Employee Absenteeism: A Problem for Many Dealers

Dealers can’t afford to carry a lot of dead weight. You have to run lean and mean. That is particularly true when it comes to your staff. When an employee is absent or late excessively, it can have a meaningfully negative impact on operations.

Dealing with employee absenteeism raises two questions: what is excessive and how as a manager to deal with it? For example, your policy provides for 15 days off a year for parts department employees, but one of your employees has taken all 15 days within the last two months: is that excessive? A talented mechanic is habitually late, 15 or 20 minutes or sometimes a half hour, two or three times a week. Is that excessive and what do you do about it?

DEFINING ABSENTEEISM
So what is excessive? If you consult with your attorney, the likely answer is, “It depends.” There’s really no strict rule or standard as to what is considered excessive absenteeism. It is more about whether or not the absenteeism violates your policy.

There are exceptions, such as when the absenteeism is covered under the Family and Medical Leave Act (FMLA). The FMLA permits time off of up to 12 weeks for medical treatment of the employee or a dependent family member. Your policy can require an employee to use other compensated time off first, before the FMLA time begins.

ESTABLISHING POLICY
Policies for absenteeism can be flexible, and often are, as dealership employees are typically close-knit groups, even family-like, in many instances. A flexible policy might have different requirements for various dealership departments or job classifications, or might allow for more time off during times when business is typically slow.

Still, the dealer needs a set policy for absenteeism. In the past those policies have broken down time off into different categories, such as vacation time and sick leave. But over the years we have seen that such categorization often forces employees to lie, such as calling in sick when they aren’t. So we recommend policies that simply provide for a set number of days of paid absence, regardless of reason – vacation, personal, sick. You don’t need to know and your employees don’t need to lie. Clearly state that any additional time off must be approved by management as unpaid leave. Most dealers find a vacation calendar helpful, where vacations are scheduled in advance and spaced so as not to leave the dealership understaffed.

Some dealers tend to shy away from rigid rules and prefer more general policies that permit supervisors to make determinations about excessive absenteeism. But while you want to be flexible you have to be careful because flexibility often leads to inconsistency, which can spur accusations of favoritism and even wrongful termination lawsuits. It may be best to consult an employment attorney when drafting any HR policy.

ADDRESSING ABSENTEEISM
When absenteeism is a problem with an individual, it is important to have a discipline program in place. All counseling and verbal warnings should be documented. If not, it can be problematic if you have to defend yourself in court against accusations of wrongful termination. Human Resources or management should be involved in any discussions with employees on absentee issues, and an employee’s file should contain records of notices issued, counseling provided, all warnings and steps taken in an attempt to correct the behavior. Only then can the dealer be in a strong position to take action including terminating employment when warranted.

Whatever your policy, it is most important that it clearly spells out attendance and punctuality expectations as well as job requirements. If your policy is simple, straightforward and easy to understand, your employees are likely to follow it.

Rex Collins is a Principal at HBK CPAs & Consultants. He directs HBK’s Dealership Industry Group, which provides tax, accounting, transaction, and operational consulting exclusively to dealers. Rex can be reached by email at RCollins@hbkcpa.com or by phone at 317-886-1624.

About the Author(s)
Rex is a Principal of HBK CPAs & Consultants and directs the firm’s Dealership Group. He has worked extensively in the dealership industry since 1984 as a department manager, a general manager and an owner, as well as providing tax, accounting and operational consulting services exclusively to dealers as an independent CPA. This experience includes working closely with hundreds of dealers from coast-to-coast since 1987 on creative tax planning and financial statements issues. He provides clients with a wide range of transaction work services, and consults for them in specialty areas such as operations, government regulatory compliance, valuations and M&A feasibility studies. Rex is active in many professional associations. He is the current Chairman of the BDO Dealership Industry Group, contributes articles and commentary to dealership industry publications, is frequently called upon to speak to industry associations and conferences, provides expert testimony, and is regularly quoted by industry and the general media.
Hill, Barth & King LLC has prepared this material for informational purposes only. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.

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