The Real Costs of Offering Paid Sick Days

Mar 02, 2012

By Andrea Lindemann

Yesterday the Wall Street Journal wrote about paid sick days policies, and unfortunately they got it wrong. The article "Sick-Time Rules Re-emerge," highlighted the hesitations many businesses express when faced with the possibility of being required to offer paid sick time to employees. It's a fair concern. Many employers fear that paid sick days will simply cost too much money. What the article missed, however, was the voice of any business actually operating under a paid sick days law.

Many businesses incorrectly assume that employees will take all of the sick days made available under the law, resulting in high costs to their business. The WSJ quoted Daniel L. Haynes, a Fredericksburg, Va. accountant, who calculated "[a]t a 30-employee firm that pays an average of $10 an hour, the cost of providing seven paid sick days could amount to roughly $18,700 a year, including payroll taxes." To reach this cost, Mr. Haynes had to assume that each employee took all seven paid sick days. In practice, this just doesn't happen.

Jennifer Piallat owns Zazie, a restaurant in San Francisco. Before a paid sick days law went into effect in San Francisco in 2008, Jennifer was hesitant about how it would affect her business. She made similar calculations to those used by Mr. Haynes; she assumed all of her employees would take all of the sick days earned and worried about how much it would cost her business. But when the law went into effect, she was pleasantly surprised. Not all of her employees used all of the sick time available - not even close. In 2011, her 30 employees used only 113 hours of paid sick leave out of 1,484 hours that they accumulated. Her expenses for paid sick leave were approximately $1,243 when they could have conceivably been $16,324.

Research conducted by the Institute for Women's Policy Research (IWPR) confirms what Jennifer found to be the case in her own business. In a report on San Francisco's law, IWPR found that the median worker reported using three days of paid sick days in the previous year. This confirms IWPR's national estimate that, for individual's own medical care, family care, and doctor's appointments, workers at large businesses use an average of 2.5 days annually and workers at small businesses use an average of 2.1 days per year. These numbers are not even half of the time that most paid sick days laws would require.

While there may be different ways to calculate the number of paid sick days that would be used under a hypothetical sick days law, there are employers in locations with paid sick days laws who can report firsthand how their employees use paid sick days. Let's listen to them.

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