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A Positive Development: Paid Sick Leave and COVID-19

A closer look at how employers have been tackling the issue of paid sick leave and the COVID-19 pandemic.

Governments around the world have faced widespread criticism about how they have handled the coronavirus. Yes lockdown, no lockdown; going for herd immunity or trying to flatten the curve; rushing vaccine development or taking a cautious approach. Whatever route a government takes, there always seems to be a side that is furious about it.

The one bright spot in all of these policy challenges has been the response to the needs of employees and businesses when it comes to paid sick leave. Before the virus hit, most Western economies had various types of paid sick leave programs, including Israel.

However, in many cases, it was up to the business owner to pay the immediate sick leave costs, and only a limited number of federal governments reimbursed those costs after a claim submission process. Moreover, in the United States, there was no federal paid sick leave program at all to fall back on; only certain states provided these benefits. In short, the status quo was at times tough on business, and at others tough on employees.

Neither of these options was reasonable once COVID-19 began and companies suffered massive drops in revenue, as well as dramatic increases in sick or quarantined workers.

Yesterday’s Problem

Before the COVID crisis, paid sick leave was a controversial topic among business owners. Opponents asserted that employees could abuse policies to, in effect, get paid vacation time, and that a weak business could be pushed towards bankruptcy by the added financial burden.

On the other hand, proponents explained that employees who don’t get paid sick leave are more likely to come to work. This greatly increases the risk of infection to other employees and customers, and creates a cycle which defeats other preventative measures such as lockdowns and PPI. The “presenteeism” problem arose during other pandemics like SARS.

A Quick Turnaround

After the devastating impact of COVID-19, the arguments against paid sick leave did not last long as governments rapidly understood that the disaster would be even worse if people suddenly lost all income. In the EU, the majority of countries changed their regulations to provide employers with financial relief due to increased sick leave costs.

Benefits have also been expanded to include self-employed individuals, and in some cases, part time workers. In addition, up to 20 of the 24 EU nations now pay directly for quarantined worker sick leave. Meanwhile, in the US, the federal government introduced the Families First Coronavirus Response Act (FFCRA) to provide sick leave benefits at companies with fewer than 500 employees. Larger companies were allowed to set their own policies, and most have been generous in their response.   

Was It Worth It?

These reactions were just in time. By April 2020, paid sick leave benefit claimants in the EU increased by up to 50% compared to the previous year. Some countries paid 100% of employee wages, and almost all covered more than half. But besides the financial side of the issue, did paid sick leave reduce infections as proponents claimed it would?

The FFCRA can serve as an example in this regard. A recent study examined the number of confirmed COVID-19 cases per state before and after the implementation of FFCRA (in states that did not have a sick leave program). The results indicate that, when given access to paid sick leave through the FFCRA, states experienced 400 fewer cases per day, a result that is statistically significant. For every 1300 workers who now receive benefits and are more likely to remain at home if they don’t feel well, there is approximately one COVID-19 case per day that is prevented.

Numerous other benefits also arose due to paid sick leave. These include reduced societal costs as workers, who cannot visit doctors during normal working hours, must use emergency room services instead, which are comparatively expensive. Similarly, paid sick leave increases employee retention, which reduces the replacement cost of workers.

However, federal sick leave initiatives are not a cure-all. In countries were paid sick leave claims must be submitted, such as the US, there is still a time gap until the business is reimbursed. In addition, some employees may choose to take advantage of the situation and report in sick, even when nobody in their family is actually ill. Finally, there is the risk that a sick employee may infect others before they are diagnosed, regardless of the benefits they will receive once they are confirmed.   

Riding It Out

But businesses can reduce paid sick leave losses with a rational approach. Many companies require medical confirmation of illness before providing paid sick leave. Combined with a standard two week leave period, this measure will reduce abuse of sick leave policies.

In addition, a strict implementation of safety rules will minimize infections at the workplace, as will ensure that employees who can effectively work from home continue to do so. Lastly, companies should ensure robust record-keeping, such as a single repository for all information related to paid time-off, in order to easily track the use and benefit of paid sick leave. 

COVID 19 has introduced a phenomenal amount of uncertainty into most aspects of life – except the chance that a business will need to deal with a quarantine situation or an employee who is actually infected, because that is a certainty. With the number of coronavirus cases in the US and EU at approximately 36 million, it is basically inevitable that most companies will face the issue of paid sick leave. But by providing paid sick leave in a diligent manner, businesses stand a much better chance of surviving until the crisis ends.      


Jenny Cohen Drefler

Jenny Cohen Derfler

Air Dr CEO & Co-Founder

Jenny is the CEO and one of the Co-Founders at Air Doctor. She spent more than 20 years at Intel, most recently as general manager of its manufacturing facility in Israel and before that in various engineering and manufacturing roles in Silicon Valley. Air Doctor is her second startup having previously founded electric vehicle company ElectRoad.