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Guidelines for creating a paid sick days policy

Guidelines for creating a paid sick days policy

Before legislation (and competition) demanded it, paid sick days were not a given for most employees. Now many companies are having to create a sick days policy. The good news is that many employers are finding that such policies can actually be beneficial and support employee productivity and even recruitment.

Here are a few takeaways when it comes to creating your company’s sick days policy.

Recordkeeping matters

Companies have to offer benefits to stay competitive in the talent marketplace. But when an employer creates a sick days policy, it also creates recordkeeping issues.

Before establishing a new policy, employers should consider their particular business needs and decide whether it would be better to create a single bank of “paid time off” (PTO) to be accrued for vacation, sick days and other absences, or to separate each one out by type.

A single PTO bank means an employer needs to spend less time policing employees’ reasons for being absent, and employees generally like the flexibility. From a manpower standpoint, separating each bank by purpose generally results in employees taking fewer days off overall.

Employees by nature make sure they use up every day of PTO they earn, but when sick days are separated from vacation time, most workers try not to use up those days, preferring to save them for a future need.

Keep it specific

A good policy that separates paid absences by type should include:

  • A method for tracking employees’ accrual and use of sick days
  • A procedure for employees to request foreseeable sick days (e.g., for surgeries or hospital stays)
  • A description of an employer’s right to request medical documentation supporting any requested sick day
  • A process to audit the use of sick days so that any abuse can quickly be discovered

Integration into existing policies

Many employers have traditionally offered a bank of vacation, sick days, and paid time off in a single “bundle.” The biggest challenge for employers is to integrate any new law’s paid sick days requirements into their existing policies.

Lynn Kappelman, an employment attorney with Seyfarth Shaw, LLP, explains that laws do not always require employers to pay out accrued but unused sick days when an employee is terminated. The law typically requires payout of accrued vacation time.

Employers who use a single bank for their employee time off, without differentiating its use, could end up paying terminated employees for more unused absences than necessary.

Kappelman said he advises some clients to “unbundle” their paid time off benefits so that vacation and paid time off are accrued and recorded separately from sick days. “It might create extra work up-front, but it is easier than trying to figure out how much of a departing employee’s leave bank is for sick leave and how much is for vacation,” he says.

But what about employers who wish to keep their employee benefits bundled and who accept a higher payout at termination? Rowley advises making it very clear in your paid time off policy that vacation, PTO and sick days all come out of the same “pot.”

“Make certain your employees understand that for each sick day they take, they are also reducing their available vacation time,” he says. One advantage of this method: it can help to ensure that employees only take time off when they are truly sick because they don’t want to use up their vacation.

Either way, employees do better when they have more benefits. They are more productive, happier, and healthier, and that’s a good thing for employers.

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