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What is sick pay? How do you manage your sick pay policy

I’m trying to get a handle on private sector practices regarding sick pay compared to what is offered in school districts. Do you have any info you can share on what most companies (mid-sized-say 250 to 1000 employees) do regarding: 1. Tracking paid sick (not FMLA) days-part of annual PTO or separate benefit-how many sick days/year? 2. Rules re sick days carry over to next year (e.g. max x days carry over) 3. Use of STD insurance and why it is in place/savings to employer 4. Payout of unused sick days on termination/retirement 5. Inclusion of sick pay payout in calculation of final pensionable earnings Thanks!

Answers

Anonymous User
Title: CFO
Company: Local Government Agency
(CFO, Local Government Agency) |

Len:

In my private sector days, sick days were usually accrued at the rate of five or ten per calendar year and were "use it or lose it". They were accounted for and administered differently than vacation. PTO wasn't even an option then.

In the public sector? Sick accrues generously and continuously and is at least cashable to some degree or can be applied to time worked at retirement for defined benefit purposes.

I throw the public sector in because public sector tends to hire public sector. They compete for workers amongst themselves. Thus a school district would have to be bold to offer something less than the "Cadillac standard" of competing public organizations. I applaud them if they do.

As I've said elsewhere, your tax dollars at work! ;-(

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Anon-your insights are really helpful. They confirm what I have viewed for years as "deferred compensation disguised as sick pay. " It's one extreme end of the spectrum; the other end is the employer who declines to offer sick pay, even a few days a year.

But the impact of "cashing in" sick days adds, unfairly, to pension costs among state pension funds (i.e. tax payer pockets).

Thanks again

Anonymous User
Title: CFO
Company: Local Government Agency
(CFO, Local Government Agency) |

Len:

We absolutely agree. There is a reason that local governmental agencies here in the great state of CA are in a state of constant, financial crises. They NEVER discuss increasing efficiencies. They only discuss increasing revenues (taxes). I ought to know. It's what I do for a living.

Some day, John Q Public is going to wake up to this disparity and take on the public sector employees and unions. I know on the street I live, you can divide people into two categories: Those who are older, still working and wishing they could retire and, those who retired relatively you and are living well without having to work anymore.

The later are all former public employees. Postal workers, police officers, federal employees, etc.

Anonymous
(Director of Finance) |

One consideration is your location. Last year, California implemented a sick pay policy that required that all eligible employees received 3 sick days annually. These were available immediately at the beginning of the year and were use it or lose it during the given year. Los Angeles County is looking at adding another 3 days annually beginning this July, also use it or lose it. These are sick days for use with no questions asked and can officially be used for personal or relatives illness, health care appointments, etc.
I have seen companies expense these days immediately and then take any benefit back quarterly (for items related to employees no longer with the company) or at the end of the year.

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

For those who may be interested, here is what the Illinois Teachers Retirement System offers:

According to TRS documents: "When you retire, you may receive a maximum of two years (340 days) of service credit for unused, uncompensated sick leave that is certified by a TRS employer. If you receive payment for unused sick leave days and the payment is reportable as creditable earnings, you will not receive service credit for those days. If the payment for sick leave days is not reportable to TRS as creditable earnings, the sick leave days must be reported."

340 days...hmmm.

Dena Ross, MBA
Title: Business Operations Manager
Company: Power-West Industries Ltd
(Business Operations Manager, Power-West Industries Ltd) |

We are a Canadian company, private, and a small company (you asked for mid-sized) but I thought I'd contribute.

Our labour standards mandates 3 unpaid sick days per year, however we offer 5 paid "Absence Days" which can cover anything from personal days to appointments. At the end of the year, whatever is not used gets paid out.

Our rationale, and it is proving itself to be true, is that employees will take unscheduled days off if they feel they 'need' them and we would rather know in advance when these days are going to be where possible. Of course an actual sick day isn't planned in advance and we average about 1 - 2 of of those per employee, however, the majority of the other absences are now known in advance and we are able to plan around them. We have noticed a significant reduction in days off for a number of staff since they would rather be paid out at the end of the year. The ones who want the time off take it - and we can plan around it instead of the unexpected absences (for the most part) that play havoc with our scheduling.

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

I worked for a school district in a union setting. The large amounts of dollars paid out to teachers retiring due to being allowed to bank weeks of time was unreal. As an administrative staff member and non union I did not have the same benefits. It was quite eye opening.

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Christie
Your comment about "allowed to bank" is the issue. If sick pay is a benefit to pay you IF you are sick, how can you have time to bank if you are not sick? Surely the employer can claim the unused portion is not an entitlement?

Anonymous User
Title: CFO
Company: Local Government Agency
(CFO, Local Government Agency) |

But Len, the flip side of your argument is that, in a "use it or lose it" environment, you can pretty much close the office during the year end holidays because everyone is "calling in sick" to make sure they don't lose it.

Truthfully, this is one of the advantages of PTO without specifications. If someone banks it and cashes it out, you win. If they use it rather than bank it, you still have contained cost.

Anonymous
(Controller) |

At my current role I have 5 personal days that can be used as sick days. We also have remote set-up, so that if you are sick but want to work you can work from home. We are a small company. When I worked for a large company, they had a take sick time as you need it (it also had remote work set-up). The worst I have ever had was a PTO policy where you only accrued 10 hours a month (15 days a year), so people came in sick all the time.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

I find it amazing, given today's technology, when a company refuses to set up secure remote computing (for those whose jobs can be accomplished remotely).

Why do you want sick people in the office to infect the healthy? It's just a way to start your own mini-pandemic. Meanwhile, those sick people may be able to contribute, albeit in a limited role.

I see something is definitely better than nothing, and for parents that need to be home because of a sick child, you can get almost or possibly great benefit (studies I've read show many remote workers are more productive).

Anonymous
(Financial Reporting Manager) |

We are a mid-sized company, approximately 4200 employees. Currently, we accrue 1/2 sick day at each pay period (twice per month). If we take a sick day during the month, it does not affect our accrual. If we take two sick days, we do not accrue anything for the month. We can accrue up to 30 sick days, period. If we leave the company, we forfeit our sick days. The handbook states that sick days are for employees use only. We are not allowed to turn in a sick day for a sick child, spouse, etc.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

My take/comments on the thread.....

Sick pay is just ONE portion of the overall benefits (primarily health) package. It should NOT be seen/evaluated as a standalone benefit.

One can have a below than average number of "sick days" but have a way above average other health benefits....or more than usual vacation leave or personal leave.

As far as management goes, I would rather have an omnibus PTO (if I can't have the unlimited version).

If I ask (expect) someone to "work" on their "sick day", then it should NOT be counted against their credits.

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

So tell me how you would handle this (true) request:
"Adopted a dog this weekend and would like to work remote to train the mutt today."

Anonymous
(Director of Finance) |

Phrased that way, it seems that not much work would be done remotely, unless this person has a really long commute time and is taking advantage of no commute.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

If there is a performance/outcome based work from home policy, does it really matter what the reason is? We are still clinging to outdated perspectives.

Carla Gordon
Title: Accountant
Company: Govt
(Accountant, Govt) |

For many govt agencies, the cashout of sick pay is their "severance". Some allow such cashouts only with 20+ years of service or something similar.
A more meaningful comparision would be to combine a study of sick pay cashouts and severance pay with the private sector.

Anonymous
(Director of Finance) |

I would like to add a question and get others input - We are a Los Angeles based company. Last year, California mandated that each eligible employee be given 24 hours of sick time annually, with the caveat that it be used during the year granted or lost and it was not a payout upon leaving the company.
Los Angeles just passed a resolution adding another 24 hours annually, again not a payout, but it appears to be setup to carryover year to year.
This raises a multitude of issues, with tracking two separate types of sick pay and keeping a distinction between the two.
We have brought this up to our HR attorneys, but I wanted to see if anyone had any ideas or thought.
Thanks.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

If you use a payroll service, tracking shouldn't be an issue.

The issue is which days get used first, the CA mandated or the LA mandated. It can be a sticky wicket if you take the carryover time first and then they lose the use it/lose it days....

I see a court case on the horizon...

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