Growing Impact of US Paid Sick Leave on Engagement Strategies

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Increase in States and Municipalities adopting Paid Sick Leave Regulations

Employment opportunities are shifting throughout the United States as paid sick leave (PSL) laws expand to cover more states and municipalities across the nation. This increase in paid sick leave regulations have both short and long-term impacts on employers that will affect future strategy as well as the way they currently schedule and hire talent. Overtime costs are expected to increase while there is a potential for a decrease in productivity if staffing levels are not capable of meeting productivity expectations. Depending on an employer’s workforce mix and operations model, it can often have an impact on both cost efficiency and productivity of labor when one location falls under PSL and one does not. Thus, monitoring and measuring the impact of these regulations on workforce performance and outcomes can be a strategic asset when it comes to workforce planning each year.

In the United States, there are still no federal laws that require paid sick leave in private employment. Although there are no federal laws for the private sector, all federal employees and contractors are eligible for paid sick leave. Currently, in the private sector, there is a rapidly growing of state and municipal government creating regulations to provide workers with paid sick leave. This paid sick leave can be used to by the employee for their own illness or in most cases to care for a sick family member.

Q1 2017 North American Quarterly Market Report

At the state level, certain private employers in Arizona, Connecticut, California, Massachusetts, Oregon, Vermont and Washington are already required (or will soon be required) to provide some form of paid sick leave to eligible employees. These paid sick leave regulations generally include contractors as well. In the case of contractors, the cost of paid sick leave is generally included in burden calculations within supplier markups, however, some employers prefer to run this expense through separate invoices depending on the level of impact. Several municipalities have gone a step further to create their own regulations. States with municipalities that have their own set of paid sick leave regulations include California, Illinois, Maryland, Minnesota, New Jersey, New York, Pennsylvania and Washington. California leads with seven different cities including Los Angeles, Oakland and San Francisco.

In San Francisco recent efforts to streamline San Francisco’s paid sick leave law with that of the State of California resulted in the following changes, amongst others:

• Specifically recognizes front-loading PSL in a lump sum at the beginning of each year of employment, calendar year, or other 12-month period

• Requires that PSL be on the itemized wage statement or a separate writing provided on payday

• Says that PSL time can be used for bone marrow or organ donation

While in Washington State, the cities of Seattle, SeaTac, Spokane and Tacoma each have their own paid sick leave regulations that differ from each other in several aspects. One area’s regulations are even specific to only nonmanagerial or nonsupervisory employees who work for certain hospitality and transportation industry employers. With laws enacted in several cities and municipalities throughout the nation, a one size fits all approach to contingent labor engagements is simply no longer an option.

Companies who choose to employ individuals in the US will have to develop specific strategies for each location. Employers who choose not to follow a granular approach might be either leaving money on the table, so to speak, or exposing themselves to unnecessary legal risk. For example, in Chicago or Cook County, Illinois a terminated employee may be eligible to have their remaining PSL time paid out to them, if they have a collective bargaining agreement. While the State of Illinois doesn’t even have regulations regarding paid sick leave for workers at a state level. Laws can include a variety of different requirements ranging from how long records of accrued and used sick time for each employee must be maintained to whether or not employees can

Laws can include a variety of different requirements ranging from how long records of accrued and used sick time for each employee must be maintained to whether or not employees can carry over time from one year to the next. If their PSL is front-loaded at the beginning of the year and the types of notice required from the employee as well as whether or not a medical certification is required from the employee are also stipulated in most municipal and state PSL regulations.

In most areas where paid sick leave regulations exist, notice of some kind is required, as is a medical certification if the absence exceeds three consecutive days. However, in the State of Oregon notice is requested up to 10 days in advance for a foreseeable absence. But it’s expected before the employee's shift begins or as soon as practicable if the absence is unforeseeable. Employers in this state can also require a medical certificate from an employee if they suspect that an employee is abusing sick time.

The list of municipalities and states with paid sick leave laws continues to grow and it’s important to note that we have only touched on a few areas that are currently impacted. Other smaller municipalities may have also enacted paid sick leave laws recently making it even more crucial to research locations for future labor engagements thoroughly or enlist the help of an organization such as ManpowerGroup Solutions to manage this process and limit exposure.