Benefits of Sick Leave for Small Businesses

Like many business owners, it’s likely you are constantly seeking ways to save money on operating expenses, including payroll. One area where many employers target is paid time off. It is a truism that providing paid time off, especially paid sick leave, is costly. While this may be an understandable approach, denying paid sick leave for your workers is a penny wise, but pound foolish policy that will likely cost your business money in the end. What’s more, providing paid sick leave for your workers benefits your company’s bottom line in ways you might not realize.

Less Absenteeism

The flu season of 2017 and 2018 was one of the worst in recent history. A particularly severe strain of the flu (H3N2) reduced the effectiveness of the flu vaccine; that and widespread infection (46 states as of January 2018) combined to create nearly a perfect storm. Another factor that almost certainly made matters worse was a unavailability of paid sick leave.

According to the Bureau of Labor Statistics, 28 percent of all civilian workers — approximately 45 million Americans — do not have access to paid sick leave. If they take time off from work, their paychecks suffer. They may even risk losing their jobs. The result is a phenomenon known as “presenteeism” — people reporting for work who should be home in bed, or even in the hospital. It is a widespread occurrence. According to a July 2016 report co-produced by NPR, The Robert Wood Foundation and Harvard T.H. Chan School of Public Health, every week 1.5 million Americans who do not have paid sick leave go to work when they are sick.

In a confined environment like an office, a single sick employee can infect an entire staff, with some becoming so ill that they cannot come to work. Multiply this occurrence by thousands of sick people riding public transportation, interacting in public places and working in food-handling or health care environments. It doesn’t take much effort to comprehend how an epidemic can reach potentially debilitating proportions. On the other hand, providing paid sick leave — and encouraging workers to use it — not only allows sick workers to recuperate, it also reduces the risk of your other employees missing time due to illness.

Better Morale

Many employers resist efforts to raise minimum wages and impose paid sick leave, but often change their minds once such policies have been put in place. The reason is simple: their fears of employee abuse and escalating costs have largely proven to be unfounded. For example, San Francisco has mandated paid sick leave since 2007. However, the median worker only takes 3 of 5 allowed sick days each year, and 6 out of 7 employers reported no significant detrimental effect on profitability.

At the same time, morale among workers increases significantly in workplaces with employee friendly policies such as paid sick leave. About 30 percent of employers in Connecticut reported improved morale among their employees as a result of the passage of a paid sick leave law.

Reduced Employee Turnover

At the height of the Great Recession, there were more than 6 applicants for every job opening. In that environment, employers felt free to demand more productivity from their employees while holding down wages and cutting back on perks like paid sick leave.

However, by 2013 the ratio had fallen to 2.9 job seekers to every opening and has continued to fall. In the resulting tight labor market, employees are naturally more likely to seek better working conditions, and employers have begun to respond accordingly, including those in the traditionally low-paid service sector. For instance, in January 2018, Starbucks announced that it would provide paid sick leave for all its salaried and hourly employees in the interests of improving working conditions and reducing employee turnover.

Increased Productivity

Sick workers are less productive than healthy workers. It may seem obvious, but many employers fail to realize the financial benefit they stand to gain from adopting a paid sick leave policy. According to a study cited by the New York Times, lower productivity from sick workers on the job costs employers as much as their medical care. In other words, employers aren’t saving any money by encouraging (or demanding) their workers to report to work when they’re sick. On the other hand, providing paid sick leave for your workers not only means less “presenteeism” but also allows workers to address acute conditions such as dental problems while they are relatively minor.

Lower Risk to Your Customers or Clients

Companies with employees in public-facing jobs or businesses affiliated with the medical or food industries especially stand to benefit from providing their workers paid sick leave. Workers in these situations who feel compelled to come to work while they are sick may spread infectious diseases that are not only detrimental to their colleagues but also place the general public at risk.

Providing paid sick leave is not just a “nice” benefit for employers to provide for their workers. It’s also smart business policy. Morale, productivity and the bottom line all benefit when workers are allowed to stay home when they are not feeling well, without risking their jobs.