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Guidelines for Creating a Paid Sick Leave Policy

Guidelines for Creating a Paid Sick Leave Policy

By: Melanie Berkowitz, Esq.

As we’ve seen, the trend to offer paid sick leave is growing nationally, with Connecticut slated to become the first state to require employers to provide their service workers with paid sick leave with other states considering similar legislation.

The result is that some companies will be faced with creating a paid sick leave policy for the first time. Some companies are discovering that, with the right structure and oversight in place, a paid sick leave policy can actually be beneficial and can support employee productivity.

Recordkeeping Matters
As with any new employment law, paid sick leave creates new recordkeeping issues. Employers in Connecticut should revise their employee benefits and paid leave policies now — in advance of the law’s January 1, 2012 start date.   

Before establishing a new leave 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 type of leave by purpose.  

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 generally make sure they use up every day of PTO they earn, but when sick leave is separated from vacation time, most workers try not to use up their sick leave, saving it for future need.

A good paid sick leave policy that separates benefits by type should include:

  • A method for tracking employees’ accrual and use of leave
  • A procedure for employees to request foreseeable leave, as described in the Connecticut state law
  • A description of an employer’s right to request medical documentation of the needed leave 
  • A process to audit use of leave so that any abuse is quickly discovered  

Integrating the New Law into Existing Policies
Connecticut employers have traditionally offered a bank of vacation, sick and PTO leave in a single “bundle.” The biggest challenge for employers will be how to integrate the new law’s paid sick leave requirements into their existing policies. 

Seyfarth Shaw, LLP employment attorney Lynn Kappelman explains that state laws such as Connecticut’s recently passed paid leave law do not require employers to pay out accrued but unused sick leave when an employee is terminated; the law requires pay out of accrued vacation time.

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

“I’ve been advising my Connecticut clients to ‘unbundle’ their leave benefits so that vacation and PTO are accrued and recorded separately from sick leave,” says Kappelman. “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.”

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 leave policy that vacation, PTO and sick leave 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.  

Location, Location
Employers who have offices or employees in different places may also need to create separate leave policies for those locations that are in a city or state that offers paid sick leave.

Kappelman recognizes that Connecticut employers with worksites in other states, or national employers with Connecticut offices might have to implement separate benefits policies. “It can become complicated in cases where an employee splits his or her time between two locations,” she says. “Careful recordkeeping is key to accuracy in those situations.”