Addressing Emerging Mandatory Sick Leave Laws
Sick leave laws have been appearing with increasing frequency recently. President Obama’s executive order from September of 2015 has been rejoined by numerous local statutes in cities across the nation such as New York City’s Earned Sick Time Act as one example. The logistics of compliance with such laws/statutes is made more difficult by the lack of a standard to be equally applied nationally. So what can a workforce management program do to stay on the right side of the legal boundary? How will the MSP program with contingent workers, suppliers and managers working across many locations accommodate these laws? How will the cost of sick leave benefits – projected to raise the cost of labor by 3 to 4 percent – be absorbed?
Like most other elements of developing and executing a successful workforce management program, the answers lie in the diligent application of the ‘3 Ps’ – preparation, planning and processes. To begin, workforce managers must assess the readiness of all suppliers serving their program. We recommend engaging only those suppliers with existing technology tools/software that is robust enough to track hours worked (by location) so as to be aware of every contractor’s eligibility for sick leave benefits. Having a technology in place enables the supplier to track the number of sick days earned and utilized by each employee and to be able to convey that information, on demand, to program management. Remember that eligibility for paid sick leave is dictated by location, tenure and employment status. Some localities even measure eligibility in correlation to the number of hours worked in a given period of time.
It’s important to remember that where a resource is situated can impact eligibility. A contractor hired by a supplier in California but engaged on a job site in Nevada will need to adhere to the local rules in Nevada. Those hired in Upstate New York but assigned to jobs in the NYC metro area must be considered under the NYC rules as opposed to those from the Upstate area. As you can see, this is why it is critical for your suppliers to be able to track these details, achieve compliance and manage costs properly.
For staffing suppliers with existing practices for offering paid sick leave, program managers may simply need to tweak the onboarding documents and associated procedures. However, if the laws have changed in any given area, contingents already on assignment will need to be alerted to the changes to their eligibility. This requires strong project management, planning, collaboration and execution. Prepare to work closely with suppliers to plan and deploy new time keeping systems, attendance policies and reporting functionality. Handle this as any other strategic initiative to ensure a much lower possibility of failure.
Regarding the increased costs associated with providing newly mandated paid sick leave, there are a few options for workforce management programs. For those clients who favor the predictability of labor costs, the best option may be to simply increase bill rates and markups to cover the costs of eligible workers. You will have to convince the customer that having a comprehensive PTO plan delivers a strategic advantage to their program. Another option would be to – at least initially – handle sick pay as a pass-through cost at a reduced mark-up. After a year or two of passing through these costs as they occur, most clients will understand the reasons for these laws and the true impacts on cost.
The only option a workforce manager must avoid with respect to these new rules is to do nothing. For help developing a strategy for your organization, ask your nextSource representative today.