What Is Sick Leave? Plus 3 Things Every Sick Leave Policy Needs

Learn how important a sick leave policy is for your business, and how to create one

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Roughly 1 in 4 working Americans — roughly 34 million people — don’t have access to paid sick leave, according to the federal Bureau of Labor Statistics.

While access to paid sick leave varies by occupation, size of employer, and geography, paid sick leave benefits both the employer and the sick employee. Providing paid sick leave allows a sick employee to rest and heal, while preventing further illness in the workplace.

Whether you employ full- or part-time workers, remote or on-site staff, it’s reasonable to assume that at some point people will get sick. Creating a sick leave policy that’s aligned with the law and meets the company and its employee’s needs is critical to managing your business effectively.

Here’s what you need to keep in mind when creating a sick leave policy.

What is sick leave? 

Sick leave is time off due to the employee’s illness. In many companies, sick leave is also allotted to employees to attend to the needs of a sick child or other dependent.

There are two types of sick leave:

  • Paid sick leave
  • Unpaid sick leave

Federal law mandates 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.

When paid, sick leave is usually accrued, meaning the employee earns the time off by working. Typically, employees earn one-half a sick day for every month worked, totaling 6 per year.

Am I required to offer my employees sick leave? 

All businesses with more than 25 or more employees must provide unpaid sick leave to staff members under the ADA.

Under the FMLA, employers with 50 or more staff members must provide sick leave. Neither laws require the leave be paid time off, and for both there are specific requirements that have to be met to take time away from work.

Although not required on a national level, some states and cities now require paid sick leave.

See “A List of States and Cities with Paid Sick Leave” for a complete breakdown of paid sick leave laws.

Does sick leave have to be paid? 

No. Unless required by local law. Paid sick time off, in states without a mandate, is a voluntary benefit provided by employers.

According to the Bureau of Labor Statistics, 78% of workers have access to some form of paid sick leave.

Before you create a sick leave policy …

As you plan for your policy, you must adhere to any compliance laws in your state, as well as federal legislation.

Consider what you want to offer to employees, which employees will be eligible, and how they will earn time off. There will be financial impact as employees begin to use time off, so be as generous as you can be, within reason and the parameters of your budget.

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What should a sick leave policy include? 

Predetermine how you want the policy to apply and roll out before you announce it to your staff. With all the elements in place, it will be easier for them to understand and easier for you to administer.

Here are some main points to determine:

1. Eligibility

Who will be eligible for paid sick leave? In most companies, paid sick time is reserved for full-time employees, but some allow part-timers eligibility at a reduced rate.

2. Accrual rate

For most companies, sick time isn’t a benefit earned after a specific amount of time. For example, you typically don’t have to wait until your first anniversary to use sick leave.

It’s generally an accrued benefit, earned over time and 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.

The easiest and most common calculation is a half-day earned for each month on the job, or 6 days per year.

Using a third-party provider to track accrual and usage is the easiest way to keep tabs on how much sick time an employee has earned, how much they’ve used and what’s available to them. Manual tracking is complicated, so the ability to outsource this work is a huge benefit to employers.

3. Usage guidelines

Another factor to plan for will be usage. Often, employees wake up sick and don’t have an opportunity to provide more than a hour’s notice they won’t be coming into work.

Your policy should include that any foreseeable absences should be called in as soon as possible. This could include using sick time for a doctor’s appointment. If notice isn’t possible, ask employees to call at least before their shift is ready to begin.

In some companies, employees need to look for a replacement for their shift if they’re calling off for the day.

While this may be a request, it shouldn’t predicate whether or not they are eligible for time off with pay. Employees who earn sick time are allowed to use it, whether they can or do find a replacement or not.

Your policy should also outline who the staff member should call if they’re taking a sick day.

  • Do they contact their direct supervisor or HR, by phone, text or email?
  • If their supervisor isn’t available, who should they contact?

doctor reading notes on phone

Can I require employees to provide a doctor’s note as proof of illness?

Part of your policy should be the option, at the discretion of the company, to request a doctor’s note to verify illness or to verify eligibility to return to work.

Some companies request a doctor’s note in the event an employee will be absent for more than 3 days. The note should specify what the illness is and when the employee is cleared to return to work. Notes for 1 or 2 days off are generally considered an unreasonable request.

If an employee has been injured, on or off the job, it will be reasonable to request a doctor’s note to clear them for full duty when returning to work. Particularly if their injury might impact their ability to perform work safely, you’ll want to make sure they’re not doing more damage to themselves, or putting others at risk.

For some businesses, patterns will begin to emerge. Some employees routinely call in sick on Mondays or Fridays – not enough time to request a doctor’s note, but enough to create suspicion. 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? 

An unused sick time rule to consider is whether or not to make sick time a “use-it or lose-it” benefit. Meaning, can employees roll over unused sick time into the next year, or take a buyout for it?

There are no federal laws that require companies 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 proposition for employees, based on a company’s policies.

Most companies allow their employees to roll over unused sick time into the next year(s), some indefinitely.

Some require employees to use up their sick time in the year (or sometimes within 2 years) 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, within limits.
  • 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. That can mean working while ill, or infecting others.

Do I have to pay out 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 come up with basic ground rules.

Many policies state that employees who are terminated for cause will not be paid out any accrued sick time; some companies include employees who are laid off, as well.

They may add that for employees who resign, sick time accrued but not used may be paid to the employee on separation.

However 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, for example. To assure a non-discriminatory policy, the rules should apply to everyone.

woman working with laptop

Rolling out your sick leave policy 

Once you’ve created a policy it will be important to communicate it widely to existing employees and make sure to issue it to new hires in handbooks and policy manuals.

Changes to existing sick time policies should also be widely communicated so employees know the rule/change or addition and can adjust accordingly.

Here are some ways to communicate your sick leave policy:

  • Memos to all staff
  • Email
  • Text messages
  • Posters

The easiest way 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 on the policy or require any further information.

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