Is contributing to a sick leave pool a gimmick?

[pompeybear]

My boss wants to implement a catastrophic sick leave pool at our work that employees can donate their PTO to. Currently employees can accrue a certain number of hours of leave per month. They can carry this leave over year-to-year up to a cap. To my mind it is silly to allow them to donate their PTO since they will simply re-accrue it all back and now we will have a liability for both the employee and the pool rather than just the employee (if the employee hadn't donated the leave they would either have had to use it or stop accruing when they hit the cap).

It seems like it would simply be a lot less headache to just either 1) allow employees to run a negative sick leave balance in the case of a catastrophic event or 2) simply cut the employee a check who has had a catastrophic event.

It seems like the main advantage of the pool is to 1) make the employees "feel" like they are doing something generous (and I guess to some extent they are) and 2) increase attendence for those employees who donated (assuming they're not simply donating time they would have lost to the cap anyway). Am I right or am I totally off-base?

[dracoi]

It does seem like an interesting accounting issue to value the accrued catastrophic leave when you don't know which employee will use it. It'll cost a lot more if the janitor uses it than the CEO.

Other than that... I don't really see a big headache in tracking a general pool of time off.

I don't know what value the employer expects, but this could add up to a pretty large liability before it gets used. That might make the balance sheet look bad, which could have serious effects on financing decisions.

If it was me... I'd look at disability or long-term care policies for the employees.

Is the idea to let people donate vacation time, or only sick time? Because there are lots of good reasons you want your people taking their vacation time.

[Keeve]

Sounds like a great idea to me.

Originally Posted by cpastu

... and now we will have a liability for both the employee and the pool rather than just the employee (if the employee hadn't donated the leave they would either have had to use it or stop accruing when they hit the cap).

Where does the liability come from? If either the employee or the pool has the days run down to zero, then further sick days go unpaid, right?

Originally Posted by cpastu

It seems like it would simply be a lot less headache to just either 1) allow employees to run a negative sick leave balance in the case of a catastrophic event

It would be very generous for the employer to do that, but he runs a risk that if the employee doesn't come back to work (for any reason) then he'll never get reimbursed for that generosity.

Originally Posted by cpastu

or 2) simply cut the employee a check who has had a catastrophic event.

Cut them a check? What does that mean? Do you mean "cut them loose", as in "fire them"? I really don't understand.

[pompeybear]

Originally Posted by dracoi

It does seem like an interesting accounting issue to value the accrued catastrophic leave when you don't know which employee will use it. It'll cost a lot more if the janitor uses it than the CEO.

Yeah, that's a big part of the headache. Since it is "Vacation" time being donated (which is on the balance sheet) to a sick leave account (which generally isn't on the balance sheet) I'm not 100% of the proper accounting treatment (this is further complicated by the nature of operation which I won't delve into).

Originally Posted by dracoi

Other than that... I don't really see a big headache in tracking a general pool of time off.

Our payroll system and timesheet system isn't really made to handle it. It can be done, of course, but it will have to be 'jimmied' to work.

[pompeybear]

Originally Posted by Keeve

Sounds like a great idea to me.Where does the liability come from? If either the employee or the pool has the days run down to zero, then further sick days go unpaid, right?It would be very generous for the employer to do that, but he runs a risk that if the employee doesn't come back to work (for any reason) then he'll never get reimbursed for that generosity.Cut them a check? What does that mean? Do you mean "cut them loose", as in "fire them"? I really don't understand.

Sorry, sometimes I forget that not everyone here is American. "Cutting a check" is derived from the Old West expression "Bleeding a Czech". You see, cowboys used to bring a couple Czechs on each cattle drive. In the event that water couldn't be found along the way, the Czech would be bled to satisfy the thirst of the cowboys. As disgusting as this sounds, it was seen as preferable to killing something valuable like a horse or a dog.

So essentially "cutting a check" means eliminating the undesirables for the good of the strong. It's harsh, but it keeps our healthcare premiums down so most everybody is happy....

Okay, I think you can see why I do accounting and not comedy. "Cutting a check" (or a cheque if you prefer) simply means paying them. I'm just stating that I'd prefer to just pay them directly rather than have to set up a separate donation pool.

[ZipperJJ]

My SIL (a teacher) used donated time for both her pregnancies. It helped her out a ton. So I'm in favor of it.

Are you sure your days need to go into a pool before someone uses them? The way it worked at her school was basically she was sick at home and she let her fellow teachers know she needed days and the ones who know and like her, and who felt they had enough extra days left, threw some days her way. I'm pretty sure it wasn't just a pool of days sitting around waiting for anyone to use at their leisure. That system seems like it's pretty open for abuse.

[BetsQ]

Federal agencies operate a couple of programs along these lines. The Voluntary Leave Bank Program sounds like what the OP's employer is suggesting. There is also a program like ZipperJJ mentions where transfers are direct from one person to another, rather than through a generalized bank. I'm not a Federal employee, so I'm not terribly familiar with the specifics, but I know a neighbor drew on these leave programs before he passed away. Leave donations provided more financial support to his family at a very tough time than they would have received from disability programs.

[What the .... ?!?!]

Originally Posted by cpastu

My boss wants to implement a catastrophic sick leave pool at our work that employees can donate their PTO to. Currently employees can accrue a certain number of hours of leave per month. They can carry this leave over year-to-year up to a cap. To my mind it is silly to allow them to donate their PTO since they will simply re-accrue it all back and now we will have a liability for both the employee and the pool rather than just the employee (if the employee hadn't donated the leave they would either have had to use it or stop accruing when they hit the cap).

It seems like it would simply be a lot less headache to just either 1) allow employees to run a negative sick leave balance in the case of a catastrophic event or 2) simply cut the employee a check who has had a catastrophic event.

It seems like the main advantage of the pool is to 1) make the employees "feel" like they are doing something generous (and I guess to some extent they are) and 2) increase attendance for those employees who donated (assuming they're not simply donating time they would have lost to the cap anyway). Am I right or am I totally off-base?

I don't understand the issue I guess. I assume the books are audited and that booking a liability is really an issue. Small companies might not have to deal with the same issue.

But generally, why is it more difficult to calculate the liability of days off belonging to 50 employees vs 50 employees plus a pool? I guess the answer is the rate but that could be estimated just fine.

As for why.....apparently the company has no obligation to keep paying people who can't work due to a catastrophe. They probably would want to in many cases. Why not ask the fellow employees to share in that "moral" liability....and why wouldn't many employees want to?

[md2000]

Sounds like an employer too cheap or callous to run a Long Term Disability plan.

My concerns - who decides who qualifies, and for how much? At least a LTD policy from a major insurance company comes with an explicit set of rules. (In my case, it was immediate hospitalization or after 4 days off with doctor's recommendation not gto go to work.) Is anyone even adding up the total donated, or does it all disappear into a black hole, then the employer can dole out a few days every so often to make you think it's a benefit.

Giving it for maternity leave just seems like a major cop-out on the employer's behalf.

I ahve trouble imagining any such plan really accruing enough time to cover, say, someone in a car accident or undergoing cancer treatment; unless it's a really big healthy company.

Partly, I blame stupid policies. I knew several people whose companies gave you accrued sick days; if you were healthy and conscientious, you could end up with a massive number of days on the books you could take whenever. On lady was told by co-workers, before you quit, call in sick for a month; since there was no payout. A system designed to get you to lie.

Most places required you to take vacation that year, max you could bank for future was 1 week. Use it or lose it.

The employer's concern, of course is that they are liable for a massive amount of wages for paid time off. Get people to say "i don't want it, take it" and you've saved a bundle. Maybe they did sign up for a LTD plan but didn't tell you?

[RealityChuck]

We do that here on a volunteer basis.

People are normally credited with a certain number of sick days (and these are accounted for by the finance people). If someone has a serious illness, they will use them up. When that happens, a call goes out to ask people to donate their sick days.

We have a use-it-or-lose is rule -- your sick and vacation days can't be banked. As a twist, sick days accrue from the first of the year, while vacation days accrue from your anniversary date.

[hogarth]

Originally Posted by md2000

Sounds like an employer too cheap or callous to run a Long Term Disability plan.

I'm not sure if I would have phrased it quite that way, but my first reaction was "Why don't they just offer Long Term Disability insurance and/or an Income Protection Plan?"

When I had mono, I was paid through my company's Income Protection Plan (i.e. short- to medium-term medical leave).

[Ca3799]

My company allows this, too.

I think the difference between vacation and sick leave is that vacation time is a 'gift' and sick leave is an earned benefit.

Vacation is limited but sick leave accrues (up to the cap). The company is on the hook for the sick time and would probably not mind using it to get it off the books. So perhaps the company doesn't care that much who actually uses it. Plus, it fosters good will amongst employees.

[Elendil's Heir]

Originally Posted by RealityChuck

We do that here on a volunteer basis.

People are normally credited with a certain number of sick days (and these are accounted for by the finance people). If someone has a serious illness, they will use them up. When that happens, a call goes out to ask people to donate their sick days....

We do the same, and I think it's a good idea. You can only donate up to 40 hours at a time here, though, and must maintain a minimum balance of sick time for yourself (I think 500 hours). I only miss three or four days a year due to illness, if that, and routinely have a 1000+ hours of sick time available. I donate sick time to coworkers just about whenever I'm asked (including once to a lady I didn't really like all that much, but I figured I earned some good karma by giving to her anyway).

[md2000]

Originally Posted by Ca3799

My company allows this, too.

I think the difference between vacation and sick leave is that vacation time is a 'gift' and sick leave is an earned benefit.

Vacation is limited but sick leave accrues (up to the cap). The company is on the hook for the sick time and would probably not mind using it to get it off the books. So perhaps the company doesn't care that much who actually uses it. Plus, it fosters good will amongst employees.

I think you have it backward. Vacation is a requirement that any civilized country and some US states require employers to give, like overtime pay or minimum wage - it's an earned benefit. You as employer have no choice, other than to be more generous than the law requires.

Sick days are an entirely arbitrary construct. Nowhere requires them, how they work is all over the map, and many employers simply say "we pay you if you show up, otherwise, too bad."

As someone who has taken maybe 2 sick days in 35 years, I don't see the value of paying someone to not show up, but then saying "if you don't use these days, well, too bad." The incentive is to make employees lie or give up free money.

My current employer has a very simple rule - you get 5 additional days off each year - use for sick days, or add to your holidays, but use within the year. A previous employer had a less formal plan - we pay you whether you show up or not, unitl LTD kicks in. 2 people in our department of 20 accounted for 75% of sick days.

I think the "donate sick days" idea is generous, but it bypasses the simple idea that a real employer should have a real support plan in place; plus, who's doing the acounting on the plan and how do you know it's fair? Is it accounted by dollars or days? What constitutes "sick"?

[Colibri]

I think this is more suitable to IMHO than GQ.

Colibri
General Questions Moderator

[Zsofia]

Originally Posted by dracoi

Is the idea to let people donate vacation time, or only sick time? Because there are lots of good reasons you want your people taking their vacation time.

And better ones to take their sick time. Please stay home with your germs!

[california jobcase]

We started a sick leave bank where I worked. Most people donated two days (out of our yearly twelve, savable to 60). Three years later the bank had been emptied by a couple of sick-scammers, so the program was ended.

[delphica]

I confess I don't really understand the accounting theory behind them, but when I hear about sick leave banks at other employers (we don't have them where I work), I always think they sound a little gimmicky. That's not quite the right word for my impression, but close enough ...

Anyway, it feels odd to me that something (PTO) that is part of your compensation can be doled out to other employees by the company ... I wouldn't do that with my paycheck, I think it's illegal to do that with my insurance benefits, and it makes me think the company is using the concept of the pool to grandstand how understanding the company is of unforeseen medical situations ... if they were that understanding, they would have a better policy. What happens when someone has a genuine medical emergency, the pool dips down, and then ANOTHER employee has a genuine medical emergency? That feels very inequitable, like the company can say "aww shucks, we had a pool and everything, it's just bad timing for ya!" (For those who work at places with pools, can people in that situation be advanced days from the pool, based on average levels of donating?)

The one on one transfers also seem like they have potential to be dicey, then it's identified who gives and who doesn't, and to whom.

[BetsQ]

It's been a long time since I've paid attention to the specifics, but I seem to recall that when I took some leave via my employer's short term disability plan, I was paid at something like 60% of my regular pay. Is that atypical? Because if disability plans usually pay at that sort of scale, a sick leave bank would be a tremendous benefit. Perhaps they can be used in combination?

[CrazyCatLady]

Originally Posted by BetsQ

It's been a long time since I've paid attention to the specifics, but I seem to recall that when I took some leave via my employer's short term disability plan, I was paid at something like 60% of my regular pay. Is that atypical?

That sounds pretty typical to me. The other issue is that I don't think short-term disability applies when you're taking care of someone else who is sick. If your spouse or child has some sort of serious medical issue and you need to stay home to take care of them, a sick leave pool can be godsend. I mean, you can take time off per FMLA, but that's unpaid leave and can constitute a serious financial hardship.

[Rhiannon8404]

Well. a friend of mine was recently able to take the time off work to donate a kidney to her childhood friend because of donations made by coworkers to the shared leave pool where she works.

It wasn't a medical necessity on her part and so she would not have been eligible for disability, I don't think. She could not afford to take the time off unpaid either. At least in this case, it's not a gimmick, but a real lifesaver.

[elfkin477]

Originally Posted by md2000

I think you have it backward. Vacation is a requirement that any civilized country and some US states require employers to give, like overtime pay or minimum wage - it's an earned benefit. You as employer have no choice, other than to be more generous than the law requires.

Any civilized country but the US you mean. There's no requirement in this country for vacation time, though I wish there was since I've only worked two places that offered any in the past 13 years...

[Una Persson]

I'm generally in favor of them.

When I was young I was almost never sick. I might get 4 hours off in a year. Some years I had no hours off. I would have loved to donate to help others.

[Gleena]

When I think I miss living in the US, I read threads like this and remember, no, I don't.

In accounting terms, it stays a liability, I'd think? If the point in use it or lose it AL or SL is to limit the liability, that same liability that they are trying to limit is just transferred elsewhere in the balance sheet.

So yes, it's silly, from a strict accounting perspective.

[Keeve]

Originally Posted by cpastu

Okay, I think you can see why I do accounting and not comedy. "Cutting a check" (or a cheque if you prefer) simply means paying them. I'm just stating that I'd prefer to just pay them directly rather than have to set up a separate donation pool.

I DO understand the phrase "cut a check". My problem was that I did not understand your suggestion that the employer could

Originally Posted by cpastu

2) simply cut the employee a check who has had a catastrophic event.

My question, better phrased, was: What would the employer be paying the employee for? In your case, where an employee "has had a catastrophic event", and will probably be out of work for the next eight weeks, and that employee only has three weeks of vacation and sick time accrued, why on earth would the employer be pay him for five weeks of recuperation?

But now I see that you did not mean for the employer to cut a check for the employee who has had the catastrophic event. Rather, you are suggesting that the employer should cut a check for the healthy employee, for a dollar amount equivalent to his unused sick time.

In my opinion, the answer to your question is this:

Many employers are relatively willing to go without their staff for a while, even though they are fully aware that this cuts into the company's productivity. But they are NOT willing to pay out any more money than they have to.

Other employers have a different philosophy, that as long as you work it into the budget, there's really no difference between paying the employee 52 weeks worth of salary when he works only 50 weeks, vs. paying him 54 weeks of salary when he worked the whole year with no vacation.

Because of this difference in philosophy, you'll find different policies at different companies: At some, the employees can bank their unused time off forever, and then they get a really big payout when all that unused time is converted to a check. And the employer doesn't mind (or shouldn't mind) because for all those years, he has been banking that accrued time in a special account for this purpose. But other companies, with other philosophies, have a "use it or lose it" policy. They'll let you take off of work for vacation and sick days, but they can't bear the thought of giving you extra money just because you worked a lot.

To be fair, I suppose sometimes the "use it or lose it" policy is intended to encourage employees to take the vacations which they sorely need. But I'm too much of a cynic to believe that this is often the true motivation.

And that's why I think some employers will let their employees pool their days off, because as long as no extra money is being paid, why not look like a nice guy.

[Keeve]

Originally Posted by md2000

I think you have it backward. Vacation is a requirement that any civilized country and some US states require employers to give, like overtime pay or minimum wage - it's an earned benefit. You as employer have no choice, other than to be more generous than the law requires.

I often read the various notices which the Department of Labor mandates to be posted. They have all sorts of information about being paid on time, and for overtime, and meal breaks, and other requirements. But I've NEVER seen any requirement for vacation time. It's like health insurance - a nice benefit, but totally optional.

Which "US states require employers to give" vacation time, in your experience?

[Foxy40]

I think sick leave pool leaves too much room for abuse. How do you determine who gets it? What if one person is chronically ill and cleaned out the fund every year and when the person that donated for ten years has a heart attack, there is nothing for them to take?

My company doesn't have a policy in place but every once in a while someone will go around asking for donations for a specific person who has an issue. Since we are only around 25 or so, that is easy to keep track of and seems to work well. Although one time someone came in and said his sick day was worth more than the employee he was donating to so they should get 1.5 days instead of just one. I advised him not to donate if he feels that way.

[Omar Little]

The OP said their "Boss" wanted to implement this policy. Is this some sort of impromptu policy that he/she wants to implement for your group, or is this a Company policy change that your Boss is implementing? If the former, your boss could be creating a lot of problems for him/herself with HR.