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

 
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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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Impact Area

Percent of Employers 

Indicating a “positive” or 

“somewhat positive” Impact

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,18 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

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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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 

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 

(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 

• 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

Page 5

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. 
Endnotes

Page 6

ENDNOTES

1

 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.
Endnotes

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23 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-2012-

Technical-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.) 
Contact us

Page 8

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