Sick Leave Benefits for Local Government Employees, Part 3: Some Recommendations

This is Part 3 of a 4-part series on the subject of sick leave benefits for local government employees. Part 1 served as an introduction to the topic. Part 2 identified issues to think about, including cost issues, and questions to discuss on the topic. Part 3 briefly reviews the literature on sick leave benefits, monitoring patterns of absenteeism, and some incentives in place, then offers some policy recommendations for going forward.

Sick Leave Data Analysis

The literature review reveals that sick leave abuse has been on the rise in recent years and has become a major problem for employers.

According to the Bureau of Labor Statistics, in 2012 only a slim majority of private employers in the USA provide paid sick leave accruals to their employees.   Those employers who do not provide stand-alone sick leave programs often provide paid time off programs combining vacation and sick leave into one pool rather than have a stand-alone sick leave program.

Some Recommendations

A comprehensive approach is needed to reducing sick leave usage. Catlett advises an employer should use a system and not just a program to address excessive absenteeism. According to him, a system implies an ongoing serious effort to control absenteeism whereas a program implies a short term, Band-Aid approach (Catlett, 1990, p. 42). Rivera lists "...disciplinary action, verification of illness, personal recognition, bonuses and buybacks" as elements of approaches to curb absenteeism (DallasNews.com, 2003, p. 2). Rivera's bonuses or buybacks are simply referred to as incentives by most of the researchers, and they are commonly mentioned options to reduce absenteeism.

Researchers Gregersen (1998), Peacock (1998), and Clack (2001) all mention utilizing incentives as a means of reducing absenteeism. Examples of incentives (1998, p. 20) are:

• sell back a portion of sick leave on retirement,
• converting sick leave to vacation on an annual basis,
• use accrued sick leave to count for early retirement, and
• converting unused sick leave to cash for purchasing deferred compensation investments Peacock

Another approach revealed in the literature review is a departure from the traditional concepts of separate vacation and sick leave. In this type of system, the person is given a specific number of days to be used as a unified bank when needed or wanted by the employee (All Business, 2003). The concept, also known as paid time off (PTO), is either promoted or suggested for exploration by All Business (2003), Rivera (DallasNews.com, 2003), and Willing (RWTC, 2000). However, the concept of PTO is not universally accepted as prudent and Dwertman (1998, p. 36) provides information which indicates the reductions in absenteeism from PTO programs are not impressive.

A Preferred Sick Leave Policy

An effective sick leave policy should state that the purpose of the sick leave program is to protect the employee from loss of income caused by absences for health problems of self or of immediate family members.  However, this employee benefit is like an insurance policy, which guarantees the income of the insured during his disability or incapacity but provides no benefit if the employee is able to work.  An employee has a right to use his sick leave credits for personal health problems or for family illness provided that the standards for authorized sick leave are met and the employee clearly substantiates his request in accordance with the rules or terms of a collective bargaining agreement.

One of the most complete listing of considerations for effective sick leave policies is the Australian publication Get Better Soon (AGWA, 1997). The findings of the study produced a list of recommendations for the development and management of sick leave programs. These recommendations seem to encompass most of the recommendations made by other HR Professionals and include them into one work. A paraphrasing of the applicable recommendations includes agencies should (a) prepare and publish policies and procedures for sick leave programs, (b) have complete and accurate sick leave tracking systems, (c) be able to produce reports and have easy access to sick leave information for managers, (d) investigate the causes of sick leave absences, (e) promote healthy employees and healthy work environments, and (f) assign the responsibility of sick leave management to front line supervisors (AGWA, 1997, pp. 41-43).

Clack also produces suggestions essential elements of a good sick leave policy. His list includes (a) the policy should include a clear statement of purpose by management of the intent to reduce sick leave abuse, (b) informing employees about both the financial and staffing impacts of sick leave abuse, (c) explore incentive programs to reward employees who do not abuse sick leave, and (d) hold front line supervisors responsible for monitoring and enforcing the program.

The study finds a good sick leave abuse policy will have (a) written policies with clearly defined responsibilities, (b) assigned accountability for managing the sick leave policy, (c) an accurate and timely records system, (d) an adequate leave tracking system, (e) enforcement, and (f) incentives for non-abusers (Peacock, 1998).

An important addition by Gregersen (1998) is progressive discipline for sick leave abusers to reinforce the management's commitment to the sick leave policy. Dwertman (1998) adds careful documentation as an important consideration of a good policy.

The Role of Supervisors

Supervisors play a significant role in sick leave usage.  Supervisors lose leverage to address misuse of sick leave when labor contract provisions are written without supervisors in mind and when supervisors are not trained how to effectively apply the rules.  There are a couple of ways to note when computing sick leave usage:  

1. The number of times absent per employee (for example, an employee might have been absent ten times during the calendar year, with each absence being of one day’s duration or less).  
2. The average number of days of sick leave taken by each employee each year (if three employees worked in a platoon, Employee A was absent 15 days; Employee B, 10 days; Employee C, 5 days; the average days absent in the platoon would be 10 days).

This column includes a recommendation that the first priority be to reinforce the inclusion of front line supervisors in the development, management and monitoring of the employer’s sick leave policy.

This will (a) raise the awareness level of the front line supervisors, (b) inform the supervisors of the department's commitment to reducing inappropriate sick leave, (c) explain the need for consistency in the administration of the policy, and (d) explain the expectations of management that the supervisors will be involved in reducing inappropriate sick leave use.

If the supervisor is in the same bargaining unit as the employee’s being supervised, the organization may consider filing a petition to get the supervisors out of the bargaining unit, consistent with Washington State Collective Bargaining Law, RCW 41.56.  There are certain windows for such action which can be reviewed with legal counsel.

Monitoring and Recording System

The second recommendation is to pursue acquiring a sick leave monitoring and recording system capable of providing the necessary reports to all levels of supervisors. Often, the present system allows tracking of individual records but offers little capability to the field supervisors to track and identify sick leave overuse or abuse. The research identifies software programs, such as Telestaff, which deserve investigation to determine effectiveness.   There are other systems available to record usage of sick leave over time, as to days of the week, hours of the day, months of the year, etc.

Quarterly Reports

A third recommendation is to provide quarterly reports to the entire organization noting the overall leave use of each department and documenting the sick leave trends identified in this research. This writer notes a lack of awareness in department members in regards to inappropriate sick leave trends. Awareness by the employees that the employer is tracking these trends within each department and across the organization has served in itself to cause a reduction in use.

Incentives

A fourth and final recommendation is to investigate and implement successful incentive plans aimed at reducing absenteeism, especially plans aimed at the use-it-or-lose-it mentality that results when non-abusers attain their maximum sick leave accruals. From the time, an employee attains their maximum accrual, they are actually negatively rewarded by receiving no incentive and losing their accrued sick leave.  Employees are also negatively rewarded when paid 100% of their wages when using sick leave.  The research identifies incentive plans, such as those incentives used by Tucson, Arizona, which have positively impacted this situation.  See also, Identifying and Addressing Sick leave Use Trends for the Tulsa Fire Department, National Fire Academy, October 2003.

It is a challenge to find a sick leave incentive that actually reduces the incidence of absenteeism.  Employers have tried numerous approaches, most of which do not change behavior.  The employees who benefit monetarily from the incentives are usually the employees who would come to work anyway.  If the employer desires to reward those employees for what they are already doing, the incentives probably can be considered as working.  However, if the objective is to keep people from taking “mental health” days when not really sick, most incentive programs do not accomplish that objective.

Although beneficial, changes to sick leave incentives in a union environment can only result through negotiations between the employer and the Union. This has traditionally been a difficult task. However, in consideration of both the severe impact absenteeism will soon have on service delivery and on the reduced safety of employees when staffing falls below prescribed levels, the two parties may find working together is a better alternative than fighting it out in bi-lateral negotiations, mediation or interest arbitration.

The leverage the Union has is “past practices” and what the Employer has been willing to concede and tolerate.  For example, some labor contracts count sick leave as time worked which means eligibility for overtime is triggered earlier than it would be otherwise.  This acts as an incentive for those employees who feel entitled to use sick leave shortly after the hours are earned.

The leverage the Employer has is the rising cost and abuses of the system that can be addressed based on tracking usage over time, without throwing out the whole system.  Interest arbitrators seem to take an interest in the Employer’s objectives if implemented throughout the organization.  So, it is good business to address sick leave usage issues as an organization-wide effort.

To balance employee and employer interests, Astron Solutions implemented a quarterly sick time program.  (See: Jennifer C. Loftus, SPHR, CCP, CBP, GRP, National Director, Astron Solutions, SHRM Total Rewards/Compensation and Benefits Special Expertise Panel Member (2008)). Every three months, the company reaches out to all employees, asking them if they would like to receive extra pay in exchange for some or all of their accrued sick time.  Employees can cashout sick time at a 50% rate.  For every two hours of sick time cashed out, the employee receives one extra hour of pay.  The company opted for this approach desiring the following outcomes:

1. A way to not penalize those employees who legitimately need and use sick time.
2. A way to reward those employees who maintain their good health.
3. A method for ensuring that the program would not be so strong of an incentive that someone would come to work when genuinely ill.
4. A program that would be time-sensitive with respect to employees’ current needs. A cash out of some sick time can effectively serve as some extra holiday spending money, for instance.

Other sample incentives to reward Employees (which are not tied to separation or retirement):

• IAFF Contract Provision:  The Employer will contribute $300 to the Variable Employee Benefit Account (VEBA) of any employee who has reached the maximum sick leave accrual of 1,152 hours and who uses less than 72 hours of sick leave in a calendar year.
• IAFF Contract Provision:  If a 24-hour shift employee uses less than 72 hours of sick leave in one calendar year, the employer will pay the employee’s contribution to the WSCFF Trust the following calendar year. 
• Teamsters Police Contract Provision:  An employee who maintains a balance of at least 480 hours of sick leave shall be eligible to sell back sick leave accrued in the previous calendar year at the rate of one hour of cash for every three hours of sick leave during such calendar year to a maximum of 32 hours.

Other sample incentives to reward Employees (which are tied to separation or retirement):

• IBEW Contract Provision:  Upon retirement, 25% of an employee’s sick leave credit accumulation can be applied to the payment of health care premiums, or to a cash payment at the straight time rate of pay of such employee in effect on the day prior to retirement.
• Police Guild Contract Provision: Upon leaving City employment in good standing, employees with at least 384 hours of sick leave and 10 years of service shall be eligible for a cash-out of a percentage of their sick leave.  The percentage shall be equal to the employee’s years of service to a maximum of 25 years, i.e. 15 years of service = 15% cash out, 25 years  of service = 25% cash out.