Local Government Sick-Leave Practices: An Exploratory Study
| DOI | 10.1177/0734371X15605158 |
| Author | Thom Reilly,Michael Thom |
| Date | 01 December 2017 |
| Published date | 01 December 2017 |
| Subject Matter | Articles |
research-article2015
Article
Review of Public Personnel Administration
2017, Vol. 37(4) 492 –510
Local Government
© The Author(s) 2015
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DOI: 10.1177/0734371X15605158
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An Exploratory Study
Thom Reilly1 and Michael Thom2
Abstract
The purpose of this study was to examine paid sick leave (PSL) practices among large
municipal governments in the United States. Results of a national survey suggest that
over 90% of these governments offer PSL. Few reported making any post-recession
changes, and in fact, most governments continue to allow employees to rollover
unused sick leave from year to year, cash out unused sick leave upon termination, and/
or include unused sick leave in pension calculations despite the sometimes significant
cost of such policies. Documentation is required in 70% of governments, but formal
auditing of PSL occurs in less than one third of responding governments. Type of
government, employee classification (e.g., public safety vs. general staff), collective
bargaining, and whether the government requires public hearings for public employee
benefit changes were significant factors in determining certain PSL practices.
Keywords
paid sick leave practices, public pay
Introduction
Absenteeism due to employee illness can have a significant effect on productivity,
morale, and organizational performance. Although there are no federal or state laws
requiring that employers in the United States provide paid sick leave (PSL), nearly all
full-time public sector employees receive some form of sick pay (Bureau of Labor
Statistics [BLS], 2014a). This is in stark contrast with the private sector, where approxi-
mately 40% of employees do not (BLS, 2014b). PSL is a conventionally accepted part
1Arizona State University, Phoenix, AZ, USA
2University of Southern California, Los Angeles, SC, USA
Corresponding Author:
Thom Reilly, Director, Morrison Institute for Public Policy/Professor, School of Public Affairs, Arizona
State University, 411, North Central Avenue, Suite 900, Phoenix, AZ 85004, USA.
Email: thom.reilly@asu.edu
Reilly and Thom
493
of public sector benefits packages, along with health insurance, pension, vacation time,
and other paid time-off (PTO). Diverse benefits within public sector compensation,
including PSL, have been an important incentive to improve organizational perfor-
mance (Behn, 1995).
Employers that offer sick leave must choose whether or not to pay employees for
accrued leave time upon separation. In many public sector organizations, PSL can be
accrued and rolled over from year to year with no limit and either cashed out at ter-
mination and/or used in pension calculations. In fact, over 42% of state and local
government organizations allow employees to apply unused leave hours to years-
of-service calculations for the purpose of pension benefit calculations (Kuhn, Fitch,
& Morris, 2012). Such calculations are typically performed at the end of the employee’s
career at their highest rate of pay. In other words, although sick leave may have been
earned during years in which the employee had a lower salary, payouts at termination
and for pension determinations are calculated at the highest salary levels. For employers
that elect to compensate for unused leave time, the cost can be substantial. In fact,
employer costs associated with PSL are ranked behind only costs for medical and
retirement benefits (Society for Human Resource Management, 2009)
The recent recession, along with unfunded liabilities for pension and other post-
employment benefits (Eucalitto, 2012; Novy-Marx & Rauh, 2011; The Pew Center of
the States, 2011), has placed public sector spending in the spotlight. As local govern-
ments struggle to preserve critical services in the face of workforce reductions, they
have been under increasing pressure to reduce operating costs.
Nevertheless, a growing number of cities and states in the United States have
enacted laws that provide some access to PSL (Gould, Filion, & Green, 2011).
California Governor Jerry Brown recently signed the Healthy Workplaces, Healthy
Families Act of 2014. This law allows all employees in California who work more
than 30 days per year access to sick leave. The majority of the state’s workers will
receive up to 3 paid sick days per year. California has followed other states, including
Connecticut, Hawaii, New Jersey, New York, and Rhode Island, and cities such as
New York, Portland, San Francisco, Washington, D.C., and Seattle, which have passed
similar laws mandating sick leave to all workers in some form (Maynard, 2013; Office
of the Governor, Edmund G. Brown Jr., 2014).
But while some states have moved toward a more liberal stance on PSL, others
have moved in the opposite direction. In 2013, employees in 10 states—Georgia,
Wisconsin, Louisiana, North Carolina, Tennessee, Mississippi, Kansas, Indiana,
Florida, and Arizona—lost access to PSL as those states prevented local governments
from enacting laws mandating sick leave and in some cases required that existing laws
be rescinded (Lafer, 2013). These bills or policies were dubbed PSL “preemption
legislation” (Smith, 2014). Other states that are enforcing preemption laws prohibit
cities, counties, and municipalities from passing their own sick leave legislation. In
some cases, like Wisconsin, the state has moved to preempt cities’ previously enacted
laws (Perkins, Conroy, & Seidman, 2014).
This study reports the prevalence of sick leave restrictions and sick leave incentive
programs in local governments across the United States and explores whether local
494
Review of Public Personnel Administration 37(4)
governments were making the types of reforms post-recession that we have seen in
the area of pensions and retiree health care. We explore whether type of government
(city or county), collective bargaining status, dominant party of the elected body, and
whether the government allowed for public hearings for the adoption of wage and
benefits affect sick leave policy.
Background
PSL is defined as a paid leave of absence measured in hourly increments that relates
to personal illness, doctor or dentist visits, or illness of immediate family members
(Rhodes & Steers, 1990). “Use or lose” leave is PSL or other leave time that, if not
used by a specific date, is forfeited without compensation (Camp & Lambert, 2006).
To regulate PSL use, employers often implement a policy of expectations and stan-
dards as well as absence control and management rules (Johnson, Holley, Morgeson,
LaBonar, & Stetzer, 2011). Monetary rewards and other incentive programs have also
been used to both discourage the abuse of sick leave and reward employees for not
misusing PSL (Rickert, Duncan, & Ginter, 1995). There also exists ample empirical
evidence that both monetary and non-monetary incentive programs reduce absenteeism
(Camp & Lambert, 2006; Duflo, Hanna, & Ryan, 2012).
The principal-agent model can assist in understanding the use of employer incentives
such as those used to manage the inappropriate use and non-use of PSL. Agency theory
explains why behavior or decisions vary between members of a group (Eisenhardt,
1989). In organizations, the principal is the employer who wishes to affect the actions of
its employee, the agent. The theory sets out how different parties involved in the same
situation with the same goal will often have different motivations. These different moti-
vations can sometimes lead to widely varying results. Agency theory assumes both the
principal and the agent are motivated by self-interest. This self-interest inevitably leads
to inherent conflicts. To determine when an agent does (or does not) act in their princi-
pal’s interest, the standard of “agency loss” is used. Agency loss is the difference between
the best possible outcome for the principal and the consequences of the acts of the agent.
In the context of PSL, employers (or principals) attempt to manage the usage
of employees (agents) PSL through various incentive programs and policies. The
employer may include incentives to reduce presenteeism and/or to control costs;
however, the end result may have the opposite effect because the employee might
have different motivations for using (or not using) PSL. For example, the employer
may institute PSL policies that allow employees to accrue and carry over unlimited
PSL hours from year to year to reduce presenteeism and prevent a reduction in pro-
ductivity. However, the employee may be motivated to not use PSL even if they are
sick to accumulate hours that they can eventually either cash out or apply toward
their pension calculations at retirement. Accrual and unlimited carryover policies
may have the unintended consequences of increased cost and presenteeism.
Management theory and research can also guide our empirical investigation in
understanding the problem of PSL use and abuse. Rickert et al. (1995) suggested most
approaches fall under three broad categories. The traditional bureaucratic approach
Reilly and Thom
495
threatens punitive action to employees who choose to abuse sick leave policies. The
“appeals” approach highlights employee loyalty and responsibility of workers to use
PSL in the intended manner. The “enlightened” approach examines the cause of
the sick leave abuse as opposed...
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