There are few things more annoying than sitting next to a coworker who is continually coughing, sneezing and complaining about how badly they feel. If you are like most people, you might think to yourself “why didn’t they just stay home? That’s what I would do.” According to a recent study by Monster.com, the odds are that you wouldn’t stay at home to recuperate. You would instead be part of the 71 percent of workers who go to work even when they are ill. Of the 29 percent that do stay home, two-thirds spend the time away from the office working, not recuperating.
As a business owner, are you willing to pay your employees to stay home and recuperate when they are sick? This is precisely the question that is being posed around the country at the city, state and national levels regarding paid sick leave. As the current battle in New York City over this issue indicates, it is a highly contentious issue where neither said is inclined to compromise.
How does your company compare?
Paid sick leave “provides all or part of an employee’s earnings if the employee is unable to work because of a non-work-related illness or injury.” It is typically offered on a per-year basis expressed in days.
According to the Bureau of Labor Statistics’ National Compensation Survey, which provides comprehensive measures of occupational wages, employment cost trends and benefit incidence, 62 percent of private sector workers and 89 percent of state and municipal workers receive paid sick leave as a benefit related to their employment. For private industry, paid sick leave is available to:
- 74 percent of full-time workers vs. 26 percent of part-time workers
- 71 percent of unionized workers vs. 61 percent of non-union workers
- 53 percent of workers at companies with less than 100 workers vs. 67 percent of workers at companies with between 100 and 500 workers vs. 89 percent of workers at companies with more than 500 workers
- 86 percent of workers whose earnings are within the top 10 percent for their industry vs. 19 percent of workers whose earnings are within the bottom 10 percent for their industry
- 54 percent of workers at manufacturing companies vs. 64 percent of workers at service industry companies
As the data indicates, there are significant differences depending on the size, nature, type and industry of employment. A high-paid, full-time, unionized worker at a large service company is most likely to have paid sick leave as a benefit. A part-time, low-paid, non-unionized worker at a small manufacturing company is least likely to have paid sick leave as a benefit.
Since 2008, the BLS calculates the percentage of paid sick leave access based on whether or not the worker has access to the benefit and regardless of whether or not they use it. Prior to this change, workers where only considered to “have access” to the benefit if the employer incurred a cost related to the benefit. Comparing the same data set using both definitions yields only a small change. One conclusion that can be drawn from this is that when workers are offered paid sick leave, they will use it.
How much does it cost to offer paid sick leave?
This is one area where there is no clear answer. Advocates of paid leave legislation indicate that it would affect a small number of workers and the increase in overall payroll costs would be minimal.
Detractors indicate that the costs would be significant – especially at a time when businesses are still struggling with a lackluster economy – and would affect a large number of workers. The paid sick leave debate certainly reflects the observation popularized by Mark Twain: “‘there are three kinds of lies: lies, damned lies, and statistics.”
The answer of course is somewhere in the middle and depends on the requirements of the legislation. In New York City, the proposed bill would require companies to provide employees , not independent contractors, with 72 hours of sick leave per year for companies with more than 20 employees. Companies with less than 20 employees would have to offer 40 hours per year. In this case the sick leave could be used for “an employee's own mental or physical illness or for attending to the illness of a spouse, child, parent, grandparent or domestic partner.”
According to the latest BLS report on employee compensation which was published in June 2010, the average worker cost per hour to private sector employers was $27.64. Benefits were responsible for $8.11 with paid sick leave responsible for $0.23 of the total hourly cost or 0.8 percent.
These figures represent the overall average and since 38 percent do not receive paid sick leave, the actual cash cost to companies that do offer it is higher. Proposed legislation across the country also would increase the minimum requirements above what many companies currently offer, further increasing costs. For companies that do not offer it now and have many part-time workers, the increased cost could be significant, especially in low margin businesses.
Is paid sick leave a right?
According to the McGill Institute for Health and Social Policy, the United States is one of the few countries in the world, and the only one in the western hemisphere, that does not have a law requiring paid sick leave. In Canada, anywhere from 31 days to 25 weeks paid sick leave is required at 50 percent to 75 percent of the workers’ wages.
Advocates argue that it should be a right and use the fact that over 160 countries require it as evidence. They also point to the indirect benefits such as lower healthcare costs since they believe contagious people are more likely to stay at home if they will be paid to do so.
However, those that do not support paid sick leave legislation believe it should be up to individual companies to decide what benefits to offer as they compete for talented workers in the marketplace. The additional costs to businesses of a paid sick leave law may also cause the elimination of many entry level and part-time jobs as companies decide it is not worth incurring yet another cost for low-skilled workers. Interestingly, many workers that currently go to work ill do so because of workload and not because of a lack of paid sick leave.
Pending legislation
The Healthy Families Act is currently being considered in the House of Representatives (H.R. 2460) and the Senate (S. 1152). Both are in the early stages of the legislative process and are unlikely to become law anytime soon. However paid sick leave does not require federal legislation and many cities and states are taking up their own legislation. San Francisco was the first to offer it in 2006, followed by Washington, DC. So far no state-level paid sick leave law has been enacted.
So what do you think? Does your company offer paid sick leave? Are you thinking about offering it? Leave your comments below.
Mike Periu is the founder of EcoFin Media, LLC an independent producer of financial, economic and entrepreneurial content for television, radio, print and the internet. Over the past ten years he has started three companies and advised over 50 companies on financial strategies including fundraising. Mike also hosts regular small business webinars on a range of topics relevant to business owners.
