What Absenteeism Is & How to Manage It 

Merriam-Webster defines absenteeism as “chronic absence (as from work or school)”. Anyone who has scheduled and supervised workers knows what a headache it is to scramble to cover an absent employee’s duties on short notice.

But what are the big-picture impacts of absenteeism on the organization? There are studies available on the internet that show the cost of absenteeism for various employment classifications, such as the Gallup-Sharecare Well-Being Index excerpted by Investopedia.

You can calculate your organization’s absenteeism rate and analyze the associated annual costs, but – any way you slice it – chronic absence is a drag on your company’s productivity, morale, P&L statement, and the effectiveness of strategic initiatives.

What can you do to reduce drag and improve efficiency? Read on for a step-by-step guide to reducing unplanned absences and revitalizing your workplace with:

• Reliable metrics
• Updated attendance policies
• Good-attendance incentives
• Improved absence tracking systems

Absenteeism vs. One-Off Absences vs. Planned Non-Attendance

People have emergencies and life happens, so the occasional hiccup is not the problem. Employee absenteeism describes situations where the same employee calls off work frequently and does not have a valid reason to be absent. These are the attendance issues that may be reduced by implementing a new strategy.

You probably have employees who are reliably on time and never absent. If one of these workers calls off from work because they were involved in a car accident, it does not fall under the category of chronic absenteeism. Likewise, an absence that is scheduled in advance for a vacation or an approved absence protected by the Family & Medical Leave Act (FMLA) would not be counted as absenteeism.

Common Types & Causes of Employee Absence

Remember that tardiness and leaving early equal absence during scheduled work hours – should be treated the same way longer absences are handled. Here are some common types of employee call-outs during scheduled work time.

Pre-Planned Absences

• Paid personal days for vacation, school meetings, and other personal activities
• Paid holidays
• Bereavement
• Jury duty
• Military duty
• Election day (or alternate early voting day)
• Planned medical appointments including COVID isolation and recovery
•  not protected by FMLA/ADA etc.
• Pre-approved absences protected by the Family and Medical Leave Act (FMLA)
• Pre-approved absences protected by the Americans with Disabilities Act (ADA)

Unplanned, Short-Notice Absences

• Minor illness or injury including COVID
• Major illness or injury requiring emergency medical attention
• Caring for a sick child or other family member 
• Bereavement for unexpected death
• Lack of child-care coverage
• Problems with transportation to work
• Sudden traffic jam/slowdown
• Car accident
• Inclement weather
• Legal/law enforcement activity
• Mental health challenges, relationship issues, or major relationship status change
• Unspecified, urgent personal issues

Please Note: Not all unplanned absences constitute absenteeism, but absenteeism almost always falls into the category of unplanned absences. Some unplanned absences may later be approved as FMLA- or ADA-protected.

Characteristics of Chronic Absenteeism

Absences must be assessed on a case-by-case basis, being mindful of protected absence regulations such as FMLA-approved time off. With that said, let’s look at the patterns of behavior that point to absenteeism/attendance policy abuse. These are generally present with chronically absent employees. 

Surprise

Late notification of absence or no-call/no-show – leaving little or no time to arrange replacement staff

Frequency

Absence from work is a common occurrence for this worker, rather than a noteworthy event

Avoidance Maneuvers

Texting or emailing instead of calling, or having their partner or other third party call out on the employee’s behalf

Sensational

Stories of freak incidents often involving animals, weather, criminals, or reckless drivers e.g. “A falcon swiped my car keys off the table on the back porch while I was eating breakfast.”

Morning After Timing

Absences frequently occur the day after a holiday or event e.g. 4th of July, Superbowl Sunday, or the company picnic – when hangovers are common

Incident-Related

Absence on the day after known conflict with a co-worker or unwelcome news from a supervisor

The Impact of Absenteeism on Your Organization

Chronic absences are not just a pain to deal with, they are expensive in more ways than just financial.

The Financial Cost of Excessive Employee Absences

There are many ways that absenteeism drains your resources. Some are obvious, direct costs, while others are more subtle but no less important.

Direct Costs

These are some of the expenses you may incur at the time of an unplanned absence:

• Absorbing the sunk cost of any accrued PTO for the absent employee
• Paying overtime rates to another employee to help cover the absent employee’s duties
• Covering the high cost of an external temporary worker (Temp), if needed

Indirect Costs

Additional resources are expended for other aspects of an unplanned absence, such as:

• Managers get pulled away from managing workflow to deal with emergency staffing
• The time required for a manager or supervisor to orient a temporary worker or an internal employee unfamiliar with the job duties
• Managerial time to address employee absenteeism and discipline
• Other expenses such as software and IT support to provide access for a temp
• The cost of turnover due to low morale like unemployment premiums and onboarding/training new employees

The Human Cost of Excessive Employee Absences

Beyond the red ink on the company or department’s balance sheet, absenteeism can wreak havoc on your normal operational workflow. In other words, unplanned absences have a negative effect on the employer and the employees.

Rise in Workplace Safety Issues

The work environment may become less safe due to:

• Overtime fatigue
• Disruption of a team’s ability to function normally
• Insufficient or no training of temps on the job duties, particularly the safety aspects

Low Morale, High Turnover

There may be a direct correlation between absenteeism and morale level in your organization. Workers may be less reliable to report for work if they:

• Get discouraged about being able to keep up the normal pace
• Feel unappreciated
• Believe they are not treated fairly
• Become downright angry about their working conditions

To compound the problem, unplanned absences can lead to more unplanned absences because they create increased fatigue and stress for those who showed up as scheduled and had to pick up the slack.

Increased Conflict & Complaints

As morale drops, interpersonal conflicts become more frequent. These conflicts, coupled with a sense of unfair treatment may lead to an increase in formal complaints about the organization to government regulatory agencies.

The Effect of Absenteeism on Customer Satisfaction

What is the best way to grow your business and maintain organizational health and longevity? Maintain a broad, happy customer base!

What is the biggest threat to your organization? Disgruntled customers who switch to another source to meet their needs.

Disruption in Services

There are several ways that unplanned absences sabotage operational efficiency:

• Understaffing & rushing to keep up may result in poor production quality
• A disrupted team (incomplete or working with temps) is usually less productive
• The change in cadence can throw other teams off their game

Poor Customer Experience

Absenteeism has a greater impact on customer satisfaction than you may think; each instance of someone dropping the ball leads to lower rates of customer confidence in your company. For example:

• Customers reach voicemail when they expect a live agent to answer
• An order is delayed with no explanation
• Your technician is a no-show for a scheduled service visit
• The addresses for two orders are accidentally switched 
• The wrong customer is notified and arrives to pick up his order (not ready yet)

We could go on, but the point is clear. Little things fall through the cracks that undermine the organization’s credibility – which is difficult or impossible to reverse.

Compliance Issues Related to Employee Attendance

Workers need time off – to rest, recuperate, take care of personal business, or care for a loved one. Unless you are careful, you can accidentally violate employment law depending on your decisions to approve or deny requests for time off.

This section is a summary of the most common federal laws that govern your response to absenteeism. In addition, there may be employment laws unique to your state or local government.

Note: This article should not be taken as legal advice; check with your legal counsel to be sure your attendance practices are compliant with current employment law.

Wage & Hour Laws

Employment law covers both paid and unpaid time off. It not only applies to written requests for pre-planned time off, but it also applies to the company’s actions each time an employee calls off their scheduled shift on short notice.

Learn more about wage and hour laws and requirements on the U.S. Department of Labor website.

Family & Medical Leave Act (FMLA) Requirements

The regulations contained in the Family and Medical Leave Act (FMLA) are complex, and employer costs for FMLA violations can range from modest fines to crippling legal expenditures. Here is one of the worst-case scenarios related to FMLA: 

• An employee who abuses attendance policies and is well-known for absenteeism calls in sick, 45 minutes after their shift began
• They spoke with a receptionist from another department who was visiting your area and picked up the phone to help out
• The worker returns to work and does not have a doctor’s note or any documentation of the reason for their absence
• You give them a written warning and change their employment status to “probationary”
• A few weeks later, you are notified that this employee’s illness qualifies them for FMLA protection and they have filed a complaint under the Family & Medical Leave Act

How could the risk of this happening be reduced or eliminated? By having workers dial a specific call-off phone number, where the person who answers the phone is fully trained to ask a standard list of questions and carefully document the answers.

For more detail, read FMLA Call-in Procedures: What Employers Need to Know

ADA Regulations that Protect Persons with Disabilities

The Equal Employment Opportunity Commission (EEOC) enforces the Americans with Disabilities Act (ADA). The effect of the ADA on your attendance practices is similar to that of the FMLA. 

When a disabled worker calls in, they should use your call-off phone number to report their absence and be interviewed by a trained staff member who will document the call. 

If the absence qualifies as ADA-protected, your call-off procedures can help you to react appropriately and avoid violations of the ADA.

Other Non-Discrimination/Equal Opportunity Laws Regarding Attendance

In addition to the ADA, each state also requires equal treatment for all workers you employ. Some may have additional requirements or special instructions, so check with the state(s) in which you conduct business.

Workers’ Compensation Laws

If an employee is injured on the job and approved for Workers’ Compensation insurance payments, their absences will likely also be protected by the FMLA and/or the ADA.

Handling Unemployment Compensation Claims Related to Attendance

If you terminate an employee for absenteeism, they will likely file for unemployment benefits. In this area, too, you must be fair and consistent.

If you contest an Unemployment Compensation claim for one worker, you must contest them for all workers terminated for attendance issues.

Decision Support Metrics That Should Trigger Policy Change

According to the 2021 Current Population Survey (CPS) Report from the U.S. Bureau of Labor Statistics (BLS), the overall employee absence rate nationwide is over 3% annually or an average of almost 8 days of unplanned absence per worker per year. Keep in mind that this is an average, and most American organizations strive to do better.

A quick internet search suggests a recommended target rate below 2%, and even as low as 1.5% – only 3.5 days of unplanned absence annually. 

Here we will only address one simple metric – the incidence rate in your organization.

Note: Bear in mind that these metrics can only be applied to non-exempt, hourly employees. Absenteeism among exempt personnel can be just as destructive to your operation, it must be handled separately. We recommend that you expect your exempt employees to set the example by abiding by the same requirements as for non-exempt workers – whenever possible.

Collecting Data on Absenteeism 

Like any other business decision, the more facts and figures you have, the better the choice you will make. You should do ongoing monitoring of current attendance statistics and periodic audits of the files of your most frequently absent employees.

If you are already doing this – good for you! If you are like many employers (especially small business owners), this section will get you started with one simple metric.

Calculating your Absenteeism Rate

Calculating your absence rate is relatively straightforward. 

Multiply the total number of absences for all non-exempt employees by 100, and divide by the total number of non-exempt employees in the organization.

For example, if you have 115 employees who were absent for a combined total of 6.5 for a given period, your absence rate is 5.7%. This tells you that it’s time for action to bring that average down.

Effective Employee Attendance Policies to Reduce Absences

An employee attendance policy is a must – even if you only employ a few people. Here are some of the benefits of a formal attendance policy:

• It helps control costs
• Written policies reduce confusion about your expectations as an employer
• It puts employees on notice from the first day of employment
• An attendance policy can help create a sense of fairness
• It improves communications and reduces conflict – raising productivity
• Your policy manual shows that you have big plans for growth, even if your business is small now

If you don’t have an attendance policy, create one! Learn more and get policy templates in the article, How to Create an Effective Employee Attendance Policy.

Characteristics of a Great Attendance Policy

Do a quick audit of your absenteeism policy; the following elements should be included:

• Policy title
• Description and purpose of the policy – be clear but brief
• The scope – who must follow the policy
• Enforceable clauses – what you expect from your team regarding attendance
• Situational requirements – what workers must do to report absences etc.
• Manager’s responsibility – expectations for enforcing compliance
• Rewards – the benefits of good attendance
• Disciplinary actions triggered by poor attendance

Note: The following sections describe specific programs you can put in place to reward good attendance and discourage non-attendance. Remember that programs like these must be included in your attendance policy in detail.

An Attendance Point System to Reduce Employee Absenteeism

If your metrics tell you that absenteeism in your organization is out of control, you may wonder how to reduce employee callouts. One solution to consider is a no-fault attendance point system policy. For a good overview of point systems and how they work, check out the article, What is an Employee Attendance Point System?

There is some controversy about this type of attendance tracking, but recent legal decisions – such as EEOC v. Austal USA, LLC – have upheld the employer’s right to follow the practice. 

The point system relies on the assignment of varying point values for:

• Tardiness
• Leaving early
• Absence less than 2 hours in duration
• Half-day absence
• Full-day absence
• No-Call, No-Show absences of any duration

Points are accumulated and evaluated periodically. Some organizations total the points every month for the previous (rolling) 12-month period.

Employees with a high number of points may be subject to disciplinary action, while workers with few or no points may be eligible for rewards. 

Before you begin writing a point-system policy, read the article, How to write an Employee Attendance Point System Policy & SOPs.

Note: This article should not be taken as legal advice; check with your legal counsel to decide if a no-fault attendance policy is right for your company.

Encourage Good Attendance with a Reward Program

Rather than focusing on the negative consequences of absenteeism, why not highlight the positives? You can find a ton of ideas online for rewarding good attendance, and there is a wide range of costs to the employer and benefits to the employee.

Financial Incentives

• A cash bonus
• A salary increase
• Extended meal breaks
• An extra day off with pay

Non-Monetary Rewards

• A commemorative plaque hanging on a “wall of fame”
• A framed certificate to display in the employee’s work area
• An award pin to add to their uniform or ID badge
• Award luncheon at a nice restaurant
• Higher priority for promotion a/d/or lower priority for layoff

Your incentive program need not be exorbitantly expensive. Everyone loves cash, but the prize is less important than the message to the worker: You see them, you hear them, and you value them. 

PTO Banking to Inspire Attendance

In some cases, a system that allows employees to bank their paid time off (PTO) can incentivize workers to use paid time wisely rather than wasting it on unscheduled absences that could be avoided.

There are benefits to be gained – and downsides, to be sure. Here are some things to consider when deciding about a PTO banking policy:

• Who is eligible for paid time off?
• If only full-time employees, how will you incentivize part-timers to work as scheduled?
• Will all workers who receive paid time off be able to bank their PTO?
• Is the program fair to all workers?
• Is it so hard for new employees to accrue time off that it is not an attendance incentive?
• How much paid time will be accrued for every hour worked?
• Will holiday pay be added immediately to the bank or factored into the accrual rate throughout the year?
• What holidays are specified as paid holidays?
• Will PTO hours roll over at the end of the year?
• If not, how can you manage workflow so most PTO requests can be approved?
• In a “use-it-or-lose-it” scenario will you pay employees for unused PTO?
• What is the process for the request and approval of time off?
• Do all employees have fair opportunities to take time off periodically?
• How far in advance must PTO absences be requested?
• What types of absences are paid but not deducted from accrued PTO? 
• So you don’t violate federal employment law, how will you pay workers – without deducting PTO – for protected absences e.g. jury duty, disability, and FLMA?

Morale-Boosting Programs

Transform your workplace by giving your team reasons to get out of bed in the morning and come to work with a variety of small and large changes.

For example, you could carry out a series of elaborate (and expensive) changes like remodeling the break room to include soft lighting, lounge chairs, bean bags, and a holistic juice bar.

In a typical company, however, you must be more down-to-earth about what you can offer. Most of the time, employees don’t appreciate the big razzle-dazzle as much as a collection of small, practical changes that make their lives better.

Wellness Programs to Boost Health & Morale

An effective wellness program can be as simple as this: 

• Participate in group exercise with co-workers before or after work or during meal breaks
• Exercise with the group at least 6 times in the 2-week pay period
• Receive .5 hours of additional paid time off
• Exercise with the group 3 times a week for 12 weeks to remove one attendance point

If you don’t want to devote resources to tracking employees’ participation, there are many third-party solutions that offer wellness program tracking and reward reporting. If you offer health insurance as an employee benefit, you might be able to opt into a wellness program through the insurance company.

Other Out-of-the-Box Ideas to Improve Morale

Here are some other interesting ways to improve the overall culture of your organization without breaking your budget:

• Announce a new campaign to reduce negativity and increase enjoyment at work
• Communicate openly and regularly – one-on-one’s for all
• Encourage and accept feedback without judgment or negative reaction
• Post a daily/weekly funny but inspirational quote
• Birthday PTO for each employee
• Group volunteering in company t-shirts
• Designate a relaxing break room and facilitate laid-back breaks
• Put free, healthy snacks in the break room
• Arrange food trucks
• Allow a mid-afternoon power nap
• Weekly happy hour for each employee to share their wins and fails during the week
• On-demand discounted perks like car washes, massages, haircuts, or laundry services
• Post-it note art wars or nerf battles with randomly assigned teams
• Train managers and supervisors to spearhead the new initiatives

Practical Procedures to Discourage and Decrease Absenteeism

If you make changes to your policies – including the addition of any of the programs and methods we’ve talked about – keeping your procedures (also known as processes or SOPs) updated is critical. 

This section explores the most important procedures to give step-by-step instructions for following your attendance policies, but don’t forget to add procedures for any other initiatives you will be putting into place. 

Reliable Phone Line for Employee Absence Call-Off

Before you can require employees to call to report that they will be unable to come to work, you must have a designated phone line for them to call that is reliably available and answered.

A “best practice” is to have a go-to person (with trained backup personnel) in the human resources department who can receive call-offs and advise supervisory staff on matters of reward and discipline related to the attendance policy. They should also take the lead in determining if an employee’s absence qualifies as a protected absence not subject to discipline. 

Standardized Call-In Procedures

It is vitally important that a specific, detailed process is followed for employees who call to report that they will not be able to work as scheduled. These are known as call-in procedures. 

That process begins with a call-off line that is answered by a designee who is trained to ask a list of questions and fully document the answers and other details of the call. Some companies require a second call to the employee’s direct supervisor. 

Make sure you have detailed procedures for all involved so they know what is expected of them.

Procedures for Employees Calling Off Work

Here are some of the who-what-when-where-why-how’s to get you started:

• Define an employee call-off
• State who is required to call when they cannot come to work
• Set the ideal heads-up time between the call-off and the time they were scheduled to arrive
• Provide the phone number(s) to call
• List the questions they will be expected to answer
• Describe any additional actions they are required to take
• Give detailed instructions for daily call-ins, if they are to be absent for multiple days
• Explain the process that will be followed to if their absence is protected by law and how soon they will be notified
• Describe special procedures to follow e.g. for COVID-19 exposure
• Refer the employee to the attendance policy that defines excessive absences and possible disciplinary action

Procedures for Supervisors & Designees Who Receive an Employee Call-Off

The following must be spelled out for any employee who answers the call-off line:

• Give a detailed list of questions that must be asked
• Provide sample forms or other tools they must use to record the answers
• List the additional documentation they must include in the call-off record
• List typical questions from the employee and sample answers
• Explain how the call should end
• Give a detailed description of individuals to be notified and finding workers to cover the shift
• Give detailed information about completing and submitting the call-off record 

Further Reading: 3 Steps to Take Whenever an Employee Calls In Sick

Staff Training/Re-Training on Employee Call-Off Procedures

Formal training protocols must be developed for the following:

• Review of the current attendance policy – all employees
• How to call off from work – all employees
• How to handle employee call-off incoming calls – supervisors and call-off line designees
• Who to notify and/or how to fill the vacant shift quickly – supervisors and call-off line designees
• How to effectively enforce the attendance policy – supervisors 
• How to determine if disciplinary action or rewards are appropriate – supervisors
• Who to contact in the HR department for guidance on attendance issues – supervisors
• How to conduct a disciplinary meeting with an employee regarding their attendance issue and implement an employee attendance improvement plan – supervisors 

Enforcement & Documentation Maximize Policy Effectiveness

You can have the best attendance policy in the entire world, but it may let you down if you don’t:

• Enforce the policy fairly and evenly throughout the organization, without favoritism or other forms of discrimination
• Document; remember the adage, “If you don’t write it down, you didn’t do it” because you have no proof that you handled the situation appropriately

If you are committed to enforcing the policy across the board and over-documenting, you are ready to implement your new policies, incentive programs, and absenteeism action plan!

Automated Solutions to Help Your Attendance Policy Succeed

It may be more affordable than you think to automate important employee attendance activities, and even turn them over to a reliable and trustworthy third party at an affordable cost. 

Attendance-Related Tasks You Can Automate

Here are some of the things a call-off system can usually do as well as humans – if not better:

• Receiving employee calls to report they will be absent from work
• Creating full intake documentation elicited by asking questions
• Notifying the direct supervisor and other appropriate parties about the absence
• Contacting off-duty workers to fill the shift
• Modifying the replacement employee’s work schedule as needed to avoid overtime
• Providing the intake documentation when needed to determine protected absence status and possible disciplinary action or rewards
• Tracking and updating attendance points and paid time off 

Benefits of Automating Your Attendance Procedures

Here are some of the gains your organization can realize by automating attendance tasks:

• Reduction in manager/supervisor time spent dealing with an unplanned absence
• Recording of call-off conversations
• Filling a shift on short notice is expedited by automatic contact of unscheduled employees as soon as a call-off is received
• Supporting documentation for disciplinary action is automatically saved and easy to retrieve
• Information is readily available to determine if the absence is legally protected
• Real-time metrics including absenteeism incidence, inactivity, and severity rates
• Up-to-date attendance point accumulation and available PTO totals 
• Automation can help reduce overtime and improve legal compliance

The Best Solution – an Automated Employee Call-Off Hotline 

Employee call-off systems are referred to by many different names, including:

• Call-off service
• Call-out system
• Employee call-in line
• Absence reporting line
• Call-in number
• Call-off hotline
• Call-out hotline
• Employee hotline
• Attendance hotline

No matter what you call it, a third-party call-off hotline can save you time and money by improving employee attendance, productivity, and retention rates.

CMS offers a simple but powerful automated call-off hotline to help streamline your absenteeism management activities. Reach out today – one of our experts can explain how our hotline works and how it frees up your leadership to do what they do best – grow your business!