Are Independent Contractors Eligible for Paid Sick Leave?

Paid sick leave is time off from work that workers can use to stay home to address their health and safety needs without loss of pay. Having paid sick leave is always critical for individual and public health, but especially important as we fight the Covid-19 pandemic. 

The pandemic has illuminated how gig workers and other misclassified workers are forced to work without critical worker protections. In the United States, it has exposed employer practices and policy gaps that are leaving millions of America’s workers and their families at risk of grave illness and financial ruin. 

You may have read recently that independent contractors (ICs) are eligible for unemployment through the CARES Act. Congress is providing unprecedented relief to this class of workers, who have chosen entrepreneurship and excluded themselves from traditional employee benefits. The Coronavirus Aid, Relief, and Economic Security Act (“CARES”) was signed into law on March 27, 2020. CARES expanded the unemployment insurance benefits (“UI benefits”) to independent contractors, although this type of worker is not typically covered.

I often get asked if ICs are eligible for paid sick leave. Generally, only “employees” are eligible for paid sick leave, while independent contractors are not. Some employers illegally misclassify workers as independent contractors to avoid having to provide sick leave, overtime, and rest breaks.

Families First Coronavirus Response Act (“FFCRA”)

 Under the Families First Coronavirus Response Act (“FFCRA”), self-employed workers are entitled to paid sick leave in the form of a tax credit allowed against the worker’s self-employment tax. Importantly, “eligible self-employed individuals” under the FFCRA include individuals who “would be entitled to receive paid leave during the taxable year pursuant to the Emergency Paid Sick Leave Act if the individual were an employee of an employer.”1 In other words, this provision could also apply to some independent contractors who would have otherwise been entitled to sick leave. The credit allows workers to take up to 10 paid sick days, and these wages are capped at $511 per day for their own use, and up to $200 a day to care for others and any other substantially similar condition.1

The coronavirus crisis illustrates our interdependency and the reason all of us must have access to paid sick leave. The federal coronavirus package recently approved by the Senate provided for paid sick leave for only some employees. A second bill is the only current effort to ensure that workers labeled—rightly or wrongly—as independent contractors will have access to paid sick days. That bill, the PAID Leave Act (Providing Americans Insured Days of Leave Act), sponsored by Senators Patty Murray and Kirsten Gillibrand in the Senate and Representative Rosa DeLauro in the House, would provide two weeks of federally funded paid sick leave during the crisis, and employer-funded paid sick days after 2021.2

The “gig-workforce” is here, but it is not protected by existing agencies. The last few months, in this watershed moment, have revealed enormous gaps in our country’s social benefits. Now would be a great time to amend these gaps to ensure that the U.S. government and businesses are living up to their responsibilities towards independent workers. 

Are you engaging independent contractors compliantly? ClearPath provides an integrated program model to manage both freelance risk and spend. Our IC compliance tool, ClearIC, provides a multi-step process, which includes technology gathering and the human element (2-person review in making an IC status determination). Our adherence to worker classification compliance enables the engagement of this highly skilled talent and expands your talent supply chain. ClearIC™ can automate and simplify the Independent Contractor evaluation process while mitigating your risk through our full-service IC vetting process. Contact ClearPath for a complimentary discovery call and 1:1 review of your current worker status. Let ClearPath be the path to your peace of mind.