Best Practice When Drafting Sick Leave Policy

The beginning of the year is a good time to review company policies to make sure they are compliant with all state and federal statutes and regulations. It’s also a good time to assess whether current practice at your organization is best practice. This post addresses legal requirements for sick leave policies, best practice in crafting a sick leave policy, and possible negative implications to your organization if you are not well prepared.

Federal and State Sick Leave Requirements

Under federal law, paid sick leave is not a requirement for private employers. When an employee leaves a company with unused sick days, the organization does not have to pay those days out. In addition, the federally mandated and enforced Family Medical Leave Act (FMLA) requires businesses with 50 employees or more to offer up to 12 weeks of unpaid and job-protected sick leave to qualifying employees each year.

Colorado law does not require that private employers provide paid sick leave or sick leave at all. Generally speaking, employers do not have to pay out on unused sick leave when a worker leaves the organization. There can be exceptions to this rule, depending on the organization’s policy and procedures, discussed below. Recently, there have been efforts to pass a paid family medical leave program in the Colorado state legislature. To date those efforts have been unsuccessful, in large part due to concerns about how it would impact small businesses that are not under the FMLA.

Best Practice in Drafting a Sick Leave Policy

Given the landscape of sick leave requirements for private Colorado employers, businesses have a significant amount of discretion when it comes to developing sick leave policy. Employers should be cautious when crafting this policy, because if sick leave is promised, they may be legally obligated to grant it. Precise language and clarity are essential when drafting a sick leave policy to avoid excessive legal liability to the organization.

Best practice includes addressing a variety of issues related to sick leave in the company policy, including:

• Does the organization offer paid or unpaid sick leave?
• How much sick leave can be earned in a year?
• Does sick leave accrue over time, or is all of it granted at the beginning of each year?
• When does the time become available to the employee to use?
• Can an employee carry over unused sick leave to the next year?
• Is there a limit as to how much sick leave can be carried over?
• Is there a minimum amount of sick leave that must be used when it is requested (i.e., no less than a half-day or 2-hour increments, etc.)?
• Will it be paid out when an employee leaves?

According to the United States Department of Labor, paid sick leave typically corresponds with the employee’s number of years at the organization in the private sector. Generally, workers who have been at an organization from one to five years receive seven sick days a year. Employees who have worked five to ten years receive eight sick days per year, and workers with more than ten years of employment with the organization have up to nine sick days per year.

Possible Negative Implications

A new trend that some organizations are embracing is lumping sick time, personal leave, and vacation time all together under one umbrella of Paid Time Off (PTO). This approach may seem to be an attractive benefit to entice prospective employees because it provides flexibility. However, there is a significant drawback to this model. In Colorado, PTO days are considered the same as vacation days, which means that if PTO is paid out, all PTO days would be payable to a worker at the end of his employment, including sick days. Therefore, depending on the employer’s PTO policy regarding carryover of unused PTO days, the payout after termination could be quite costly to the organization. Not having separate sick leave can also encourage employees to come to the office while sick so that they don’t lose vacation time—thereby spreading illness in the work force.

Conclusion

While Colorado private employers are under no statutory obligation to provide paid sick leave, once a benefit is promised, there are consequences to the organization. The extent of the legal liability will depend in large measure on what the policy promises, how the leave is organized, and how the policy is enforced. For additional guidance on sick leave policy, consult with legal counsel.

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Featured Image by Rebecca Sidebotham.