Paid Sick Leave: Is Your Policy Hurting Your Small Business?

While new federal paid sick leave mandates might not impact your small business, it’s a good time to take stock of your own PTO program. Here’s how.

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This week, President Obama released an executive order mandating that all new federal contractors will be granted seven days of paid sick leave starting in 2017.

What does this mean for my small business?

Private businesses are not impacted. Currently, your private business is only required to offer unpaid, job-protected, long-term sick leave through the FLSA. Paid sick leave (with the exception of a few cities) is not required at all. Even so, competitive companies of all sizes are increasingly offering employees paid sick leave as elective benefit, often as part of a larger time off program.

Is your paid leave policy competitive?

Many small businesses haven’t looked at their time off policies since the day they created them—but they should! Paid time off policies play a huge role in motivating your employees to do their best work and stick with your company for the long haul.

See whether your situation could use a tune-up.

Situation #1: We don’t offer or track paid time off, but want to.

Solution: Explore your options to make an educated move.

Time off policies come in a lot of different flavors. Some policies separate vacation, personal time, and sick time into separate buckets (traditional time off), while others group all types of PTO into a single pool (banked PTO/unlimited PTO). From there, you can pick and choose features that are right for your company—should your employees accrue time off, or will you grant it? Will it roll over, or is it capped each year at a maximum? If you’re not ready to offer a full time off policy, at minimum, offering paid sick leave is a good first step.

Situation #2: We offer a traditional paid time off policy, but it’s a pain to manage.

Solution: Reduce complexity with a simpler system.

Large enterprise companies and small businesses alike are making the move to banked PTO policies, which don’t distinguish personal from vacation from sick time. Such policies free you from maintaining meticulous records and give employees greater control over using their time off freely. Among small businesses (100 employees and under), banked PTO is growing in popularity.


Situation #3: We offer a banked PTO policy, but even that’s more than we care to deal with.

Solution: Go all in with a leap to unlimited PTO.

If you trust your employees to be responsible with an unlimited PTO policy (which you should!), this switch will make your life even easier. If someone has a cold or migraine, no worries—employees can be trusted to take the time they need without submitting and requesting approvals.

Ultimately, whether you’re offering paid sick leave for the very first time or just switching policies, thinking through the role that PTO plays in your company helps everyone stay happy and healthy at work.

Still have questions about which PTO policy is right for you? Check out our Pocket Guide to Creating the Perfect PTO Policy.

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