In recent months, you may have been surprised to see a new charge on your staffing invoice: paid sick leave for one or more of your contingent workers. Are you legally obligated to pay these charges?
Families First Coronavirus Response Act Obligations
Under the Families First Coronavirus Response Act, covered employers must provide to all employees two weeks, up to 80 hours, of emergency paid sick leave which will be paid either:
- at the employee’s regular rate of pay up to $511/day up to a maximum of $5,110, where the employee is unable to work because the employee is quarantined, and/or experiencing Covid-19 symptoms and seeking a medical diagnosis; or
- at two-thirds the employee’s regular rate of pay up to $200/day and a maximum $2,000, because the employee is unable to work because of caring responsibilities as a result of Covid-19 measures.
In addition to the emergency sick leave, a covered employer must provide:
- up to an additional 12 weeks of expanded family and medical leave to employees that it has employed for at least 30 days
- after the first 10 days, which is unpaid, an employee who is unable to work due to a continuing need to care for a child is entitled to two-thirds their regular rate of pay for the hours they would normally work up to $200 a day
State and local responses vary. The following are a few useful resources. Please note, however, the information may be subject to change as the pandemic continues to develop; employers should seek legal counsel to be certain they are compliant with the relevant laws for their business.
- The National Conference of State Legislatures provides an overview of the various state laws.
- A Better Balance provides a useful table of the various jurisdictions that have passed laws and gives details of the coverage that can be used to compare state and local regulations.
- An April 21 National Law Review article provides a Covid-19 Statutory Leave Quick Reference Chart, details of the jurisdictions with new laws or guidance expanding existing sick leave laws as of that date, and links to additional jurisdictions that have published posters, FAQs, or other guidance regarding employee use of Covid-19 paid leave.
The US is one of the few highly developed countries without a national paid sick leave policy. Prior to the coronavirus pandemic, 13 states and Washington DC had enacted paid sick leave laws, although one, Maine’s, does not come into effect until 2021.
In response to the impact of Covid-19, some states temporarily broadened access to paid sick leave, and the US Congress enacted emergency legislation to temporarily give many Americans access to paid leave if they need to take time off work because of the virus. The Families First Coronavirus Response Act requires certain employers to provide their employees with paid sick leave or expanded family and medical leave for specified reasons related to Covid-19. The emergency paid sick leave applies to those with fewer than 500 employees (see sidebar for more details).
State and local responses vary, as do the existing sick leave laws, which makes life even harder for multistate employers to keep track. It is not possible in this article to give details of the different laws that employers should be aware of, but the accompanying sidebar provides some useful resources.
Co-employment and Paid Sick Leave
Contingent workers are eligible to receive leave, either federal Emergency Paid Sick Leave or Expanded Family and Medical Leave Act, but whether a hirer will be liable to pay for such leave depends in part, on whether the hirer is a joint employer of those workers. The Department of Labor’s guidance states:
Both of these new provisions use the employee definition as provided by the Fair Labor Standards Act [FLSA], thus all of your US (including Territorial) employees who meet this definition are eligible including full-time and part-time employees, and “joint employees” working on your site temporarily and/or through a temp agency.
The use of external workers of any type means the assumption of at least some co-employment risk. However, the interpretation of co-employment under the FLSA — which had looked to be settled by the DOL’s revised interpretation of joint employer status under the FLSA — is once again in doubt.
The DOL’s final rule, effective March 16, introduced a four-factor test for assessing joint-employer liability when an employee performs work for his or her employer that simultaneously benefits another individual or entity. The test requires consideration of whether the putative joint employer:
- Hires or fires the employee
- Supervises and controls the employee’s work schedule or conditions of employment to a substantial degree
- Determines the employee’s method of payment
- Maintains the employee’s employment records
However, the rule has recently been deemed invalid by a US District Court as being arbitrary and capricious and not in accordance with the established law. This means that hirers cannot rely on the DOL’s four-factor test and should revisit the standards set by the courts in the jurisdictions in which they operate.
In the majority of cases, employers using contingent staff will supervise and control their employees work to an extent, so engagement organizations should work on the basis they will be at risk of being joint employers and liable for paid sick leave.
Even if the hiring employer is not a joint employer under the paid leave provisions of its state or directly liable for the payment of leave under the Families First Coronavirus Response Act, it is likely the staffing firm will wish to recover their employee costs in full, and will have provided for this in its terms of business or in negotiations over price.
In short, contingent workforce buyers should be prepared to pay for sick leave coverage where their contingent workforce is affected. This will likely apply in the long term and not just under provisions relating specifically to coronavirus.
But, as with all employee benefits and entitlements, it is best to obtain specific legal advice on your own circumstances, particularly when there is nothing so predictable as change itself.