Abuse of Sick Days: Analyzing the Merrill Lynch Response

Merrill Lynch is reportedly cracking down on time off abuses through new attendance guidelines that provide for a verbal warning and possible loss of pay after use of four sick days and termination after use of nine sick days without valid excuse. The new corporate policy is purportedly designed to reign in workers who misuse sick days by playing hooky on nice summer days, extending weekends, etc. The new policy replaces a program that providing up to 40 sick days per year.

Sick day programs are one of the most fretted over of all employment policies because they involve so many management and legal issues. Sick time is disruptive to the workplace because it is almost always unscheduled. Misuse of sick time has a dramatic impact on employee morale because of work inequity perceptions. Employers must manage abuses within the legal parameters imposed by the wage & hour laws, disability discrimination protections, Family and Medical Leave Act compliance, and wage payment regulations.

Almost every employer offers some form of sick time benefit.   Statistics show that the average business offers 8.1 sick days per year, but employees use only 5.2. However, the growing trend is away from traditional sick days to creating a paid time off bank (PTO). PTO programs combine into one pot all categories of time off, like vacation, sick days, personal days, and floating holidays. Some of the advantages and disadvantages of PTO are as follows:

• Advantages of PTO
  • Eliminates morale issue created by misuse of sick time.
  • Creates more flexibility for employees to use time off without having to provide a reason.
  • Eases policy administration because employers don’t have to account for and classify absences (i.e., excused vs. unexcused or vacation vs. sick time).
  • Gives those who didn’t abuse sick time more time off.

• Disadvantages of PTO
  • May create workflow issues if PTO is used in a predominantly unscheduled fashion.
  • Makes FMLA administration more difficult because employers don’t know if someone is absent due to a serious medical condition.
  • Makes coordination with STD or LTD programs more challenging
  • Impacts ability to contest unemployment claims based on absenteeism.