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The Wisdom of Paid Time Off

A conversation with employee-wellness expert Bob Merberg reveals paid leave is not only beneficial for workers and their families; it's good for employers, too.

Monday, June 8, 2015
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The day before President Obama's 2015 State of the Union address, the White House again displayed its social-media prowess. Valerie Jarrett, a senior adviser to the president, wrote a LinkedIn post titled Why We Think Paid Leave Is a Worker's Right, Not a Privilege. The article was a pre-emptive strike designed to enlist support for the Healthy Families Act from both employers and employees.

After the SOTU, I found myself in a series of exchanges with Bob Merberg, Paychex's employee-wellness manager, who I believe possesses one of the best minds in the employer space when it comes to dissecting myriad topics around employee health and well-being. Even though paid leave is not his specialty, Merberg is interested in how the conditions of work affect employee health, and he has a way of considering facts and researching issues that brings a different viewpoint to the discussion.

What follows is my conversation with him. It started with paid leave and took its twists and turns from there.

Harnett: The United States is the only high-income country not to require paid leave for workers. My tendency often leans toward letting the market guide employers into doing the right thing for the business and employees. But we haven't made much progress here. Do you think it's time for a legislated mandate?

Merberg: Before declaring a mandate, I want to know the market had the opportunity to do the right thing, fully equipped with relevant data. Employers haven't been well-educated about the advantages paid leave may deliver to their employees and business results -- especially the paid sick leave the president advocated.

A few breaths after championing paid leave in his SOTU address, the president said: "We'll still need more employers to see beyond next quarter's earnings and recognize that investing in their workforce is in their company's long-term interest." For me, that was the more salient point.

H: I feel as though there's been no more confusing time than now for HR executives to discern how to best invest in their employees. Many employers focused on employee health via wellness and prevention initiatives only to find themselves caught up in a wellness-doesn't-work controversy.

We've also seen employers struggle with how to handle all forms of paid time off, including moving from a vacation/sick-time model to PTO to unlimited PTO to paid leave to sabbaticals.

M: Conventional wellness programs may have about a 10-percent influence on employee health -- which is meaningful, but not enough to meet employers' expectations. Employers need to act on changes they -- as employers -- can make to support workforce health.

Offering paid leave, especially paid sick leave, to attend to personal or family health, is one step employers can take to support employee health and overall well-being. Of course, most large and many smaller employers already offer paid sick leave.

Employers that struggled to craft PTO policies oppose legislation because they believe they'll have to recreate their procedures. In Connecticut, the first state to enact a paid-sick-leave law, most employers were already in compliance before the law passed. A follow-up study showed the sick-leave law had little or no impact on employers' business operations or their bottom lines.

H: There are two things that come to mind for me concerning the study you referenced. The Center for Economic and Policy Research investigators found some Connecticut employers reported benefits from paid sick leave. Fifteen percent of these companies cited improvements in employee productivity, 19 percent saw a reduction in the number of sick employees who came to work, and 30 percent noted improved employee morale. The discussion point I see missing from the analyses of the Connecticut law, and similar state statutes, is the positive impact on employees.

M: Great observation. There's plenty of reason to believe paid-sick-leave policies have a positive effect on the health and well-being of employees and their families. One study estimated 7 million additional people got sick during the 2009-2010 H1N1 flu pandemic due to contagious employees going to work sick. Indeed, a University of Chicago survey found workers who don't have paid sick leave are 1.5 times more likely to go to work with a contagious illness, like the flu, compared with those who have paid sick leave. The survey data also indicated that 20 percent of employees without paid sick leave used hospital emergency departments as a substitute for seeing their doctor, compared with 10 percent of workers who had paid sick leave.

Lack of paid sick leave has even been associated with higher rates of occupational injury and reduced access to preventive care.

The American Public Health Association reminds us that paid leave can mitigate the physical, emotional and financial stress that go hand-in-hand with life-changing health events in the family, such as pregnancy, childbirth, diagnosis of a serious disease or death of a loved one.

Ultimately, stress is the undercurrent for all employees experiencing work/life conflict. In these cases, paid time off -- and not necessarily stress-management or resiliency programs -- may be a solution.

H: I can't agree enough about the benefits paid leave brings for both workers and employers. But, as we noted in the beginning of our discussion, working Americans have limited or no paid leave available to them. Working consumers state that the three things they value most are their health, their income and their homes.

Approximately 80 percent of them insure their homes and health (largely due to regulatory or other requirements), yet only about 30 percent insure their income -- despite the fact that most of us will experience some type of illness, injury or surgery that will put us out of work for a period of time. I struggle with how to tell employers and employees this story and motivate them to take action -- particularly because paid leave isn't an option for many.

M: You're hitting on a lot of key points, Carol. Ultimately, I think we have to tease out how different types of leave affect different types of businesses and workers. Most [full-time] American workers -- about 65 percent -- have paid sick leave, but most lower-wage and part-time workers don't. We need to understand this gap, and also how small and medium-sized employers are affected by mandates.

In contrast to sick leave, paid family leave -- to care for a new child or an ailing family member over a period of several weeks -- is uncommon in the United States, outside of California, New Jersey and Rhode Island.

I'd like to hear more about what you mean by "insuring income," and how it intersects with the topic of paid leave.

H: Let me go back to one point you made first, Bob, concerning paid sick leave. While more than half of Americans have access to paid sick days, the number of days available to a worker per year varies by organization (the national average is eight). Yet, 5 percent to 10 percent of employees -- depending on the company -- leave the workplace every year due to a sickness, surgery or injury. The median time out of work for someone who experiences a short-term disability is six weeks. When I talk about "insuring income," I am referring to people who have a short- and/or long-term-disability policy.

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According to a Bureau of Labor Statistics post released in February, only 39 percent of employees were covered by a STD policy in 2014 (33 percent were covered by a LTD policy). Paid statutory disability leave is only available to employees in Hawaii, California, New York, New Jersey, Rhode Island and Puerto Rico.

What happens to the 61 percent of employees who leave the workplace for more than eight days and don't have access to an STD or statutory policy?

I've written before about the number of Americans who live paycheck to paycheck. The Council for Enterprise Development reports that 44 percent of Americans are living with less than $5,887 in savings for a family of four.

And since 56 percent of Americans currently have subprime credit, Time's Christopher Matthews once wrote: " . . . if emergencies arise, many Americans are forced to resort to high-interest debt from credit cards or payday loans."

Combine with that the gap in not having income-protection insurance with high-deductible health plans, and many American workers could become financially devastated by even a short-term illness.

M: That's great data, Carol. You've really raised my awareness about the importance of short- and long-term disability insurance. Follow-up question: Is there reason to believe that employees put off necessary care, such as surgery, because they don't have disability insurance?

H: I'm not aware of any studies that looked at the issue of delayed medical treatment because an employee did not have disability insurance. However, the Commonwealth Fund reported in a November 2014 study that about 66 million people in the United States delayed or put off getting medical treatment for cost reasons in the prior year, and approximately 64 million people experienced difficulty paying their medical bills over that same time period.

Disability insurance provides employees who are unable to work with an income stream, which allows them to pay for life-impacting expenses such as healthcare and healthcare deductibles. Without this coverage, many workers would struggle with seeking treatment.

Your question makes me realize there's a research opportunity to look at whether employees who have STD/LTD policies experience better healthcare utilization and health outcomes than workers who do not. It would be worthwhile to also consider how these potential effects impact business outcomes.

M: I agree about the research opportunity. Employers invest in trying to change employee behavior, while sometimes failing to take the measures within their own control to genuinely support well-being. Research likely will find that providing STD/LTD are among these measures.

Certainly, limiting overtime, rewarding effort, facilitating social support, and giving employees voice in their jobs and their organizations all are on a list of proven levers that employers can shift to support employee well-being. Paid leave belongs on this list, too.

Carol Harnett is a widely respected consultant, speaker and writer in the fields of employee benefits, health and productivity management, health and performance innovation, and value-based health. Send questions or comments about this feature to or



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