Coronavirus Puts Paid Sick Leave Policies Front and Center

Paid sick leave has always been an important benefit to employees, but the coronavirus pandemic is throwing into stark relief how critical it is from a corporate risk management perspective. A few companies have taken proactive steps but now is the time for all companies and boards to be considering their policies. To hesitate in doing so risks the health of employees, the health of customers and, we believe, puts shareholder value at risk. 

Food service and retail service workers are in the most obvious danger of acquiring the disease as they interact with customers. It is in these very industries where pay leave is the least frequent. As Jeff Solsbyy of the National Restaurant Association told the Wall Street Journal, “The coronavirus has a unique quarantine and recovery period that transcends the traditional policy debates surrounding paid sick leave.” 

As shareholder representatives, we fear that a company’s brand reputation could be destroyed by a single publicized mistake. It is also unclear what the legal implications might be, for example, if a mildly ill employee comes to work and infects a customer with pre-existing health conditions that ultimately requires a lengthy hospitalization or leads to death.  

Two of the first companies to act on the issue are Trader Joe’s and Microsoft. On March 5, Trader Joe’s sent a memo to employees clarifying that employees should stay home if they have any symptoms. "Since we want to reinforce this guideline, through April 15, your Captain [store manager] has discretion to approve a reimbursement of AR [absence reserve, or sick leave and paid time off] for Crew Members who are unable to work due to respiratory illness." 

Microsoft went a step further, and guaranteed additional support for hourly contract workers. “We’ve decided that Microsoft will continue to pay all our vendor hourly service providers their regular pay during this period of reduced service needs. This is independent of whether their full services are needed. This will ensure that, in Puget Sound for example, the 4,500 hourly employees who work in our facilities will continue to receive their regular wages even if their work hours are reduced.”

On Monday, Darden restaurants announced they would also provide paid sick leave for hourly workers who are not already covered under company policy. The company, which operates Olive Garden and Longhorn Steakhouse, will be retroactively granting sick leave hours based on hours worked in the past half year.  

We applaud the steps these companies have taken and encourage others to do the same. We also believe it is critical that employees not face repercussions if they make use of the plans. According to the Harvard Business Review, “Policies that give employees confidence that they will not be penalized and can afford to take sick leave are an important tool in encouraging self-reporting and reducing potential exposure.” In many companies, there is a culture where good news is rewarded and employees hesitate to pass bad news up the ladder. There is ample evidence that this was the case, for example, at Boeing. In the short-term, executives and even shareholders may benefit from such a culture. Ultimately, however, it is critical, from both a public health and a shareholder perspective, that there is honest communication throughout a company. 

The Surgeon General in a tweet this week noted: Employers: PLEASE understand giving your employees flexibility and (paid) sick leave will save you money in the long run- it’s much cheaper than shutting down because everyone else gets sick!

Shareholders agree and will be watching to see how companies respond to this crisis.