The Benefits of Offering Paid Sick Leave

Aug 07, 2020
Back to Blog →

Offering paid sick leave to employees has many benefits. It increases retention and morale, helps with recruitment, gives customers a better experience and decreases the risk of spreading contagious illnesses to other employees and customers. 

Sounds amazing, right? But, how can a cost-conscious business offer such a great benefit when they need their employees daily in order to operate? In this blog, you’ll learn how offering paid sick leave is easier than you think. 

What Is Paid Sick Leave?

Let’s start off with the basics. Paid sick leave is a type of leave that allows an employee to either accrue paid time off of work to use when they’re sick, their family member is sick, they have a doctor’s appointment or a medical procedure. Another option employers have is to front-load a set amount of hours at the start of each benefit year that employees can use for paid sick leave throughout the year.

For businesses in states or cities with mandated sick leave, all work is eligible for accrual; and for employees in locations where there are no mandates, it’s up to the business to offer paid sick leave.

Beginning on April 2, 2020, the temporary Families First Coronavirus Response Act (FFCRA) became effective to make paid sick leave available for employees who are affected by COVID-19 while providing relief in the form of tax credit reimbursements for their employers. The act covers certain public and private employers with less than 500 employees and allows for two weeks of paid sick time for specified reasons related to COVID-19. The leave provisions provided through FFCRA are effective through December 31, 2020. Listen to our most recent podcast for more details about the FFCRA. 

How to Offer Paid Sick Leave

To implement a paid sick leave program, the first thing you have to do is check for any applicable state or local regulations. Each regulation gives you the minimum accepted accrual rates, waiting periods for sick leave use and annual rollover limits. If you’re a multi-state employer, you may need different rules for employees in each state to follow the minimum acceptable standards. 

Your paid sick leave plan can be as simple or as complex as you would like it to be. For example, you can have a plan that allows for all employees to be front-loaded a set amount of hours on January 1st of each year with no rollover of any unused hours. Or, you can have a tenure-based accrual plan. In this plan, employees can accrue a set amount of paid leave hours over a specified time frame (by pay period, or by hours worked), with caps on the amount of leave they can have in their balance at any time or on the amount of leave they can use in a single benefit year. 

Paid Sick Leave Advantages

The cost of offering paid sick leave depends on how much you allow your employees to accrue.

For a basic estimate, you can take the hourly pay rate of an employee and divide it by the accrual rate of one hour of sick leave. If your employee makes $12 per hour, and your policy allows them to accrue one hour of sick leave for every 40 hours they work, then their sick leave will cost you $0.30 more per hour worked. 

According to the Journal of Occupations and Environmental Medicine, working while sick costs the national economy $234 billion annually in lost productivity. If you’ve ever gone to work not feeling well (raises hand), you know how hard it is to focus and get your work done. Allowing your employees to stay home means they can get well faster. It also means they won’t be potentially spreading their illness to other employees or customers.

Offering paid sick leave can also reduce turnover which typically costs one third of the worker’s annual earnings. For your business, offering paid sick leave may be less than what it would cost you to advertise a position, interview candidates and provide training. 

There are several obvious advantages to offering paid sick leave. With the growing trend of city and state governments mandating it, it’s a no-brainer to consider offering the worker-centric benefit at your business. 

Because it’s our mission to improve the lives of hourly workers and the businesses that depend on them, we provide the option to offer paid sick leave to your workers. Providing paid sick leave can be an administrative burden and require separate tools to track and manage. We can handle all aspects of offering this benefit to workers so you can focus on growth. Contact us to learn more.