Monday, May 19, 2003

Firms let employees dip into time-off 'pool'

By Jonathan D. Epstein
Gannett News Service

A growing number of companies are switching to a single pool of paid time off, as they face higher costs for sick leave, greater demand for unscheduled time off for a wider range of reasons and concerns that workers are abusing sick leave policies.

A recent survey by the Society for Human Resource Management found that about two-thirds of U.S. companies offer the flexibility of a single pool of time off, up from 21 percent in 1998.

The all-in-one bank of time allows workers a fixed number of days to be used for any purpose and can be set up so employees can take just the time they need, instead of a full day.

Workplace consultants and employers said a single pool is easier and cheaper to manage than separate pools of time with different rules. Employers also said it allows employees to plan more of their absences in advance, instead of having to make up excuses.

"If you want to take time personally for religious observance or a sick child, that's time that's now available to you," said Jim Donahue, spokesman for MBNA Corp., which adopted a paid-time-off plan a year ago.

Federal and state laws do not require employers to pay for employees to have time off, but such benefits are considered standard. The time typically consists of vacation days, which build up the longer an employee stays at a company, together with an assortment of sick days, personal days and floating holidays.

But the cost of providing paid time off and short-term disability programs for employees is increasing, comprising an average of 15 percent of payroll expenses in 2001, compared with 14.6 percent in 2000, according to a survey by sister firms Mercer Human Resource Consulting and Marsh Inc.

That means that, in 2001, an employer spent about $6,000 for time off and short-term disability for an employee earning $40,000 a year. That cost equated to 39 days of absence - 27 scheduled and 12 unscheduled - compared with 38 days in 2000 - 27 scheduled and 11 unscheduled.

Unscheduled absences are the biggest problem. The amount paid to an employee is the same whether a day is planned or unplanned, but if an employee calls in sick at the last minute, the employer must absorb a lost day of productivity, the cost of paying overtime to someone else or the need to call in temporary help.

A study last fall by Harris Interactive found that only one-third of absences were the result of illness, while 24 percent were for family issues, 21 percent for personal needs, 12 percent for stress and 10 percent because of a sense that employees are entitled to time off.

"If there's something that someone needs to do outside of working hours, they aren't going to use vacation time," said Lori Rosen, a workplace analyst at the Riverwoods, Ill.-based Commerce Clearing House. The development of more flexible time-off policies gives workers more freedom to allocate their days off, whether for vacation, an illness, taking care of a sick child or elderly parent, or running errands. They can even be used for an occasional "mental health day."

"Trying to create an environment where people have a lot more control over their working lives helps people to feel more in control overall, and that helps to bring down anxiety levels," said Jennifer Schramm, manager of workplace trends and forecasting for the Society for Human Resource Management.

But employers who squeeze employees' time off to save money may find the tactic backfiring. One of the top causes of absences and a drag on productivity is stress, especially in the wake of terrorism and war worries. The Bureau of Labor Statistics found a "marked increase" in absences in 2001 because of mental health issues.

"If they do need time off because of stress," Schramm said, "somehow it's going to come out and they're going to take it in some form or another."

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