How to Handle Sick Leave as a Small Business Owner

How to Handle Sick Leave as a Small Business Owner

How to Handle Sick Leave as a Small Business Owner

Getting paid time off when you’re ill used to be a trademark of more traditional, full-time career employment; it came standard for many workers, along with pension (and a gold watch) when you retired. This was part of the picture only for some American workers, however, as most part-time employees, laborers in certain industries, and freelancers rarely received sick leave. While the Labor Department 2018 numbers revealed a slight increase in workers who got paid sick time (a change from 61 to 68% over 2015), there’s still much to do.

Now, many businesses are scrambling to comply with newly-enacted labor laws requiring they give paid sick leave. Some worry it’s not affordable, while others welcome the challenge (which could help them attract and retain incredible talent.) Here’s a quick guide to making sure your business is poised to meet the new world of HR regulations head-on.

Know the law, but don’t get too attached

While experts don’t think sweeping federal regulations on paid time off will be handed down anytime soon, the myriad of state and local laws can be overwhelming for some companies. That’s why having a labor law expert (even retained on a per-project basis) can be beneficial. New York’s law, for example, is just one of many state and city ordinances that have complicated working with freelancers and remote workers, and companies working in that state have had a short time adjust. With mid-term elections looming close, we could easily see an additional patchwork of rules telling businesses how much paid time off they should offer.

Consider the remote worker

Freelance workers and remote employees are not the same things (although many companies have tried treating them as such, resulting in even more regulations and precedent-setting court decisions.) Because many paid leave laws take effect for both the employer and employee, it may even determine if you bring on talent from any of some highly-regulated states. If one of your top sales managers wants to move across the country, choosing to settle in an area with mandated paid leave, it may not be financially prudent to continue the relationship. With each state or municipality represented by your workforce, knowledge of the law – and complete compliance – is expected.

Stay on top of legislation

An informed citizen may not always be a happy citizen, part of your job as an employer is to know what laws are coming down the pipeline. While Democrats and Republicans have vastly different ideas for funding mandated paid leave (as per usual), other lobbyists believe that businesses should never be compelled to offer benefits that could restrict growth or add to administrative work. Since both the red and blue sides of the aisle have floated their own ideas for how flex-time will be paid for, it’s likely just a matter of time before new laws go into effect – even if at a state level, initially. By following the news for major, changing regulation for your industry and locale, it will be easier to plan for new requirements in the future.

Use PTO as your newest branding tool

One of former General Electric leader Jack Welch’s best-known quotes says: “Control your own destiny or someone else will.”

This sentiment is becoming more common among innovators and disrupters of several industries who want to be known for their forward-thinking benefits and resources. By not waiting until they are required, companies can earn a reputation for “doing it before it was cool.” Some companies are using their voluntarily-implemented paid time off programs to proclaim that they have the employee’s best interest at heart, and they are successfully using this tactic as a hiring and retention tool – especially for industries within STEM.

Instead of unlimited taco bars, kegerators, and a “bring your dog to work” day, you may make a more positive effect by giving people what they want: not having to choose between infecting their co-workers with the flu and missing a mortgage payment.

Count up administrative costs

Regardless of whether you wait until the government requires it – or you choose to forge your own destiny – there will be some additional expenses beyond those unworked hours you’ll now be adding to paychecks. Tracking time off, ensuring it’s paid out efficiently, and dealing with accumulations can be time-consuming. Someone has to administer this new benefit. If you’re a one-office start-up, it may be something that your HR person can do manually, with a few extra hours a week. Larger companies, however, will need to invest in software or another tech to ensure compliance. Many smart businesses hand off this responsibility to payroll services, which are more accustomed to the nuances. However, there will be a cost to make it happen. The Bureau of Labor Statistics estimates that it will cost $1.98 per hour worked (or 6.9 percent of employee wages) to offer the perk. Factor this into your budget when considering any changes to your benefits program.

Move the money around

So, how are these PTO days being funded? Many businesses are simply forgoing wage increases, choosing to bulk-up benefit packages with paid time off. Instead of giving 12 paid holidays a year, many recognize that “holidays” are somewhat of a cultural minefield. (Do you celebrate Christmas? What about Jewish or Muslim events? Is President’s Day worth taking time out?) By sticking to the few very essential, nationally-recognized holidays, and putting the rest of their capital into a more flexible option, many companies are finding the somewhat happy balance to keeping operating costs in check and putting their employees first. You can also pursue certain types of financing such as lines of credit, and get matched up with the best option for your business with Nav.

The silver lining for your business

If there’s a positive to take away from the impending tide of PTO regulations, it is this. The U.S. workforce is increasingly unsettled when it comes to employment. A low unemployment rate, paired with a general opinion that something better waits around the corner, has kept employees ready to jump ship if a more favorable job opportunity comes along. Millennials, in particular, have expressed their willingness to move on to greener pastures, making it increasingly likely that – to attract the youngest and the best – you’ll need to act fast to capture their loyalty.

This article was originally written on August 24, 2018 and updated on February 1, 2021.

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