliance laws in your state, as well any applicable laws issued by the federal government. Next, consider which employees will be eligible and how they will earn time off. You may also want to decide if your employees’ sick leave rolls over into the next year or if it restarts at the beginning of each calendar year. The goal here is to be as generous as possible with your policy while adhering to your predetermined compensation strategy and fiscal year budget.

What should a sick leave policy include?

Your sick leave policy should include the eligibility criteria, accrual rate, and the guidelines your employees need to follow in order to use their sick leave.

1. Eligibility - In most companies, paid sick time is reserved for full-time employees. But some businesses allow part-time employees to accrue sick leave at a reduced rate.

2. Accrual rate - Sick leave is generally an accrued benefit that is earned over time and employee tenure. There are several different types of accrual options. The most common is that employees earn a specific amount of time for every hour, week, or month on the job. For these employees, their sick time is generally calculated per pay period. One common calculation is a half-day earned for every month of paid work. This usually amounts to 6 or 7 paid sick days per year. However, some companies have decided that offering all eligible employees a certain amount of annual leave is the best option. It simplifies their sick leave policies while providing employees the time they need to care for themselves or a sick loved one. Using a third-party HR provider to track accrual and usage is the easiest way to keep tabs on how much sick time an employee has earned and used and how much sick leave is still available.

3. Usage guidelines - Next, consider the process by which employees request sick days and how they’ll be approved. Keep in mind that most employees wake up sick and can’t provide much, if any, advance notice. However, employees should be instructed that when they can foresee the need for absence, they should report it ASAP. That way the employee can secure the time off, and the company has time to fill the opening in the schedule. In other instances, you may simply ask that the employee call in as soon as they realize they won’t be able to make it to work. You can also ask employees who are calling in sick to try finding their own shift replacement. This happens most often in service industries. However, this can only be a request, and it cannot impact the employee’s ability to use their accrued sick time. Remember to also include how to request a sick day in your sick leave policy.

  • Do they contact their direct supervisor, or HR department? By phone, text, or email?
  • If their supervisor isn’t available, whom should they contact?
  • Can I require employees to provide a doctor’s note as proof of illness?

You can request that your employees provide a doctor’s note in order to prove that they’re actually sick. In general, this is requested if an employee must take 3 or more days’ leave to care for themselves. The note should specify what the illness is and when the employee is expected to be able to return to work. Doctor’s notes for 1 or 2 days off are generally considered to be an unreasonable request. If an employee has been injured, on or off the job, it’s considered reasonable to request a doctor’s note that clears them to return to work. This is especially important if the employee’s injury impacts their ability to perform their job safely. As an employer or HR professional, you’ll also want to look at sick leave patterns. Some employees may routinely call in sick on Mondays or Fridays, which may raise questions as to whether the employee is actually sick. Often, simply noting to the employee that a pattern is beginning to emerge is enough to get a weekend warrior to rethink their use of paid sick time.

What about unused sick time?

How do you plan to deal with unused paid sick leave? Some companies allow unused paid sick time to roll over. Other companies simply give employees the monetary cost of their unused sick time at the end of the year. There are no federal laws that require companies to pay employees for any unused sick time they’ve earned. Depending on state and local laws, there may be rules on what rights employees have to unused sick time. Check with your local Department of Labor for laws applicable in your area. Unlike vacation time or paid time off, sick time pay can be a use-it-or-lose-it benefit for employees, based on a company’s policies. Many companies allow their employees to roll over unused sick time into the next year(s), some indefinitely. Some employers require employees to use up their sick time within a year or 2 of earning it. Still, others allow employees to roll over sick time up to a predetermined limit, like 30 days.

The pros of a use-it-or-lose-it policy

  • If you let employees roll it over, employees can create a bank of sick time for when they really need it – like if they become seriously ill or are planning a pregnancy.
  • Having a large block in their sick time bank is good for business – it boosts retention.

The cons of a use-it-or-lose-it policy

  • You may see a wave of absences at the end of the year that can be difficult to manage. For many companies, rollover is the best option in order to prevent a rash of absences right at the end of the calendar year
  • Employees who work hard to bank their sick time often do so at their own expense. They may come to work when they shouldn’t, more focused on accumulating than using sick time off. That can mean working while ill or infecting others.

Do I have to pay terminated employees unused sick leave?

Unless there is a specific law in your area, sick time does not have to be paid out when an employee leaves. However, many companies develop basic rules to cover this type of scenario. Many policies state that employees who are terminated for cause will not be paid any accrued sick time. Some companies even extend this policy to include employees who are laid off vs. fired. They may add that for employees who resign, sick time that is accrued but not used may be paid to the employee upon separation. However, when you determine the unused sick time policy, make sure it’s administered evenly for every employee. You don’t want a policy that’s different for hourly versus salaried employees.

How to roll out your sick leave policy

Once you’ve created your sick leave policy, it’s important to communicate it widely to existing employees. Make sure it’s in all your new hire handbooks and employee manuals. Changes to existing sick time policies should also be widely communicated to employees so that they can adjust accordingly. This can be done via all-staff memos, email, text messages, posters, etc. The easiest way to communicate changes is to provide a checklist of what’s new or changed, then add a hard copy and/or link to or of the full policy on the company’s website. Make sure to include who employees can contact if they have any questions about the policy or require any further information. Business has its challenges. And we have solutions. Check in daily for helpful news, tips, tools, and resources for the HR and business management journey.

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