By your leave

By Posted on Jul 25 2015 | By

Note: From time to time I am asked to pen a piece far afield from my typical areas of interest. The following is a discussion of a little known program seeking wider acceptance.

Employee leave sharing: sound idea waiting to blossom

Within the Federal Government, employees regularly donate vacation or sick leave to fellow workers who are experiencing medical emergencies and are in need of time off. The program embodies the Golden Rule.

And yet, for nearly three decades this unique employee benefit has been implemented largely by state and local governments, educational and health institutions and non-profits.

The private sector has seemingly ignored its adoption; one designed to build employee morale and commitment.

In an era when workers are asking for more balance between work and lifestyle the question presents: Why not the expansion of a good thing?

It’s a serious question for human resource professionals. Today, a large segment of the work force is known as millennials, born between 1980 and 1992. This cohort is focused on career income and benefits.

Nearly 60 percent of millennials have already switch careers at least once and most say they are unlikely to stay with their current employer. As a result, companies increasingly offer fringe benefits crafted to make its work environment more attractive to talented employees.

Perhaps Silicon Valley’s hi-tech firms personify the degree to which businesses lavish such perks on it employees.

Benefits like bike repair shops, comfy chairs called Nap Pods, exercise and yoga classes, barber shops, car rentals to run errands, gaming arcades, concierge services and even helicopter rides are just a few of the goodies bestowed on employees in the land of hi-tech.

So it begs the question of why more firms are not offering a benefit as simple and straightforward as leave sharing.

In the beginning
The concept of leave sharing became Federal law when President Ronald Reagan signed the Federal Employees Leave Sharing Act of 1988, directing agencies to establish the program.

Hospital patientIn 1989, the program was expanded to include the creation of a Sick Leave Bank whereby Federal employees could donate leave to an agency bank and request leave from it after exhausting personal accrued leave.

The concept caught traction within state governments and today 19 states offer some form of a “sick leave pool”.

In 1993, the original law was reauthorized and the Government Accountability Office testified before Congress that the program had operated successfully since its inception and employees favored its continuance.

Moreover, GAO found the administrative costs were low and that an employee attitude survey found 20 percent of employees had donated leave and one percent had received donations. Not a profound impact but certainly beneficial to those employees in need.

In response to a recent inquiry to the Office of Personnel Management, the agency stated: “According to feedback from Federal agencies, the programs have been successful and they are often used by employees who have short-term personal or family medical emergencies.”

OPM does not maintain a total count of employees who use the programs. Those numbers are tracked by individual agency. Federal employment totals 1.8 million, excluding the United States Postal Service which is not an executive agency; its employment count is 486,822.

Notwithstanding the sanguine view of the Federal program, a recent informal survey of private sector businesses in the Piedmont region confirms that leave sharing is embedded in few human resources policies. Where it has been offered, its success is evident.

Under the Fair Labor Standards Act public employers are able to provide compensatory time off instead of monetary overtime compensation, providing there is an agreement between the employer and employee.

It appears private companies have elected to adopt a similar “in-house” solution to leave sharing.

Fauquier Health
Fauquier HealthFauquier Health is one of the largest firms in the Piedmont region, employing approximately 1,200 people.

Its services run wide and deep and include a 97 bed hospital, long-term care and rehabilitation nursing facilities, a 72 person assisted living operation, home health and wellness centers and a physicians practice.

Its Human Resources Department is headed up by Vice President Katy Reeves. The organization has a “Paid Time Off Donation” program. There are no separate vacation or sick leave plans.

Rather, the earned leave program “combines a vacation bank, a sick leave bank and a holiday bank. You put all of those days in one bank. Then an employee picks and chooses how they use their combined leave,” said Reeves.

The leave policy is structured so it doesn’t penalize employees who never use sick leave from being able to use it as paid time off for vacation. Moreover, additional flexibility permits each worker to donate leave to a fellow employee under certain conditions.

“For example, Betty can’t draw on John’s leave bank unless John wants to donate his hours to her. And it has to be for some type of hardship; a cancer treatment, car accident, a child or spouse undergoing some type of medical treatment,” explains Reeves.

A receiving employee cannot use donated leave to go on vacation and Human Resources must approve all leave donation requests.

“It has been extremely successful. It’s limited to medical emergencies and it’s used as frequently as needed. We always seem to have somebody in need of leave. I am continuously amazed at our employees and the number of people who step up to the plate and donate leave,” Reeves said.

The program in execution reflects the best of its intent. But it comes with a price tag.

“It’s absolutory a cost to Fauquier Health. If you look at why other companies don’t offer this kind of program, I would say the biggest barriers are financial,” Reeves said.

As an example, she elaborates that one cost factor involves hours donated by a staff employee being used by a department director. “The leave has been donated at a lower rate of pay but paid out at a higher rate.

“You budget for what you are going to spend. So suddenly, if you planned costs of $100 for a certain employee but they make a donation to another employee earning more money, the company liability might be $200. That’s a potential risk for companies with a paid time off donation program,” Reeves said.

One work around to the issue is for a firm to take the value of the donated hours and convert them to dollars. “But administratively that’s a huge undertaking.”

Similar financial issues present themselves in administering the program. For example, determining who is eligible to give and receive hours and tracking the leave exchanges, either manually or in the payroll system. “For us it’s a cost of doing business.”

“Our donation program is another example of the fact we are in the health care business; caring and compassion and taking care of people. If we don’t take care of our employees, they won’t be able to provide for the care of our patients. It’s the complete cycle of making sure we are treating our folks right,” Reeves said.

Former CEO
Gary Newell is the former owner and CEO of Buccaneer Computer Systems and Services in Vint Hill. He embodies the entrepreneurial spirit that drives successful companies.

In March 2000, he created his small firm and 10 years later had grown it to 700 employees scattered across six states. In September 2010, he sold the company for $65 million. The man knows how to wield a sharp pencil.

Newell explains that he had an employee suggestion program at Buccaneer. One worthy submission was to create a shared leave program. He looked at two concepts in evaluating the proposal. One was for people to donate to a leave pool; the second was for a direct employee-to-employee donation.

“Either way we looked at it, it was an accounting nightmare,” said Newell. “Especially when you are doing government contracting business. You can be audited anytime by the government.

“If I had an employee making $200,000 a year who was very sick and another employee making $50,000 a year who wanted to donate leave to the person, the donated leave is a different dollar value.

“But you can’t take a portion equal to giver’s salary and donate to the higher paid employee. You would be giving away salary information and that is very confidential.

“The employee could donate four hours of leave but the sick guy could only use one of those hours. It gets very, very messy accounting-wise.

“If you do a direct one-on-one donation, it turns into a popularity contest. When I only had three or four employees, it wouldn’t have been a problem. But when you get to 700 employees you can’t do individual things for individual people. It leaks out and everybody expects it can be done for them,” Newell explains.

Newell goes on to underscore another issue he sees as problematic. There are a certain percentage of employees who as soon as they earn any vacation or sick leave use it. More mature employees build up their leave in case emergencies arise.

“So what you are doing with a shared leave program is benefiting those people who use their leave the moment they earn it. They know there is a pool of leave waiting for them. Those types of people don’t mind spending other peoples’ leave.

“And by the way, who makes the decision who gets to tap into the leave? Where do you draw the line on how sick you have to be? And what if the pool is empty?

“It took about a 30 minute meeting with my human resources and finance managers to decide the juice just ain’t worth the squeeze,” said Newell.

Excelsior Pay Group, LLC
Tianna Wells is director of client services at Excelsior Pay Group in Manassas. The firm “helps eliminate administrative burdens of workforce management, accounting and training.”

“I do see leave sharing being able to help employees in the near future. The program is gaining in the private sector,” Wells said.

She goes on to describe a personal experience with the concept. Her husband was injured in a motorcycle accident and “I had exhausted all my leave. So the option was worked out for me because a co-worker extended her leave to me during my time of need.”

At the time, the company she worked for did not have a formal leave sharing policy in place but afterwards adopted one based largely on her experience. The firm was a subcontractor servicing Federal contracts.

“I’m not sure why it isn’t being offered as a fringe benefit in the private sector. I assume companies don’t want to put pressure on their employees to share the leave they’ve worked hard for.”

Wells could not cite any examples of companies she knew who currently offered the benefit but still sees the likelihood it will expand. “In this day and age a lot of employers are trying to gain significant employees and may feel a need to do as much as they can to entice people to work for them.”

However, she thought the option was one that almost always would be executed on an exception basis.

“While I do see the program growing, I don’t see it being part of a company’s policy but rather being exercised at the discretion of management,” Wells said.

Pangea Global, LLC
Pangea Global is a human resources consultant firm located in Haymarket. Its principal is Jeff Brown. Brown echoes the experience of other private sector executives; to wit, leave sharing is a benefit enlightened employers handle on their own without a formal policy being established.

And it is normally exercised as an exception instead of a blanket policy. He believes the Federal policy has been established to create a level playing field where individual managers don’t have the autonomy to offer it at their own discretion.

“But in businesses they grant mangers the flexibility to provide for additional sick leave up to a certain point. As a practical matter, six months is the outside range. Beyond that long term disability comes into play.

“I’ve never heard of a leave sharing policy within the private sector; never encountered anything like that.

“In fact, the only time I’ve heard of it anywhere was in the Federal government. A friend of mind who passed away from cancer worked at the State Department. She had the benefit. It’s a completely different way to approach the problem than in the private sector,” Brown said.

Fauquier County Government
There are approximately 600 employees in the Fauquier County government; two forms are leave sharing are available for their use.

First, there is a leave bank. An employee can gain access to the bank by simply donating 7.5 hours of leave into it. This “deposit” then permits the employee to withdraw up to 60 days of leave a year for medical emergencies or work related injuries. To be eligible they must have exhausted their own personal leave.

Employees cannot normally donate leave to one another unless of serious medical necessity. But if they have exhausted leave from the bank, they can make a special request for the county to seek donations from all employees on their behalf. The county administrator must approve the exception requests.

The flexibility and generosity of the program is impressive.

Deputy County Administrator, Katie Heritage, said,” The program has been offered for the 20 years I’ve been here and I’m sure longer than that.

“It’s a great program because you give one day of leave and have this wonderful access to a pool of leave. Nobody wants to think they will have to use it. But you never know.

“The exception program shows that county employees are, in my experience, extremely generous with their donations; even if it’s not to somebody in the same department. I think it shows a great thing about the county government,” Heritage said.

One employee who echoes Heritage’s views is Miles Friedman, director, Fauquier County Department of Economic Development. He holds the position after serving for 27 years as head of a nonprofit association in Washington, D.C. His opinion as to why leave sharing is limited in scope is insightful.

“I think one reason why you see it more in governments and nonprofits is they can’t pay the way the private sector does. Nonprofits try very hard to make up in employee benefits what they can’t do in salaries,” Friedman said.

When Friedman led his nonprofit he was always looking for ways to do “nice little things” for his employees such as covering childcare costs, helping out with emergencies or giving them access to counseling if they had issues.

Leave sharing was one of the perks included in the benefits package. “We tried to make it like a family.

“It’s a different culture in the private sector. You are paid handsomely and receive nice benefits like vacations, nice offices, travel expenses and so forth,” Friedman underscores.

He doesn’t believe private companies are “being crass” but just feels their employees are already being taken care of. “It’s how they do it.”

Asked if based on his extensive experience he could recall any private companies offering leaving sharing, he responded with a simple, “I can’t.”

Summing up
Even considering the differences between government and government-like organizations and private businesses, it seems facile to simply dismiss leave sharing as something that won’t work in the private sector.

At its core, leave sharing is charity in action; a character trait that, perhaps more than ever, should be fostered within government and commercial firms alike. But the realities of a free enterprise economy dictate business decisions are rarely driven by altruistic motives.

Yet, the search by young workers for employers who balance work and lifestyle issues presents the private sector with an opportunity to simultaneously serve their employees and the commonweal through leave sharing.

It’s a modest proposal seeking wider adoption. A continuing dialogue seems in the best interests of all.


Published in the Summer 2015 edition of the Business Journal.

Categories : HAGARTY TALES