Sick Leave Policies for Small Businesses | SMB Compass
Ezra Cabrera | October 22, 2020
The Coronavirus pandemic has taken a massive toll on many small businesses. Not only has it affected sales, but more so it’s caused great concern for employees’ health. As COVID-19 continues to threaten people’s health and well-being, there is one question that lingers on the mind of both entrepreneurs and employees: Is there a sick leave policy for small businesses?
Suppose you’re running a company during this pandemic. In that case, you may have seen a steep increase in your staff asking for time-off – perhaps to take care of their kids who are going to school remotely, or because they contracted the virus and need to stay home to avoid infecting others. During this challenging time, it’s imperative that business owners implement clear and comprehensive sick leave policies.
In this guide, we’ll talk about everything there is to know about sick leave policies to protect your employees throughout the COVID-19 pandemic and beyond.
What is Sick Leave?
Sick leave is a time-off given to employees to help them recover from injuries or sickness. In some cases, a company must also allow their employees to use their sick-leave policies to care for children or other family members.
Before the COVID-19 pandemic, there wasn’t a law that required small businesses to grant paid time-off to their employees. While some states have regulations regarding time off policies for small businesses, there are workers in other states who don’t have access to sick leave whenever they need it.
The CDC strongly encourages workers to stay home to avoid transmitting or spreading the disease to others. However, without a proper sick leave policy in place, many are forced to choose between risking their health to continue working and getting paid, or staying at home to be safe, but losing money as a result. The choice between making a living and protecting their health is not one any employee should have to make.
Fortunately, the government answered the nation’s concern for sick leaves. When the virus broke out, the Families First Coronavirus Response Act (FFRCA) and CARES Act were enacted. The primary purpose of these federal laws is to protect employees from job and paycheck loss while ensuring they have access to sick leave, whenever needed.
What are the New Laws Regarding Sick Leave?
The Family First Coronavirus Response Act (FFCRA) and CARES Act assist small business employees, allowing for more flexibility for a paid sick leave during the pandemic. It’s the government’s way of taking swift action and giving relief to the United States’ workforce.
Families First Coronavirus Response Act (FFCRA)
Signed on March 18, 2020, the Family First Coronavirus Response Act was the second major legislation that was put in place to address concerns of workers during the COVID-19 pandemic. The FFCRA is further broken down into two provisions: The Emergency Paid Sick Leave Act (EPSLA) and Emergency Family and Medical Leave Expansion Act (EFMLEA).
The Emergency Paid Sick Leave Act (EPSLA)
A significant provision of the FFCRA, the Emergency Paid Sick Leave Act, requires all small businesses (those with fewer than 500 employees) to provide up to 80 hours or at least ten days of sick leave for their full-time employees. During the entire duration of their absence from work, the workers would receive their full wages given that they use the paid sick leave because of quarantine purposes or experiencing the Coronavirus symptoms. However, if the employee uses the break to take care of their children (under 18 years of age) or other family members, they would receive two-thirds of their regular pay rate in their absence.
The Emergency Family and Medical Leave Expansion Pack (EFMLEA)
Aside from the 80 hours of granted paid sick leave, the FFRCA provision also allows employees to get at least 12 weeks of expanded family medical leave. This is for parents of children whose school and/or primary childcare providers have become unavailable due to the COVID-19 pandemic. Two weeks of the time-off is unpaid, but the workers can use their EPSLA leave (if it’s still available) to cover the two-weeks of unpaid leave. In the remaining 10 weeks, employees will receive two-thirds of their regular salary.
One important thing to note about the provisions is that the 80 hours of paid leave are only for full-time employees. Part-time employees can receive a paid leave benefit, but the amount of time offered would depend on the average number of hours they work in a two-week period. To be eligible for either the EPSLA and EFMLEA, employees have to be employed at a specific company for at least 30 days.
While this can be a big financial burden to small businesses, especially if sales are being negatively affected by the pandemic, the government provided a way for these small businesses to offset the costs for these benefits. Under the FFRCA law, small business owners can get tax credits equivalent to the cost of providing this COVID-19-related sick leave for their employees.
Other provisions of the FFRCA include:
- Increased and more comprehensive Medicaid assistance
- Unemployment insurance coverage
- Nutrition assistance
- Free coronavirus testing
The act is set to be effective from April 1 to December 31, 2020.
Coronavirus Aid, Relief, and Economic Security (CARES) Act
Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed on March 27, 2020, provided over $2 trillion worth of relief for small businesses in different industries. One of the law’s provisions allows funding the sick and family leave their employees’ needs. Entrepreneurs can apply for an SBA 7(a) loan or SBA Emergency Economic Injury Disaster loans to obtain the money they need to cover employees’ payroll.
Related: 5 Ways to Protect Your Small Business During the COVID-19 Outbreak | SBA Loans
It’s also worth noting that each state in the country may have a different policy aside from what the federal government has enacted. Be sure that you’re aware of these for your state. Work closely with your human resources team to ensure that your company’s sick leave policies are clear and adhere to your state’s guidelines.
Safety Measures to Reduce the Incidence of Sick Leave During Pandemic
Employees opting to take a break from work can cause a considerable decline in the company’s productivity. Ensuring that your business is at its optimal operating condition is vital to its profitability and survival. One way of doing that is to keep your employees healthy. Consider the following suggestions:
1. Offer a Remote Working Arrangement
Social distancing is one of the essential measures to avoid the transmission of Coronavirus. Instead of requiring your employees to work in the office, offer alternative working arrangements, like remote work. For tasks that can be done outside the office, give your assigned employees the option of staying home and doing the work from there. This will lessen their chances of getting infected – and thus reducing the likelihood that they will require sick leave – and at the same time, ensures that your office is following the social distancing policy mandated by the CDC.
Related: Successfully Manage Remote Employees in These 11 Simple Ways
2. Provide Work-From-Home Resources
Provide resources that will make remote work easier for your employees who choose to work at home. Invest in a cloud-based system and upload everything there so it will be easier for your remote staff to access the company’s documents. Correspond with your employees regularly through messaging and video-conferencing apps.
3. Send a Sick Worker Home
Because the virus can easily be transmitted from one person to the next, employers must send workers home if they have been showing signs of the coronavirus infection (i.e., dry cough) to minimize the risk of infecting others in the company. The more employees who get sick, the more sick leave employers will have to grant.
How to Create a Sick Leave Policy for Your Company
If there’s one major takeaway from the current events, it’s that having a company policy for paid time off is fundamental to every business. Pandemic or not, companies should incorporate sick leave policies as part of their employees’ benefits. Not only will this attract better talent to your company in the future, but it also shows your current employees that their employer values their health and well-being.
If you’re planning on implementing or creating a paid sick or time off leave policy in your company that will benefit your employees even after the pandemic, here are some of the most important considerations that you should include in your system:
1. Eligibility
Since there’s no formal legislation that requires companies to offer sick leaves to their employees, there’s no guideline on determining which employees are eligible for the benefits. While there are guidelines for eligibility for the FFCRA, the legislation only lasts until December 31, 2020, if it’s not extended. If you’re planning on implementing a sick leave policy beyond that point, you’d have to decide who’s eligible for the benefit.
As a company owner, there’s a good chance you have different types of employees working for you. In addition to full-time workers, you may also employ part-time workers and freelancers or consultants. In these instances, as the owner, you will be responsible for deciding who is eligible for the paid sick leave, including how long a person needs to have been employed in the company before they can qualify for paid sick days.
2. Uses for Sick Leave or Time-Offs
State policies mandate that companies should give their constituents at least 12 weeks of sick leave to recover from sickness or nursing a sick family member back to health. You can adopt the same guidelines for your company. You should also consider any other reasons that your employees will be able to use their sick leave (i.e., vacation, personal emergency, etc.).
3. Maximum Length of Time for the Paid Sick Leave
One of the most common ways to determine how much sick leave an eligible employee is given is based on hours worked. For instance, you may give at least an hour of paid sick leave for every 40 hours of work rendered to the company. Some business owners may prefer to set a standard, the specific length of paid sick leave that an employee receives (i.e., X paid sick days per year for employees who have been employed for Y years).
4. Use Software to Track Working Hours
If you’re basing an employee’s sick leave on the number of hours he or she has worked, then you need software to help you track their work hours. These tools automatically calculate the number of hours your employees have put in and reflect the equivalent length of paid sick days each employee can use. Automating company processes such as this could lead to fewer errors made.
5. Define What is Considered Misuse and Abuse of Your Time Off Policy
No matter how perfect your policy is, there is always the potential for employees to abuse the system. They may either record an incorrect number of hours (intentionally or unintentionally) or use the time-off for non-valid reasons. Whatever it is, be sure to include the definition of what is considered abuse or misuse of your time off policies. Also, emphasize consequences that will result should someone be found guilty of abusing the system or misusing their sick leave.
Sick leaves or time off policies for small businesses are best put together with a business lawyer and the HR team. This way, you can get helpful insights into the appropriate parameters (length of time for sick leaves, eligibility, etc.). It’s also useful to look into the policies of other businesses similar to yours to ensure that your policies are more or less in line with what others are giving their employees.
Conclusion: Sick Leave Policy for Small Businesses
The government has made sick leave policy for small businesses mandatory during the COVID-19 outbreak. The guidelines ensure that employees will be given the much-needed time to recover from sickness or take care of their family members affected by the pandemic. With the laws in place and the support that the government has given small businesses (i.e., CARES Act), entrepreneurs can maintain operations through the health crisis.
While a paid time off policy for small businesses is vital during this uncertain time, business owners should strongly consider making the company’s policies permanent. This will help assure your employees that their health and well-being are protected even in the absence of a global health emergency.
As sick leave policies for small business are considered a legal matter, it’s always best to consult with a business attorney if you’re crafting or changing your company’s policies. This ensures that you won’t overlook any items that might become a source of legal disputes in the future.
About the Author
