Sick Leave

Today, we’re going to dive into the light, easy, totally uncontroversial world of taxes. As in, “Who’s FICA? Why’s he getting all my money?”

About once a week, the PayReel office phone rings with someone on the other end of the line referring to the Federal Insurance Contributions Act (FICA) with exactly the same tone you’d expect with a four letter word. We understand. You’re the one who blearily rolled yourself out of your still-warm covers instead of pressing snooze again. You’re the one who (resentfully) learned how to use a crock pot so you’d have a meal (sort of) after your 12-hour workday. You work hard for your money. Why does someone else get to take a big chunk of it while you budget and count pennies for that one sofa that will finally show you’re crushing this adulting thing?

To ease the pain, we’ll start with what FICA is designed to do for you rather than why it gets taken from you. Fair enough?  

What FICA means to your future

The idea of taxes is that we get something in return for paying into the system. Tax money goes into funding for programs, infrastructure, roads, etc. It’s not a perfect system, sure, but that’s the idea.

FICA taxes specifically are designed to pay for medicare and social security. That means that when you reach 65, you can start drawing social security checks and have your health costs covered by medicare. For those without a 401K or another retirement fund, this is the one thing that makes it possible for them to retire. Even people with other sources of retirement often find the social security a necessary supplement.

What FICA is and how it works

FICA taxes are required by the federal government. Employees and employers share the financial obligation. The employer deducts the employee’s share (half of the total due) from employee wages and the employer pays the other half itself. The amount comes out of your paycheck before any other deductions, such as health insurance. The social security tax rate is 6.2% on your gross income. This is standard across the board until you hit a higher tax bracket, at which point, you contribute more. The amount you can draw from social security directly correlates with how much you put in. So if you put more in, you get more out.

The medicare portion is 1.45% and also works on a sliding scale for those who make 200K+. This is a federal health insurance program you can start drawing on when you’re 65.

What FICA isn’t

This has nothing to do with your W-4s.  W-4s have to do with federal income taxes. The way you fill out your W-4 tells your employer the correct amount of said taxes to withhold from your paycheck, based on your filing status and income bracket. The IRS recommends filling out a new W-4 any time your personal or financial situation changes.  FICA, on the other hand, has to do with your social security and Medicare and there is no such form for FICA because you cannot claim exemption.

The bottom line

When everything works as it’s designed to, FICA is not the bad guy. It is an important part of each generation’s future.

About PayReel:

At PayReel, we minimize the time and effort it takes to get you ready for your project. Rely on PayReel to assume all of the risk associated with worker classification and get back to the business at hand. We make sure everyone gets paid quickly and easily, and have Client Relationship Managers on call around the clock to answer your questions. All you have to do is call 303-526-4900 or email us. The PayReel team makes live event, corporate media, and brand management payroll easier, faster, and seamless.

The U.S. ranks among the 13% of countries who do not mandate paid sick leave despite the fact that Americans work longer hours and have more stress-related illnesses than their European and Japanese counterparts. While the Family and Medical Leave Act (FMLA) does prohibit penalties for people who take time off to care for a sick/new family member, it doesn’t guarantee the time will be paid. With cities passing their own paid sick leave ordinances while states push back and states passing laws despite the federal position, the debate rages on.

What do proponents of paid sick leave say?

1. Employees with paid sick leave take better care of their health

Financial concerns loom for those without paid sick leave, but when workers have paid leave they are more likely to get annual physicals and take preventative measures such as flu shots and mammograms. In short, workers with more paid sick leave are more likely to take care of their health.

2. It protects workers

Clearly not having to miss wages due to a bad case of the flu is beneficial for the worker herself, but some say benefits cascade from there. The workers left in the office stay healthier too because people aren’t as likely to bring their germs into work to share more liberally than holiday fruit baskets.

3. It’s good for employers

It may seem counterintuitive, but some estimates say one of the biggest beneficiaries of mandatory paid sick leave is employers themselves. That’s because offering a solid paid sick leave policy may actually lead to fewer absences and higher productivity. When workers take the time to recover, they can also get back in the game quicker and be more effective. They also argue that people with space to care for their physical and mental health are better employees. Some argue that if workers had more sick leave days, they wouldn’t be quite as likely to come to work sick in order to protect those coveted vacation days.

4. Mental health is an important consideration, too

Eliminating mental health stigma and allowing mental health days into the equation may make people less likely to lie about why they’re taking a day off. An employee on the verge of burnout could simply say, “If I don’t get a little distance from things in the office, I’m not going to be able to do my best work. This job is important to me and the team deserves my best.” Surely that’s preferable to an oddly specific description of their employee’s digestive issues and better for team morale and productivity, too.

What do opponents of paid sick leave say?

1. People abuse it

They’re sick all right…sick of working. Employees misuse paid sick leave with little remorse, using it to go to the Renaissance Fair or on a vacation. Such abuse, which Oregon describes as “repeated use of unscheduled sick time on or adjacent to weekends, holidays, vacation, or pay day, regardless of the number of consecutive days,” may be rampant. Judging by these related searches that came up when I googled “fake sick days,” this is an entirely legitimate concern. Some people approach their excuses with the discipline of a competitive sport.

2. It violates business rights and economic success

It should be up to companies to decide how to take care of their employees. Not only is it unfair and debatably illegal to require companies to provide paid sick leave, it can be damaging to businesses, which are at the heart of a state’s economic success. Tracking sick leave is an expensive, complex process. That cost may also get passed on in the form of more expensive goods or services. A better alternative Lisa Horn, director of congressional affairs for the Society for Human Resource Management, says, is a pre-emption bill. The idea is to set a minimum to the voluntary amount of paid sick leave employers could offer. When met, companies would be exempt from local or state mandates. Horn argues that this would eliminate some of the administrative headaches and lessen the burden of such mandates, which vary from state to state and city to city.

3. Benefits don’t translate to all workers

Paid sick leave rules were designed for a conventional FTE workforce and do not translate in the same way for workers who are temporary and who work at varying worksites. It accrues slowly and must be used in the same area (same zip code in some instances). This makes it very tricky to determine when and where the sick leave is valid.  Say a worker accrues one hour after 30 hours of work. They are unlikely to turn down a $700 day gig for one hour of accrued sick pay. Paid sick leave mandates provide little benefit to temporary workers, but still require expensive, complex tracking. As is often the case with such mandates, it can backfire when applied to the flexible, freelance workforce.

The bottom line

According to this article, the “tortured” history of paid leave in the U.S. indicates that abundant paid leave of any kind seems a bit countercultural for a country famous for its hard-working ways. As it stands, the fury continues, with Texas duking it out as we speak.

About PayReel:

At PayReel, we minimize the time and effort it takes to get you ready for your project. Rely on PayReel to assume all of the risk associated with worker classification and get back to the business at hand. We make sure you get everyone gets paid quick and easy, and have Client Relationship Managers on call around the clock to answer your questions. All you have to do is call 303-526-4900 or email us. The PayReel team makes live event, corporate media, and brand management payroll easier, faster, and seamless.

If you’ve been waiting to look into the new paid sick leave laws until the dust settles, you can be assured the dust won’t settle and the time is now. Here’s what you need to do to get your payroll in good shape and your people covered:

Know YOUR Rules:

From state to state and sometimes county to county, there is very little consistency in the rules for accrual and usage. Rules can change as an employee crosses city lines or even zip codes, creating a nightmare for employers to manage. It can get confusing.

Especially if your employees operate in more than one location (where guidelines differ) it can be worthwhile to find a contract payroll management partner that has software in place to track and manage the details automatically.

For example, PayReel OnLine’s Sick Leave Accrual Management (SLAM) system runs in the background, with no interaction needed on your part, to ensure full compliance for all PayReel employees working on your behalf.

Such a system automatically analyzes each employee’s timesheet, calculating hours accrued by location during that time period, and maintains an employee-specific balance. The system also allows employees to use accrued sick time only when the law allows, and with a supervisor’s approval.

No matter where your business operates, make sure you (or your payroll partner) is at the forefront of mandatory paid sick leave laws so employees are treated fairly and everyone remains compliant.

Monitor Accrued Time:

If you elect to pay contractors yourself, make sure you have a system in place to monitor updates in regulations as they are constantly evolving. You’ll also need to stay on top of how, when, and where sick leave is earned and used.

Establish Your Internal Process:

Establish an internal process to be followed across your organization. For example, how will employees request sick time and have it approved? Who will be accountable for the regulation and administration of this program?

Want a little more background? Here’s what you need to know.

Need to determine whether your workers are actually employees? Visit our Worker Classification Employee series for more.

About PayReel:

PayReel’s clients, who are some of the biggest companies in the world, are constantly immersed in the chaos of producing multimedia content or executing live events. PayReel makes sure they have the right contractors at the right time in the right place, and that everyone gets paid properly. And, most importantly, they handle every last detail perfectly while making sure their clients think nothing of it, so they can get back to doing what they do best.

If you’ve been waiting to look into the new paid sick leave laws until the dust settles, you can be assured the dust won’t settle and the time is now. Here’s what you need to know to get your payroll in good shape and your people covered.

The Times, They are a Changin’

The past few waves have seen a wave of new laws enacted across the US requiring employers to provide paid sick leave to employees. Regulations are now in place in four states, 20 cities, and one county, and those numbers are only going in one direction—up.

Laws are Inconsistent

There is very little consistency in the rules for accrual and usage from one area to the next. Rules can change as an employee crosses city lines or even zip codes, creating a nightmare for employers to manage.

If They’ve Earned It, They Can Take It

If an employee is scheduled for an upcoming project and has accrued a sufficient amount of sick time and is eligible to use it based on local laws, they have the right to call in sick and be paid for the time they missed work.

However…

An employee must be scheduled for work and must have previously worked a sufficient amount of hours to accrue paid sick leave in the location where they are scheduled for work.

Paid sick time can only be used in the geography where it was accrued and each location has specific restrictions on accrual and usage.

Sound like a nightmare to keep track of? Check out this blog post for help.

Paid sick leave laws apply to employees and not independent contractors, which is another fun challenge to keep straight. Need to determine whether your workers are actually employees? Visit our worker classification series for more.

About PayReel

PayReel’s clients, who are some of the biggest companies in the world, are constantly immersed in the chaos of producing multimedia content or executing live events. PayReel makes sure they have the right contractors at the right time in the right place, and that everyone gets paid properly. And, most importantly, they handle every last detail perfectly while making sure their clients think nothing of it, so they can get back to doing what they do best.