Sick Leave Benefits for Local Government Employees, Part 4: Establishing Clear Policies

This column is Part 4 of a series of articles on the subject of paid sick leave benefits for local government employees. Part 1 was the introduction that raised issues being discussed by HR professionals and debated by elected officials; Part 2 was a summary of research on sick leave policies, practices and various paid time off (PTO) programs; Part 3 addressed the important role of supervisors, some incentives in place and policy recommendations for improvement; and Part 4 will provide some review, guidelines for establishing clear policies, summation, and attempt to wrap-up the subject for now.

Local government has been a leader in regard to paid sick leave as a benefit. The private sector is now in the process of catching up. Elected officials at the state and local level are establishing minimum standards in regard to paid sick leave, similar to what they have done long ago in regard to wage and hour laws.

The importance of sick leave has been underscored by the increasing number of women in almost all parts of the workforce as well as an aging workforce. In addition, the legislated requirement in some states and localities that employers offer at least 40 hours of paid sick leave per year has not caused a significant increase in the cost of labor for those businesses who have been required to provide this benefit that they did not previously offer. Paid sick leave is recognized by many employers as a necessary recruitment and retention tool because employers with whom they compete for labor provide paid sick leave benefits. It also provides some insurance that fewer sick employees will come to work and pass their sickness on to others.

So, paid sick leave is likely to grow in importance in the private sector and not be cut back by economic interests of the business community. In the public sector, there may be some continuing shift to paid time off programs but it appears that the majority of local governments generally favor the status quo. Most employees who are not sick accept the ethic that they should not call in sick when they are not sick. Hopefully, the few abusers will not ruin it for the everyone else. A problem that has been identified by some readers is how to effectively deal with unauthorized sick leave as well as the employee who persists in using accrued sick leave such that a zero balance becomes the norm for that employee. 

Incentives that work to reduce excessive use of sick leave seem to be those that are linked to annual benefits (e.g. 25% sell-back or HSA account) rather than wait until retirement or termination. Incentives that reward employees with both annual and post-retirement pre-tax benefits (e.g. MERP,HRA) seem to result in better overall attendance.

Guidelines for Establishing Clear Policies

To effectively control unauthorized sick leave, an employer must have a clear policy regulating leave, track each employee's use of sick leave, and take corrective actions when abuses occur. This does not allow for a tolerance policy.

When establishing a checklist for a policy regulating sick leave, the policy should outline what constitutes acceptable leave (for example, see Stanford University's policy on Acceptable and Unacceptable Uses of Sick Time), how time is accrued, the steps necessary for an employee to make a claim, and when a doctor's excuse may be required. In addition, some departments require employees to remain at their homes, except for travel to their health care provider, in order to be eligible for payment of leave. In some departments, verification of sick leave is made by a home visit by the supervisor. Also, many agencies require a written medical certificate if certain circumstances exist, including the supervisor's desire to verify the absence.

The policy should also include provisions addressing the requirments of the Family Medical Leave Act (FMLA) of 1993. The FMLA requires employers to "provide up to 12 weeks of unpaid, job-protected leave to 'eligible' employees for certain family and medical reasons." This may include caring for a child after birth, or placement for adoption or foster care; caring for the employee's spouse, son, daughter, or parent who has a serious health condition; or dealing with a serious health condition that makes the employee unable to perform their job.

Finally, every employee in the department must be familiar with the employer’s policy and the possible penalties for noncompliance. This becomes particularly important when the "just cause" standard is in place.

Tracking Abusers (a/k/a overuse)

In order for an employer to effectively manage sick leave and ensure compliance with their policy, good records are essential. The information gathered from these records is critical to demonstrate a policy violation. Several off-the-shelf scheduling software (e.g., police or fire) programs are available with leave-time tracking features. See this list of attendance tracking software.

At a minimum, the records system should track when the employee takes leave and the reasons for the absence. This system does not need to be elaborate to be able to collect this information. One easy way is for the supervisor to develop a table with the employee's names and blocks for the amount of leave taken during each of the preceding 12 months and the total for the year. This chart makes patterns of abuse easily recognizable.

Another approach to identify employees who may be abusing leave on a regular basis is to track the total amount of leave taken by the entire unit and calculate the average amount by dividing the total sick leave taken by the number of employees in the unit. Then a determination must be made of the level that the organization considers to be excessive, such as 25% above average. Assuming 25% is chosen as the threshold overage for review, the average is then multiplied by 1.25. Any person who has used more than the established threshold should have their leave use reviewed for policy compliance.

Patterns of Abuse

With the policy in place that establishes the standards of conduct and a records system that measures usage, supervisors can easily watch for compliance. Realistically, an agency cannot expect to stop every isolated instance of abuse. Rather, supervisors should routinely look for patterns of abuse. These patterns can evolve in many ways. For example, the offending employee may routinely take leave in conjunction with regular days off, vacation, or holidays. Some will call in sick in response to having their vacation requests denied. Others' sick days may coincide with their spouse's off-days. A more difficult pattern to track occurs when an employee takes off during a specific time each year.

One of the more obvious patterns occurs where an employee uses their leave as soon as it is accumulated. In these instances, employees with an extensive length of service, such as 10 years, will have accumulated only a few days of leave.

It should be noted, it is not necessary for the employee to establish to a pattern of abuse before corrective action can be taken. Rumors of an employee taking sick leave for unapproved purposes should be investigated.

Corrective Action

Enforcing leave policies requires discretion and good judgment on the part of the supervisor. Once a problem has been identified, it is incumbent upon the supervisor to meet with the employee to discuss the reason for the absences. During this meeting, the goal is to have the employee commit to changing their behavior. This will not occur unless the employee assumes responsibility for his or her conduct. During the session, the supervisor should explain that the purpose of the meeting is to discuss the use of sick leave, the problem or pattern that has been identified, and the impact of the behavior on the organization.

Sometimes, the employee may have a legitimate explanation that was not previously known and no further action is needed. In other instances, the employee's problems may exceed the supervisor's ability to address. In these cases, the supervisor should recognize his or her limitations and refer the employee to the department's employee assistance program.

The most successful corrective action plans occur when the subject employee takes part in developing the solution. In some cases, the supervisor may need to guide the employee through the process of exploring the alternatives. Before the meeting is concluded, the supervisor should write a corrective action plan outlining the problem, what the employee is going to do to reduce the use of leave, and a description of any adverse administrative action to be taken for noncompliance.

Disciplinary procedures vary from one community to the next and depend upon governing laws and collective bargaining agreements. However, most realize the need for progressive discipline. Many agencies require employees who continue their abusive behaviors to provide a statement from a health care provider for a specific time (e.g., six months) to verify all claims of sickness.

The Problem Employee

Abuse of sick leave can be a symptom of employees who put themselves above all others or who feel they are “victims” of the system. Some employees, driven by feelings of entitlement, justify their absence as being deserved because of perceived mistreatment by the organization. This willful violation of the employer's policies is found in the employee who knows the department policy requirements but chooses to intentionally violate them anyway. If the employee's attitude is not replaced with a sense of accountability the conduct may continue to erode into even larger problems. Because of this, some departments have begun to consider making excessive sick leave usage an important indicator to track in their corrective action policies.

Use of Incentives to Combat Abuse

Too often organizations invest too much energy and resources trying to control a few poor performers and fail to reward their exemplary employees. It is interesting to note the different approaches used by the private and public sectors in providing leave to employees. In the private sector there is a growing trend to stop distinguishing between types of leave and provide an established amount of leave each year. Employees can then use the time provided for any reason they desire.

In the public sector, the trend has been to keep the different types of leave. As such, in an effort to reward loyal employees for not taking leave unnecessarily, many communities have developed incentive programs. Although compensation practices vary widely across the country, incentive programs can serve to reduce leave use and in the long run save money for the community.

In some agencies, employees are allowed to accrue sick leave up to an established level. The department provides the employee with a cash payment for a percentage of all unused sick leave above a base rate at the end of the year. In many communities, the reimbursement coincides with the holiday season and serves as a nice bonus.

Other communities take a long-term perspective and reward longevity by allowing employees to accrue a specific amount of leave. Any leave earned beyond this limit is forfeited and credited toward years of service upon retirement.

A few departments allow employees to accrue unlimited amounts of sick leave throughout their career and pay the employee for a percentage of the unused leave, up to a specified dollar amount. This serves as a substantial bonus upon retirement. If put into a tax-sheltered account, this can make the money stretch further toward underwriting post-retirement medical premiums to age 65.

Still other organizations pay a percentage (not 100%) of the employee’s wage when the employee is sick. This serves as an incentive for the employee to come to work.

Below is a sample paid leave policy that offers employees a choice between a paid time off program (with less sick leave accruals) or a traditional sick leave accrual program:

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PAID TIME OFF

Employees shall have the option of selecting from two vacation/sick leave schedules based on years of service. This selection shall be made on an annual basis. Once an election is made, it will stay in force until the employee notifies payroll of their decision to change their selection. It is the employee’s responsibility to notify payroll of any change within the open enrollment period during the month of November. If no selection is made, Schedule 1 will be assigned.

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Obviously, this list is not exhaustive, but it does illustrate the wide variation of incentive programs. Also, these incentives are not without problems. For example, employees who are paid out at a lesser rate may "burn the time" they have over the set amount before retirement. This would represent a budget problem and a staffing problem also.

Some Cautions

Once an audit of the sick leave program is done, and different solutions are considered, it is important to take care that the cost of the solution(s) is not going to be greater than living with the status quo. This sometimes calls for an experimental period, testing your assumptions, as to what is broken about the current system and what the solution is intended to fix.

Be open to trying something different for a one or two-year period and then revisit the issue. Employees may have suggestions for improvements that Human Resources has not considered. This suggests being willing to negotiate changes to language in collective bargaining agreements that unintentionally reinforce overuse of sick leave, e.g., provisions that count sick leave hours taken as though they were hours worked for purposes of overtime eligibility.

Some Homework (Follow-up Actions – Data Driven)

I would encourage management and labor leaders to partner and consider going through the exercise suggested at the end of Part 2 to get a better handle on the cost of paid sick leave. 

Conclusion

In light of the above considerations, thousands of employer dollars and significant employee morale issues are at stake when it comes to paid sick leave usage. So, it is worth the time and attention to assess the impact on the various organization units and review options for making things better for all concerned. This is particularly true in local government because employees working in cities, counties and special purpose districts generally accrue more sick leave hours than those in the private sector. Studies have shown that the more sick leave is accrued, the more it is taken.

To ensure a high level of trust, supervisors, managers and leaders in the best companies to work for abide by the Golden Rule and treat employees like they would like to be treated. If workers know that the reasons behind their time off will not be scrutinized by their managers, they will continue to do secretive and potentially unproductive things like taking sick days when they’re well. Yet, if an atmosphere of trust and respect for privacy is in place, and it’s clear that the management will scrutinize sick leave use and not discriminate when it comes to review of employees’ time off records, workers will largely respect and adhere to the rules governing the paid time off system. As the CCH surveys and others have shown, the use of paid sick banks can be an effective tool to cultivate an improved atmosphere of employee trust.