Assessing the Impact of Mandatory Paid Sick Leave

ThinkstockPhotos-160611067While it may come as a shock those who are paid when they miss work due to illness, 40 to 44 million of their fellow American workers don’t receive paid sick leave. In fact, 38 percent of private sector US employees have no paid sick time, according to government statistics. Even fewer workers can take time off if their child or another family member is sick.

Presently, some four states, 19 cities and one county have paid sick time laws on the books and this initiative is gathering momentum according to work and family legal center, A Better Balance. In addition,there are six cities with proposed legislation on their mayor’s desks and President Obama signed an executive order on Labor Day requiring federal contractors to provide paid sick leave benefits to their employees beginning in 2017.

Theses statutes will raise the direct and indirect cost of contingent labor leaving program managers and staffing firms to work together to manage costs and achieve compliance.Unfortunately the time allowed, tenure and qualifications vary from statute to statute and are complex,requiring systems modifications to maintain accurate eligibility record-keeping.

There are many things you must know as a manager of a major contingent workforce program to get a handle on the impact associated with paid sick leave. Here’s a partial list to get you started.

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Who is covered under the law?

Ask your staffing partners to calculate the percentage of contingent workers who might be affected by the law, based on your current and projected staffing needs. Workers don’t necessarily need to be sick to engage the granted allowance; they can be caring for family members as well.

You’ll want to know how many contractors are eligible by location, position and even by project to assess the impact on workflows, productivity, costs and seasonal production, as workers exercise their sick leave allowance. How about students or interns? Or contractors who travel between sites? Naturally, your partners will need to consider the law’s qualifying criteria and exemptions to come up with an estimate.

How much paid sick leave will contingents get?

The answer to this question depends on the statute, accrual policy and method. The bottom line: It’s complicated. Nevertheless, you need to collaborate with your partners and come up with a projected number of eligible sick days per contractor and the qualifications. For instance: How much sick time is accrued in a calendar year per worker? When can sick time be taken? Can employees use sick time to care for a relative? If a state and city have separate laws, which one applies?

Which employees might be affected in the future?

Given the growing support for paid sick leave, it’s never too early to start planning for the future. President Obama has called on Congress to require companies to give workers up to seven days of paid sick leave a year (Heathy Family Act S. 497 / H.R. 932).Estimating the future impact on various work groups can help MSP program managers achieve accurate budgets and avoid disruptive changes. Even if a staffing firm already provides PTO and sick leave to contingent workers, the allowances may need to be increased to meet the requirements in the assigned state, city or county.

What actions are clients and MSPs taking?

We have conducted an extensive survey of client companies and MSP partners to understand their positions. To our surprise, many end clients and MSP program managers were not aware of this trend nor the cost impact associated with these statutes. Sixteen percent of our survey respondents stated they allow suppliers to pass through billing for approved sick time while 13 percent have declined to allow billing or bill rate offsets.Many companies are still going through discovery and we expect them to announce strategies at the turn of the year.

It’s important to note that eTeam is not the only advocate for paid sick leave. A leading managed staffing provider has taken a proactive approach, urging their clients to approve pass-through billing for contingent worker sick leave. It behooves everyone involved to deal with the issue of paid sick leave sooner rather than later.

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Ben Thakur

Ben Thakur
Ben Thakur is the principal of eTeam Inc, a service provider of structured contingent workforce and full-time hire solutions to its Fortune 1000 clients.

Ben Thakur

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