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Paid Sick Days: Ensuring a productive workplace

November 1, 2010

Business Benefits of Paid Leave

From the National Partnership for Women and Families

Everyone gets sick. When workers have access to paid sick days to use for their own and family members’ illnesses, they recover faster, are more productive, and obtain timely medical care, thus holding down healthcare costs. This is a tremendous benefit to businesses. Yet nearly two in five private-sector workers lack paid sick days. In smaller businesses, 47 percent lack paid sick days.

This report details four reasons why paid sick leave are good for business:

  1. Paid Sick Days Reduce Worker Presenteeism and Promote Retention
  2. Paid Sick Days Reduce the Spread of Disease and Lower Healthcare Costs
  3. A Paid Sick Days Standard Will Level the Playing Field
  4. Experience With Paid Sick Days Laws Shows That They Work for Businesses and Workers

Paid Sick Days Reduce Worker Presenteeism and Promote Retention

Paid sick days can help businesses by decreasing presenteeism, turnover, and the spread of disease.2 Workers with paid sick days are more likely to stay home when they are ill, reducing the spread of illness to coworkers and customers. Paid sick days also reduce “presenteeism”—the productivity lost when workers come to work sick—the cost of which has been estimated at $180 billion annually, or an average of $255 per employee per year.

By providing paid sick days, businesses also benefit from increased worker loyalty and reduced turnover. This is particularly important in low-wage industries where turnover is often high. The director of operations and development at a small New York City restaurant recently estimated at a Congressional briefing that turnover costs in the restaurant industry total about $1,000 per employee. She noted that because her business offers paid sick days and other good benefits, their turnover rate is only 30 percent annually—compared to an industry standard of 200 percent.

Paid Sick Days Reduce the Spread of Disease and Lower Healthcare Costs

Employees who work sick endanger business profits. During three months of the H1N1 flu pandemic in 2009, 8 million workers went to work sick and may have infected 7 million of their coworkers. Lack of paid sick days may have prolonged the pandemic.

The risks of contagion—and the resulting costs—are highest in workplaces where workers regularly deal with the public. These are often the industries in which workers are least likely to have paid sick days. In the restaurant industry, nearly two-thirds of servers and cooks report that they have served or cooked while ill. Sick workers can create serious public health risks and lead to high costs. When a food service worker at a Chipotle restaurant in Kent, Ohio who didn’t have paid sick days came to work with a stomach virus, he infected 500 people who became violently ill. The incident cost customers and the community hundreds of thousands of dollars— and caused reputational harm to the restaurant.

Lack of paid sick days drives up healthcare costs for businesses and the public: Workers without paid sick days are more than twice as likely as those with paid sick days to seek emergency room care because they are unable to take time off during normal work hours. And parents without paid sick days are five times more likely to seek emergency room care for their children or other relatives.7 Lack of paid sick days also may make workers less likely to seek preventive care.

A Paid Sick Days Standard Will Level the Playing Field by Making a Minimal Number of Paid Sick Days the Norm for All Businesses

Although model employers—small and large—are already offering paid sick days to employees at all wage levels, a standard would provide all workers with a minimum amount of sick time. A standard would level the playing field, making paid sick days a normal business practice on par with other widely accepted minimum labor standards. Policy proposals would allow businesses the flexibility to continue to offer more generous benefits. And those businesses that are already providing basic paid sick days protection would not need to change their practices.

Cargo Coffee and Ground Zero coffee shops in Madison, Wisconsin offer paid sick days to all 24 of their employees. After these small establishments began offering paid sick days, productivity increased among staff, while the spread of illness among employees decreased. Lindsey Lee, the owner of the coffee shops, believes that his “business would benefit from a national standard of paid sick days because it would level the playing field among competitors who don’t currently offer paid sick days to their employees.”

Experience With Paid Sick Days Laws Shows That They Work for Businesses and Workers

Since San Francisco’s paid sick days law went into effect in 2007, job growth has been consistently higher in San Francisco than in neighboring counties that lack a paid sick days law. And the number of businesses—small and large—has grown more rapidly in San Francisco than in neighboring counties. This holds true even for businesses most impacted by the new law: retail and food service establishments. The Executive Director of the Golden Gate Restaurant Association has said that “paid sick days is the best public policy for the least cost,” adding, “Do you want your server coughing over your food?

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