Sick Leave: Usage Rates and Leave Balances for Employees in Major Federal Retirement Systems

Publication Date: September 2004

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Government

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Abstract:

Full-time federal civilian employees receive 13 days of sick leave each year, and may carry over an unlimited amount of unused sick leave from year to year. At the time of retirement, employees in the Civil Service Retirement System (CSRS) (those hired before 1984) receive credit in the computation of their civil service retirement annuities for any unused sick leave they have at the time of retirement.

In contrast, employees in the Federal Employees Retirement System (FERS) (those hired after 1983 and others who transferred to FERS) generally receive no credit for unused sick leave at the time of retirement. As a result, some believe that FERS employees will use more of their sick leave as they approach retirement (resulting in productivity losses) than their CSRS counterparts. The conference report for the legislation creating FERS in 1986 urged the Office of Personnel Management to examine this issue, but to date the agency has not done so. CRS obtained data from a payroll processing organization for about 500,000 federal employees and determined that FERS retirees and FERS employees in that group who were eligible to retire or approaching eligibility used substantially more sick leave and had much lower sick leave balances than comparable CSRS retirees and employees.

A number of non-federal organizations have developed policies designed to encourage their employees to conserve sick leave. For example, all except five state governments provided some type of compensation to employees for unused sick leave at retirement, usually either as cash payments, service credit in the computation of annuities, or payment of health or life insurance premiums. The states generally limited these payments in some way (e.g., capping the number of hours of sick leave payable).

FERS employees comprise an increasing percentage of the federal workforce, and by 2014 virtually all federal employees will be in FERS. By the year 2010, the number of FERS employees becoming eligible to retire will be roughly the same as in CSRS. The current policy of providing no compensation to FERS employees for unused sick leave may partially explain their higher usage rate and lower leave balances, and if so, may be costing the federal government tens of millions of dollars each year in lost productivity. Granting some form of compensation for unused sick leave, even if entirely paid for by the federal government, might encourage employees to conserve sick leave and cost less than the current policy. Alternatively, agencies could be more stringent in their administration of federal sick leave policies.

This report will be updated when additional or more current data on sick leave use become available, or if changes in federal sick leave policies are contemplated.