In the US, leave is having a moment. From the US President’s State of the Union to New York’s 12 weeks of fully paid parental leave, to the FAMILY Act legislation, leave has been all over the feeds, which is encouraging given the majority of US workers struggle to take advantage of our current policy’s benefits.
While most of the coverage seems to focus on longer-term family leave, in today's working environment, paid sick leave is more important than ever. In fact, US workers without paid sick leave could be three to four times more likely to quit their job than comparable workers who have this benefit. This is especially true for hourly versus salaried employees and for female employees who tend to disproportionately carry caregiving responsibilities outside of paid work.
For most industrialized countries, sick worker pay is not a critical issue. In fact, 32 of 34 OECD countries guarantee paid leave for personal illness. Who are the two OECD countries holding out? The United States and North Korea. So, let’s dive into the American problem and what it can mean for businesses managing workers in the US.
With a “tripledemic” threat of flu, COVID-19, and Respiratory Syncytial Virus (RSV), it’s evident that company sick pay is a critical benefit for companies of all sizes. Even some US government studies concluded that there was a noticeable rise in workers who quit with unpaid leave during 2020.
FFCRA Leave and Changing Paid Sick Leave Law Amid COVID-19
The COVID-19 pandemic revealed that paid leave is essential to employee well-being and safety. In the past, paid leave was not considered critical to supporting the American economy. As COVID-19 cases ramped up, allowing workers to stay home or care for their sick family members helped meet real human needs, combat the spread of COVID-19 and mitigate the impact on the American economy.
The Families First Coronavirus Response Act (FFCRA) was eventually implemented, which required certain employers to provide FFCRA leave and expanded family and medical leave for specified reasons related to COVID-19. About 25% of US firms did increase their sick leave options and one study found that states, where workers gained increased leave benefits under FFCRA, reported an average of 400 fewer cases of COVID-19 per day. However, 90% of companies reported these increases were intended to be temporary.
Since Covid, there also seems to be a renewed interest from the Biden administration to make paid leave a requirement. During the State of the Union 2023, he backed up his claim to stop workers from being stiffed by fighting for paid family and medical leave. His secretary of labor is also calling for better national standards to mark the 30th anniversary of the Family and Medical Leave Act.
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Rising Turnover Reveals Paid Sick Leave Is Critical to Employee Retention
One key reason why our people analytics teams should consider paid sick leave in our turnover models is the impact on retention. Certain populations of workers are much more likely to quit over paid leave. This means that employers who don't offer this benefit are at a disadvantage when it comes to retaining critical team members.
The rise in turnover rates is already a nationwide problem. Plus, replacement costs for an employee can be as high as 50% to 60%, with overall costs from 90% to 200%.
Offering paid sick leave is not only critical benefit employees look for in a business, but it is also a great way to live out your values of caring about individual well-being and your desire for employees to stay with your company for the long haul.
Increase Employee Productivity and Engagement With PTO
It’s pretty clear that when employees are out sick, they are not able to work and be productive. However, offering employees the ability to take the time they need to recover without worrying about losing pay will also positively impact productivity levels when those sick team members are back in action and healthy.
When employees feel like their employer cares about them and their well-being, they are more likely to be engaged while at work. This leads to improved morale and a better work environment for everyone involved—improving life outcomes for individuals, the bottom line as an organization and your brand as an employer of choice.
Ultimately, your standard sick leave policy is a factor your HR analytics team should consider when analyzing retention rates. Understanding how much your average PTO and sick leave is affecting your workforce this cold, flu and COVID season may be the difference between keeping and losing employees and remaining competitive in your market. HR teams should invest in knowing the internal and external story the data tells us and sharing it with leadership. Doing so could help improve employee retention rates, reduce turnover-related costs, and increase productivity in the long run–and help turn leave’s current “moment” into our new norm.