8 VITAL Paid Sick Leave Issues to Understand

February 18, 2015
5 min read
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When it comes to paid sick leave (PSL), it doesn’t matter whether you run contractors through your own back-office or outsource to a back-office service provider – you need to be familiar with this employment law area. However, unless you place contractors in a geographical area that currently requires PSL or has it on an upcoming ballot, the lack of any PSL laws at the federal level may have left you unaware of this growing issue. This is one case where ignorance is not bliss – since we first reported on this issue in April 2013, the number of cities and states requiring PSL has more than tripled and 21 states are considering statewide legislation. If PSL does not currently impact you, the odds are good that it will soon.If you run your own back-office (particularly if you place contractors in more than one location in the U.S.), the considerations are numerous and complex. Below, we list 8 of the pressing issues to consider:

  1. Staying Informed. Keeping abreast of the new locations mandating PSL is easier said than done. Since the requirements are typically enacted at the state or municipal level, finding a single source for updates is unlikely. New legislation is popping up in a piecemeal fashion around the country, so you must be proactive about researching and alerting yourself to new bills on ballots, whether they pass or fail, and the specific compliance requirements that take effect if they do pass.
  2. Does it Apply to You? Not all sick time laws affect every employer within the location equally. Some requirements, including whether or not an employer is liable, whether or not the leave time must be paid, and how much time must be provided, vary based on the size and industry of the employer.
  3. Differing Regulations. Every location handles paid sick leave laws differently, and keeping track of the variances can place a large administrative burden on you. Some of the regulations that can vary widely are the effective accrual date, the rate of accrual, the maximum accrual, the maximum usage, the end-of-year carryover, and the rehire provisions and policies.
  4. One Law Trumps Another. In some cases, a location may be affected by PSL laws at both the state and local level. For example, San Francisco, CA has a city-specific PSL law, but it is also covered by the California statewide PSL law. The San Francisco ordinance is more generous with respect to the amount of sick time allowed in a year, but the California law is richer in regards to the rehire provision. In this situation, the employer must provide whichever provision or benefit is more generous to the employee.
  5. Posting Requirements. Each location with a PSL law requires you, as the employer of record, to post a notification to the employee informing them of their PSL entitlements. Further complicating the issue, some locations provide model notices for employers to use, but in most cases the employer must create their own.
  6. Record-keeping. You will have to track accruals closely and provide employees access to updated records indicating what they have earned and may use. The record-keeping and retention requirements may vary a great deal from law to law.
  7. Rehire Provisions. The guidelines for rehire provisions vary, but they generally state that if an employee is rehired within a certain number of months, the employer must restore any accrued and unused paid sick leave. Again, this reinstatement is not client-specific – it is ­location-specific. Therefore, you may have an employee who ends a contract with one client and begins another with a different client in the same location, necessitating that you (the employer of record) observe the applicable rehire requirements.
  8. Handling the Cost. The most common PSL accrual rate is one hour of leave for every 30 hours worked. You must consider how you will handle this added cost. Will your firm account for it up front within your own back-office pricing structure? Will you invoice the cost back to the client?

As you can see, PSL is not a clear or easy area of employment law, and this article offers only a brief overview of some of the vital considerations. PSL is likely to become even more complex as time goes on. For example, the issue of potential PSL rehire provision reciprocity between locations has yet to be addressed. Even if a nationwide mandate is someday put into place, it may not simplify things for employers if they are still required to provide the more generous provision or benefit of all applicable PSL laws.If all of this sounds like too much to track and implement within your own office, your best bet may be outsourcing to a back-office service provider. Make sure you carefully select a provider that will put the necessary effort into ongoing tracking and observation of the changes in law – you want to be sure that they will take the burden off of you altogether.

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