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Issue brief

WORKPLACE FLEXIBILITY: INFORMATION AND OPTIONS
FOR SMALL BUSINESSES
INTRODUCTION
Workplace flexibility is often described as the outcome of
employers and employees working together to determine
when, where and how much an employee works, with a
view toward meeting both individual and business needs.
While all workers struggle to juggle work and personal
life, the challenge is even greater for hourly, low-wage
workers, who often have the least amount of flexibility
at work and experience unpredictability and instability in
work schedules.1 Considering these challenges, there
are specific workplace flexibility arrangements that may
serve hourly, low-wage workers best. These can include
shift flexibility, employee scheduling, and just-in-time
flexibility.2 And while workplace flexibility is important,
ensuring workers also have an adequate number of hours
to make ends meet is also crucial. Small businesses have
already adopted many of these practices and are therefore
better at providing flexibility for hourly workers. In fact,
according to the 2015 Economic Report of the President,
small firms provide more flexibility than large firms across
five dimensions of flexibility: changing starting and quitting
times, working regular hours at home occasionally,
having control over breaks, returning to work gradually
after childbirth or adoption, and taking time off during
the work day to tend to family or personal needs without
losing pay.3 For salaried high-wage workers, workplace
flexibility is often more accessible and can involve a variety
of arrangements, including flextime, teleworking and
compressed workweeks, as well as job-sharing and other
reduced-work arrangements.4
A flexible workplace is critical to business success.
Flexibility is a powerful management tool that can be
used to accomplish work more efficiently while helping
employees manage the demands of work and home.
Employers with flexible workplace policies also have
a competitive advantage in attracting and retaining
top talent.5 At its best, workplace flexibility is a natural

component of an organization’s culture, whereby
employees and managers work together to discover a
variety of creative and mutually beneficial ways to schedule
and accomplish work. Flexibility can also be used to reduce
the carbon footprint and to help keep employees engaged
and committed when a business’s focus changes or when
budgets are tightened.6

Issue brief
THE BUSINESS CASE FOR
WORKPLACE FLEXIBILITY
According to the 2015 Economic Report of the President,
one component of an effective workplace is access to
family-friendly workplace policies.
The direct and indirect costs associated with employee
turnover can be considerable. For example:
• In organizations with fewer than 1,000 employees,
hiring costs $3,079 per hire.7
• A worker’s absence because he or she does not have
the flexibility to balance work and personal needs
can be a significant cost for businesses. In fact,
according to “Absenteeism: The Bottom-Line Killer,” a
publication of workforce solutions company Circadian,
unscheduled absenteeism costs roughly $3,600 per
year for each hourly worker and $2,650 per year for
each salaried employee.8
• Employers typically spend about one-fifth of an
employee’s salary to hire and train a new employee
when one leaves, although costs are even higher for
jobs that require specialized training.9

Given the considerable costs associated with recruitment,
hiring, training and unnecessary absenteeism, flexible work
policies can potentially pay for themselves. Employees who
have flexible work options are more engaged and loyal.
Indeed, employers that have adopted flexible workplace
practices cite many benefits, such as reduced worker
absenteeism and turnover, improved ability to attract and
retain workers, and other positive changes that translate
into increased worker productivity.10 Specifically, studies
have found the following results:
• Workers with flexible work arrangements report a
“high likelihood” of remaining with their employers for
the following year.11 Workers in flexible workplaces
are more likely than other employees to have high
levels of engagement in their jobs. They also have
stronger intentions to remain with employers.12
• A positive relationship between workplace flexibility
and worker productivity.13 14 15
• Workplace flexibility can also save businesses
money during emergencies and weather-related
disruptions. For instance, the Federal Government’s
telecommuting policies—which require employees
who have previously arranged to telework to continue
working even when the government is closed for
weather emergencies—saved more than $30 million
a day, and $150 million over the winter, during snowrelated closures in 2009 and 2010.16
In the Society for Human Resource Management’s 2014
Workplace Flexibility survey, the vast majority of employers
reported that offering flexible work options has a positive
impact on recruitment and retention, the employee
experience, and organizational success.17

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Issue brief
Percent of Employers
Indicating a “positive” or
“somewhat positive” Impact

Impact Area

Quality of personal/family life

84%

Engagement

80%

Retention

75%

Intent to stay

74%

Productivity

67%

Company culture

63%

Recruitment

61%

Quality of work

59%

Absenteeism rates

56%

Turnover

52%

Health and wellness

52%

Public image as employer of
choice

52%

Source: SHRM’s 2014 Workplace Flexibility- Strategic Use of
Flexible Work Arrangements

SMALL BUSINESS FACTS
Small businesses, which employ about one-half of the
nation’s private-sector labor force,19 are more likely to
have better workplace flexibility policies. Specifically,
businesses with 50 to 99 employees nationwide are more
likely than businesses with 1,000 or more employees to
allow employees to change starting and quitting times,
telework, determine their break time and offer paid leave.20
Importantly, small business employees that have access to
formal workplace flexibility policies actually report a greater
level of job satisfaction and commitment to their employer.21
18

MYTH BUSTERS
A prominent barrier to expanding the implementation of
workplace flexibility practices is a lack of knowledge about
the benefits to both employers and workers, as well as
misunderstanding about how such practices work. Below
are common myths about workplace flexibility, alongside
some studies disproving them.

Myth

Fact

Flexible workplace
strategies are only for
certain groups, such
as individuals with
disabilities or women.22

Workplace flexibility is a universal
strategy that is beneficial to all workers.
Working parents, caregivers, older
workers and individuals with disabilities
may especially benefit. For example, in
a 2014 survey of high-skilled working
fathers conducted by Boston College,89
percent said that the availability of
paid paternity leave was an important
consideration in seeking a new job if they
planned to have another child. Likewise,
95 percent reported that workplace
flexibility policies allowed them to actively
engage with their children.23

Workplace flexibility
is too expensive,
especially for small
businesses.

Small businesses that offer flexible work
options have lower rates of employee
turnover and absenteeism, resulting
in reductions in the cost of employee
recruitment and paid sick leave.24

Offering flexibility to
low-wage employees
isn’t worth the
investment.

When low-wage employees are given
the same consideration as higher-wage
employees, employers get a workforce
that is more satisfied and engaged with
its work, has less home interference
with work, and is more likely to stay with
the current employer.25 Any investment
will be returned in greater loyalty, lower
turnover and more engagement at work.26

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Issue brief
POLICIES THAT WORK
Three policies that have been proven to work for
both employers and employees are paid leave, paid
sick days and flexible scheduling. Below is a brief
discussion of each.

Paid Leave

One of the most important steps society can take to help
small businesses compete for and retain good workers is
to establish paid leave programs. Today, about 34 million of
America’s working families have young children, and more
than 25 million workers provide unpaid elder care—both
are major life responsibilities that may require absences
from work.27 Nearly 60 percent of U.S. workers are eligible
for leave under the Family and Medical Leave Act (FMLA),
which entitles eligible employees of covered employers
to take unpaid, job-protected leave for specified family
and medical reasons with continuation of group health
insurance coverage under the same terms and conditions
as if the employee had not taken leave.28 However,
potentially millions of workers cannot afford to take unpaid
leave because of the large loss of income it entails.29

(those with more than 100 employees) to report any
negative effects of PFL.32 Among workers in lowwage jobs, use of PFL increased retention: 83 percent
returned to the same employer, compared with 74
percent of those who did not use PFL. Lastly, over
91 percent of surveyed employers with less than 100
employees reported that PFL had a “positive effect”
or “no noticeable effect” on profitability, performance,
turnover and morale.33

Paid leave offers a number of benefits to employees and
employers.30 Paid leave raises the probability that mothers
will return to work after giving birth, work longer hours and
earn higher wages.31 Other workers benefit when they can
take leave to care for family or their own serious health
needs, and businesses benefit because they are able to
retain these experienced workers rather than bearing high
turnover costs. California, New Jersey, and Rhode Island
have implemented state paid leave programs. Below are
descriptions of California’s and New Jersey’s programs,
along with studies about their successful implementation.
• California’s law, now over a decade old, has been
shown to have positive or at least no negative effects
on businesses, especially small businesses. California
passed the Paid Family Leave (PFL) program on
September 23, 2002. The law took effect on July
1, 2004, and provides eligible employees up to six
weeks of wage replacement leave at 55 percent of
their usual weekly earnings, up to a cap. The program
is funded by an employee-paid payroll tax, with no
direct cost to employers and benefit levels indexed
to inflation. A survey of California employees and
employers from 2009 and 2010 found that small
businesses were less likely than larger establishments
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• New Jersey, in 2009, became the second state to
provide workers with paid family leave. Under the law,
covered workers are eligible for six weeks of partial
(66 percent) wage replacement (up to a cap) in the
12 months after becoming a parent, or anytime to
care for an ill family member.34 Under the program,
all employees in New Jersey whose employers

Issue brief
are subject to the New Jersey Unemployment
Compensation law are covered, regardless of the
number of employees.35 Family Leave Insurance
is available to workers with at least 20 calendar
weeks of covered employment and at least $8,300
in earnings in the 52 weeks preceding leave.36 The
program is funded through employee contributions—
workers contribute 0.09 percent of their first $32,000
in earnings. According to a study by the Center
for Economic and Policy Research, while there
were concerns before implementation, especially
from the small business community, regarding the
administration of the family leaves and general
operations, interviews of New Jersey employers since
the program went into effect have found that “it’s
business as usual”: the paid family leave program
has had little effect on most aspects of business
operations.37

Paid Sick Days

Nearly half of those who work for smaller businesses do
not have access to paid sick days to use to recover from an
illness or care for a sick family member.38 This is especially
true for low-wage workers who can’t afford a day off
without pay and are forced to come to work sick, potentially
spreading illness to coworkers and customers. Paid sick
days create a healthier work environment by encouraging
workers to stay home when they are sick, making them less
likely to infect others and cause further productivity loss.
Paid sick days result in reduced turnover, which leads to
reduced costs incurred from advertising, interviewing and
training new hires.39 Paid sick days also help minimize the
productivity lost when employees work sick—known as
“presenteeism”—which is estimated to cost our national
economy $160 billion annually. This surpasses the cost of
absenteeism due to poor health, which, according to recent
Gallup Poll estimates, is around $84 billion.40 41 Evidence
also suggests that, on balance, paid sick days do not lower
business profits.42

Scheduling
In their framework for a national conversation on hourly
flexibility, researchers at Georgetown University Law Center
and the University of Kentucky Institute for Workplace
Innovation described three types of scheduling challenges:
rigid workplaces, unpredictability, and instability. For
instance, just-in-time scheduling is centered on customer
demand and occurs with little advance notice, resulting
in high levels of unpredictability. Rigid scheduling does
not allow for flexibility in start or stop times or when an
employee can take leave.43 Recently, lawmakers at the
federal, state, and local levels have introduced legislation
to respond to these difficult scheduling practices. Three
important types of flexibility can minimize the scheduling
challenges that workers—especially low-wage, hourly
workers—experience. These flexibilities are shift flexibility,
employee scheduling, and just-in-time flexibility.44 More
information about these practices can be found in the table
accompanying this guide.

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Endnotes
ENDNOTES
Watson, L. & Swanberg, J. 2011. “Flexible Workplace Solutions for Low-Wage Hourly Workers: A Framework for
a National Conversation.” Workplace Flexibility 2010 & Institute for Workplace Innovation. Retrieved from: http://
workplaceflexibility2010.org/images/uploads/whatsnew/Flexible%20Workplace%20Solutions%20for%20Low-Wage%20
Hourly%20Workers.pdf.
2
Roundtree, L. & Kerrigan, K. 2009. “Flex-Options Guide: Creating 21st Century Workplace Flexibility.” Retrieved from:
http://www.roundtreeconsulting.com/assets_d/20110/download_media/2009-flex-options-guide_122.pdf. (Developed as part
of a contract with the U.S. Department of Labor Women’s Bureau.)
3
White House. 2015. “Economic Report of the President.” Retrieved from: https://www.whitehouse.gov/sites/default/files/
docs/cea_2015_erp.pdf.
4
Ibid.
5
Council of Economic Advisers (White House). 2014. “Work-Life Balance and the Economics of Workplace Flexibility.”
Retrieved from: https://www.whitehouse.gov/sites/default/files/docs/updated_workplace_flex_report_final_0.pdf.
6
Roundtree, L. & Kerrigan, K. 2009. “Flex-Options Guide: Creating 21st Century Workplace Flexibility.” Retrieved from:
http://www.roundtreeconsulting.com/assets_d/20110/download_media/2009-flex-options-guide_122.pdf. (Developed as part
of a contract with the U.S. Department of Labor Women’s Bureau.)
7
Society for Human Resource Management. 2011. “Executive Brief: What Factors Influence Cost-per-Hire?” Retrieved from:
http://www.shrm.org/research/benchmarks/documents/cost-per-hire%20article_final.pdf.
8
Circadian. 2005. “Absenteeism: The Bottom-Line Killer.” Retrieved from: http://www.workforceinstitute.org/wp-content/
themes/revolution/docs/Absenteeism-Bottom-Line.pdf.
9
Heather Boushey and Sarah Jane Glynn. 2012. “There Are Significant Costs to Replacing Employees” (Washington, D.C.:
Center for American Progress. http://www.americanprogress.org/issues/labor/report/2012/11/16/44464/there-are-significantbusiness-costs-to-replacing-employees/.
10
Council of Economic Advisers (White House). 2014. “Work-Life Balance and the Economics of Workplace Flexibility.”
Retrieved from: https://www.whitehouse.gov/sites/default/files/docs/updated_workplace_flex_report_final_0.pdf.
11
Ibid.
12
Matos, K. & Galinsky, E. 2014. “2014 National Study of Employers.” Families and Work Institute. Retrieved from:
http://familiesandwork.org/downloads/2014NationalStudyOfEmployers.pdf.
13
Ibid.
14
Bloom, N. & Van Reenen, J. 2010. “Why Do Management Practices Differ across Firms and Countries?” Journal of 15
Economic Perspectives, 24(1): 203–24.
15
Bloom, N. & Van Reenen, J. 2010. “Why Do Management Practices Differ across Firms and Countries?” Journal of
Economic Perspectives, 24(1): 203–24.
16
Office of Disability Employment Policy (U.S. Department of Labor). 2013. “The Business Case for Workplace Flexibility.”
Retrieved from: http://www.dol.gov/odep/pdf/BusCaseWorkFlex.pdf.
17
Society for Human Resource Management. 2014. “2014 Workplace Flexibility Survey - Strategic Use of Flexible Work
Arrangements (FWAs).” Retrieved from: http://www.shrm.org/research/surveyfindings/articles/pages/2014-workplaceflexibility-survey-strategic-use-of-flexible-work-arrangements-%28fwas%29.aspx.
18
The U.S. Small Business Administration defines small businesses as companies with fewer than 500 employees or less
than $7.5 million in average annual receipts. U.S. Small Business Administration. 2014. “Summary of Size Standards by
Industry Sector.” Retrieved from: https://www.sba.gov/content/summary-size-standards-industry-sector.
19
Klayman D., Gatta M. & Herbert, D. 2011. “Fact Sheet: Small Businesses and Workplace Flexibility.” (Unpublished
resource developed as part of a contract with the U.S. Department of Labor Women’s Bureau.)
20
Matos, K. & Galinsky, E. 2014. “2014 National Study of Employers.” Families and Work Institute. Retrieved from:
http://familiesandwork.org/downloads/2014NationalStudyOfEmployers.pdf.
21
Richman, A., Johnson, A. & Noble, K. 2011. “Business Impacts of Flexibility: An Imperative for Expansion.” Corporate
Voices for Working Families. Retrieved from: https://www.wfd.com/PDFS/BusinessImpactsofFlexibility_March2011.pdf.
22
Office of Disability Employment Policy (U.S. Department of Labor). 2013. “The Business Case for Workplace Flexibility.”
Retrieved from: http://www.dol.gov/odep/pdf/BusCaseWorkFlex.pdf.
1

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Endnotes
Council of Economic Advisers (White House). 2014. “Work-Life Balance and the Economics of Workplace Flexibility.”
Retrieved from: https://www.whitehouse.gov/sites/default/files/docs/updated_workplace_flex_report_final_0.pdf.
24
Klayman D., Gatta M. & Herbert, D. 2011. “Fact Sheet: Small Businesses and Workplace Flexibility.” (Unpublished
resource developed as part of a contract with the U.S. Department of Labor Women’s Bureau.)
25
Office of Disability Employment Policy (U.S. Department of Labor). 2013. “The Business Case for Workplace Flexibility.”
Retrieved from: http://www.dol.gov/odep/pdf/BusCaseWorkFlex.pdf.
26
Richman, A., Johnson, A. & Noble, K. 2011. “Business Impacts of Flexibility: An Imperative for Expansion.” Corporate
Voices for Working Families. Retrieved from: https://www.wfd.com/PDFS/BusinessImpactsofFlexibility_March2011.pdf.
27
Lyles, L. September 24, 2014. “In Support of Paid Leave: 25 Million Stories.” U.S. Department of Labor Blog. Retrieved
from: https://blog.dol.gov/2014/09/24/in-support-of-paid-leave-25-million-stories/.
28
Office of the Press Secretary (White House). January 14, 2015. “Fact Sheet: White House Unveils New Steps to
Strengthen Working Families Across America.” Retrieved from: https://www.whitehouse.gov/the-press-office/2015/01/14/factsheet-white-house-unveils-new-steps-strengthen-working-families-acr.
29
Council of Economic Advisors (White House). 2014. “The Economics of Paid and Unpaid Leave.” Retrieved from:
http://www.whitehouse.gov/sites/default/files/docs/leave_report_final.pdf; Klerman, J., Daley, K. & Pozniak, A. 2012.
“Family and Medical Leave in 2012: Technical Report.” Retrieved from: http://www.dol.gov/asp/evaluation/fmla/FMLA-2012Technical-Report.pdf. A survey conducted for the U.S. Department of Labor found that about 16 percent of all workers in
2011 said they needed leave to care for themselves or a family member. About half of them took fully paid leave, but the
other half had only partial pay or no pay at all, or couldn’t afford to take any leave because it would be unpaid. Six in ten
workers who took partially paid or unpaid leave reported difficulty making ends meet; nearly half of these workers were
forced to cut their leaves short due to financial constraints. This could mean that millions of workers in the U.S. who need
family leave are getting only partial pay, no pay, or do not take leave they need because they can’t afford to do so.
30
Van Giezen, R. 2013. “Paid leave in private industry over the past 20 years.” Retrieved from: http://www.bls.gov/opub/btn/
volume-2/paid-leave-in-private-industry-over-the-past-20-years.htm.
31
Budig M. & England P. 2001. “The Wage Penalty for Motherhood.” American Sociological Review, 66(2): 204-25.
32
Appelbaum, E. & Milkman, R. 2011. “Leaves that Pay: Employer and Worker Experiences with Paid Family Leave in
California.” Center for Economic and Policy Research. Retrieved from: http://www.cepr.net/documents/publications/paidfamily-leave-1-2011.pdf.
33
Ibid, 8.
34
White House. 2015. “Economic Report of the President.” Retrieved from: https://www.whitehouse.gov/sites/default/files/
docs/cea_2015_erp.pdf.
35
Lerner, S. & Appelbaum, E. 2014. “Business As Usual: New Jersey Employers’ Experiences with Family Leave
Insurance.” Center for Economic and Policy Research. Retrieved from: http://www.cepr.net/documents/nj-fli-2014-06.pdf.
36
Ibid.
37
Ibid.
38
Bureau of Labor Statistics (U.S. Department of Labor). 2014. “Table 6. Selected paid leave benefits: Access, National
Compensation Survey, March 2014.” Retrieved from: http://www.bls.gov/news.release/pdf/ebs2.pdf. In this publication, BLS
defines “small establishments” as those with fewer than 100 employees.
39
Meyer, C.S., Mukerjee, S. & Sestero, A. 2001. “Work-Family Benefits: Which Ones Maximize Profits?” Journal of
Managerial Issues, 13(1): 28-44.
40
Stewart, W. et al. 2003. “Lost Productive Work Time Costs From Health Conditions in the United States: Results From the
American Productivity Audit.” Journal of Occupational and Environmental Medicine, 45(12): 1234-46.
41
Witters, D. & Liu, D. 2013. “In U.S., Poor Health Tied to Big Losses for All Job Types.” Gallup. (Reporting findings based
on polling as part of the Gallup-Healthways Well-Being Index.)
42
White House. 2015. “Economic Report of the President.” Retrieved from: https://www.whitehouse.gov/sites/default/files/
docs/cea_2015_erp.pdf.
43
Statement by Joan C. Williams during panel presentation on hourly workers at the National Dialogue on Workplace
Flexibility, February 17, 2011, Pasadena, CA.
44
Women’s Bureau (U.S. Department of Labor). 2014. “Flexibility Fact Sheet: Hourly Workers.” (Unpublished resource
developed as part of a contract with the U.S. Department of Labor Women’s Bureau.)
23

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Contact us
Women’s Bureau, U.S. Department of Labor, October 2015.

CONTACT US
Website: www.dol.gov/wb/
E-mail: Womens.Bureau@dol.gov
Mail:
Women’s Bureau
U.S. Department of Labor
200 Constitution Avenue, NW
Washington, DC 20210
Phone: 1-800-827-5335 or (202) 693-6710

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