Complying with a host of new mandatory paid sick leave statutes can be especially challenging for MSP program managers and suppliers, with contingent workers and spread across multiple cities and worksites.
Of course, the “elephant in the room” question is how to pay for the new sick leave benefits that are projected to raise the statutory cost of labor by about 3.2 to 3.5 percent. The only way to ensure compliant behavior, reduce risk and manage costs is through meticulous planning and preparation. Here’s a look at the steps program managers must take to plan and prepare to comply with disparate mandatory sick time laws.
Evaluate the readiness of your suppliers
It’s critical that staffing partners have scalable technology, software and tools that can track hours worked by location (state, city, county), eligibility dates as well as the number of sick days earned and taken by each employee. Since eligibility for paid sick time is determined by location, tenure and employment status, and in some cases, the number of hours worked in a week or a month.
For instance, contractors who work in the Washington metropolitan area are governed by different laws when they’re assigned to clients in Washington D.C. and Maryland. And California contractors are covered by more expansive plans when they’re assigned to worksites in San Francisco, Oakland and Emeryville but not San Jose. Suppliers must be able to track those finite details to achieve compliance and manage costs by administering benefits correctly.
Let the planning begin
If your staffing partners have pre-existing plans that offer paid sick time or PTO, program managers may only need to make minor modifications to onboarding documents or call-in procedures. However implementing a series of new plans to working contingents will require diligent project management, extensive cooperation and advance planning, roll-out meetings and modifications to time keeping systems, attendance and approval policies and reporting. Ensuring that the initiative is managed as a strategic project that will impact the entire organization will increase the chances of success.
Covering the cost of mandatory sick leave
Mandatory sick leave is similar to other statutory employer costs such as FICA, SUTA or workers’ compensation. There are several ways to pay for the benefits. Here are some options:
- Increasing mark-ups and bill rates for eligible workers might be the best option if your clients prefer fixed, predictable labor costs and budgets. And implementing a comprehensive PTO plan offers your clients and suppliers a strategic advantage.
- Treating sick pay as a pass-through cost at a reduced mark-up might be the better way to go, at least for the first year or two. Passing the costs through as they are incurred will give all parties a chance to understand the impact of the law especially the number of days contingents will use and the true cost of paid sick leave.