If your business is looking at providing paid sick leave time for your employees you should look to the costs associated with providing this benefit. There currently is no law that dictates that employers have to provide paid sick leave. Senator Ted Kennedy currently has proposed a bill to Congress to impose such a law. This law would stipulate that business with 15 employees or more must provide a total of 7 paid sick leave days for employees that work 30 hours or more per week. Proration would be used for employees that work less than 30 hours per week. The bill also stipulates that employees would be able to roll over unused sick leave days from year to year as long as it doesn’t exceed the 7 days per year. This leave would be available for employees to take to use for personal illness or to take care of children or care for other family members. If this law were to pass and be enacted into law this would most likely increase the costs of sick leave for companies.
As statistics were found in 1997, 56 percent of medium to large businesses provided paid sick leave to their full-time employees as a benefit. Companies currently have the choice to provide paid sick leave to full-time employees, part-time employees, hourly employees, or any combination of the three. Among those companies surveyed, the average number of annual paid sick leave days ranged from 11.2 days after one year of service to 21.1 days after 25 years of service. Of those employees the average number of sick days used per year by a salaried exempt employee was found to be 3.8 days.Salaried nonexempt employees were found to use and average of 5.6 days. Non-union hourly employees were found to use an average of 4.8 days and union hourly employees were found to use a high average of 5.5 days per year. Employees that struggle with obesity or are regular smokers are also found to use more sick leave days than their counter part employees.
So how do we break it down into dollars and cents?In 1999, studies were found to show that the average price of sick leave per employee was found to be about $0.19 per hour. This translates to about 0.9 percent of their total compensation per year. Let’s look at an example: An employee that works hourly for $7 per hour and a total of 30 hours per week would make $810 per month or $10,080 per year. The total cost of sick leave to the company would total $90.72 per year. The company is paying out approximately 13 free hours per year. Where costs increase to the company is if replacement or substitute employees are needed to take the place of an absent employee. An example of this would be a teacher – she has to have a substitute come in to take his / her place to continue teaching. Although the employee substituting may be on a lower pay scale, the costs still exist.
Non-monetary costs include productivity, job satisfaction, and employee loyalty. For companies that provide benefits like paid sick leave a direct correlation is seen with increased job satisfaction and company loyalty. Employees are found to be more productive and exert more effort to be there and do their best as much as they can. The feeling of security exists knowing that if they really needed to take time off pays off in so many other ways. Monetarily the costs are not exorbitant and the non-monetary rewards provide great benefits to the company.When and where a company can provide this benefit, they should.