06/ 14/ 2005
by Steve Strauss
Q: How do sick leave and vacation policies work? We will be starting a business soon and will be hiring employees. I want to get this right, right from the start. Thanks for your help.
Deena
A: When developing vacation and sick leave policies for your business, there are some things that you have to do because the law requires them and some things that you will want to do because they will help you keep your best employees.
First the law: The Fair Labor Standards Act requires that you pay employees at least the minimum wage for 40 hours of work a week. The only legally required "extra" benefit employers are obligated to have is workers compensation insurance. The law does not require payment for time not worked, such as sick days, vacations and holidays. While employees like getting paid for these days off, benefits such as these are a matter of agreement between you and your employee.
Second, the Family and Medical Leave Act allows eligible employees to take up to 12 weeks of unpaid, protected leave in a 12-month period for specific family and medical reasons. The FMLA applies to all private employers who employed 50 or more employees for 20 or more workweeks in the current or preceding calendar year (as well as all public agencies.) Eligible employees include those who have worked at least 1,250 hours during the previous year.
So the legalities are fairly basic. The real question is: What sorts of vacation and sick leave policies can you adopt and afford that will not only make your employees happy, but make yours an exceptional workplace?
Businesses have typically created programs whereby employees get X of sick days and Y vacation and holiday days off. On average, new employees usually get about 17 or 18 days off per year, allocated evenly between sick and vacation days. Professional, long-term employees could have 30 days or more. If you need to learn what the norms in your industry are, check with the local Chamber of Commerce. Industry associations can also be a good source for this type of information.
This classic plan is easy to set up. You simply decide on how many sick days and vacation days each employee is to get per year, put it in writing and let everyone know.
Here is an alternative I like a lot. Consider pooling all of these days into a day off "bank." Employees may get, for instance, 150 hours off a year (about 19 work days). The bank would include days off for all holidays (typically 11 or so), a week for vacation and a few sick days. But instead of divvying them up that way, it is up to the employees to take off the days they want, when they want.
This plan has many benefits. First, it allows employees to schedule days off without telling those little white lies. Second, employees are treated like adults. They make their own choices for what days they want off. Maybe Kwanza or Yom Kippur are more important to them than the 4th of July.
Moreover, they can use this time as they see fit. If they have a child at home sick for a few days, they can use some time for that for example. In fact, they can use the day-off bank for vacation, personal time, sick days or whatever they would like. Some employers even allow employees who bank more than say 80 hours, to redeem the excess hours by exchanging the hours for cash.
The important thing is to come up with a policy that you can afford and which your employees like. That's the secret.
