Risk Management

NEW COLUMN: Risks & Benefits

Advice to employers: Don't discourage employees from using their sick days.
David KatzDecember 26, 2000


(Editor’s note: This is the first appearance of “Risks & Benefits,” a weekly column covering risk management, employee benefits, compensation, and other workplace issues of interest to senior financial executives. Comments are welcomed. E-Mail to: [email protected])

On the surface, it sounds like a great idea, a perfect incentive to cut down absenteeism during the height of the cold-and-flu season.

Employers are increasingly looking at ways to reward employees for not using sick days when they merely have the sniffles.

At a General Dynamics Electric Boat division shipyard in Groton, Conn., for example, salaried workers get to take part in a lottery if they don’t use sick days. The lures are cash prizes of up to $2,500, gift certificates, or free parking spaces, according to a Dec. 21 Associated Press story.

The AP story also cites the use of “paid time off” (PTO) days as proof that employers are looking to get workers to use less sick time as a way to cut costs. In PTO programs, whether a worker takes time off to care for an injured child or parent, nurse a cold, or hang out at the local pool hall is immaterial.

Employees simply get a set amount of days, which the employer can vary in tune with the employee’s length of service or position. Days can be carried over from year to year in such a program.

The reasoning behind PTO programs, as it is behind the shipyard’s lottery, is to encourage an employee to take as few sick days as possible. Offer them a reward, and they will come to work.

The reasoning, however, stinks.

This is because employers who push employees to walk wounded into the workplace are asking for trouble on at least three fronts: Increased legal liabilities, workplace health woes, and labor-retention problems.

Take the case of Jim Henson, creator of the Muppets. Back in 1990 he tragically died from an aggressive strep infection that reportedly started off with the symptoms of a cold. He was said to have ignored the symptoms, pressed on with his hectic schedule, and then wound up in the hospital—too late.

Now, Henson was the head of his own company, not just a mere employee, and his illness occurred before the days of PTOs and lotteries. Thus, his family had no one to blame but Henson himself.

However, say a worker has what seems to be a bad, lingering cold, and limps into work in search of winning a coveted parking space in a lottery or to hold on to her PTO days for summer vacation.

If she had an ailment similar to Henson’s, was persuaded by her employer’s sick-leave policy to come into work, and ended up dying, could a lawsuit by her surviving family be far behind?

This isn’t as far-fetched as it sounds. The increasing involvement of employers in directing employee health care, especially through the use of managed-care plans, already represents a source of fiduciary liability. Employers, for instance, can already be pulled into a “death-by-utilization-review” suit for picking a managed-care provider that tells a worker to hold off seeking life-saving medical care.

Extending this concept just a bit further, it may not be long before an employer is hit with litigation, arguing that it encouraged a worker to neglect a deadly ailment by means of an erring sick-day policy: a “death-by-PTO” suit.

By that reasoning, risk managers working for companies with such policies had better check their companies’ liability policies to see if they have adequate coverage.

More obviously, programs encouraging workers to cut down on sick-day use can spur the spread of contagious ailments to other employees. In the cold season, as every supervisor knows, absences can mount as a result of an uncovered cough or an ill-placed, used tissue.

Hearing a persistent hacking cough, many bosses frequently send the worker home. But if there’s enough motivation to avoid using a sick day, the worker could resist.

Further, widespread underuse of sick days could cost an employer money by contributing to an increase in health-insurance claims. And if a worker’s ailment impairs his judgement or alertness in the workplace, it can lead to workers’ compensation claims. Think about the drug warning labels on certain medications that advise the user not to drive or operate heavy machinery.

The third reason employers shouldn’t set up programs discouraging sick-day use is the demeaning message they send to employees. According to the AP article, a software engineer-manager at the shipyard who won $1,000 in connection with his not taking a sick day in five years, praised the lottery as “a big incentive for people to be in work.”

In this day of tight labor markets and tough times in retaining talented workers, an employer should be providing better incentives than persuading employees to roll out of bed in the morning.