A recent investigation by the MBTA that found massive abuse of the federal Family and Medical Leave Act (FMLA) by T bus drivers provides a cautionary tale to state lawmakers as they debate mandated paid sick days.

The MBTA report found that the agency paid $2 million during past fiscal year in overtime costs to cover absent bus drivers taking fraudulent FMLA leave, referred to among employees as the “Friday-Monday Leave Act.”  The report indicated that 1,600 bus drivers took a total average of 18,125 days each year during the five-year period between 2006-2010 using the FMLA benefit after the agency cracked down on suspected abuse of sick days.

Drivers averaged more than 11,000 paid sick days each year in addition to the FMLA leave.  In recent months more than a dozen MBTA employees have been fired for submitting fraudulent notes or falsifying medical documents and forging signatures on stolen medical forms.

The $2 million FMLA tab was up $250,000 from the previous fiscal year.

Sick leave provides a level of income protection to employees in the event of accident or illness.  The majority of employers who offer sick leave provide this benefit to employees on a non-vested basis, meaning the paid leave is available to the employee if needed, but is not paid out at termination or rolled over from one year to the next.

A smaller percentage of companies allow employees to roll over some portion of unused sick leave from one year to the next; or allow employees to cash out a percent of unused sick leave annually.  Some companies may even offer significant flexibility, while not having a formally defined sick leave policy.

While employers struggle to make payroll, address skyrocketing health-care premiums and remain competitive during this jobless summer, labor unions and other advocates continue to push a mandated paid-leave proposal that would remove employer flexibility and choice under the guise that it is “good for business.”  Mandated paid sick leave introduces a host of  issues for employers throughout Massachusetts:

• At companies that already offer paid sick leave, the benefit will change from being a safety net to an entitlement, one that carries forward from one year to the next.
• Companies will likely experience an increase in the number of unplanned absences.  Employees using sick leave for non-sick related absences strain companies by impacting production and increasing costs related to overtime needed to backfill unplanned absences.  When an employee takes vacation or personal time, they schedule the absence in advance, allowing the company to staff to cover the absence.  Because sick leave is most often an unplanned absence, companies are left scrambling to cover the absence.
• Companies looking to control abuse will become the “sick leave police” developing practices to monitor sick leave usage, including requiring doctors notes and monitoring Friday/Monday absences
• Employers who have migrated to Paid Time Off banks will need to address what portion of their PTO program is identified as sick leave.  PTO programs may need to be modified to comply with the mandate.
• Small employers would feel the impact most directly because they are more likely than large enterprises to not offer paid sick leave, or to offer limited sick leave or flexibility.
• Employees may see attendance bonus programs disappear because providing the bonus and allowing unused sick time rollover from one year to the next results in double payment.

Employers have a finite amount of money available for total compensation, including base pay, incentives, insurances, payroll taxes, time off and a host of other benefits.  The budget is the budget.  So if Massachusetts mandates seven paid sick days, employees may be faced with cutbacks in other areas to fund this new mandate.  Whether the impact is in jobs, merit budgets, insurance premiums and co-payments or staff training and development opportunities – rest assured there is a shared cost to both the employer and employee.

Bottom line, this case shows that MBTA customers and Massachusetts taxpayers are left with a hefty bill for a debt-ridden agency. They are also left with a stark example of the way in which this type of policy changes employee perception of sick leave from using it to cover absences related to illness or injury to using it for personal time or pleasure.

So how would your company react if Massachusetts mandated seven paid sick days?

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