You have been working hard without taking time off to go on a vacation, and now you want to go on a well-deserved holiday. However, you don’t want your finances to suffer, so you want to know whether you are qualified for paid time off. Companies are careful in dishing out holiday leaves to their workers since independent contractor compliance is a sensitive issue.
PTO Guidelines for Employees and Independent Contractors
What is a PTO?
Although roughly 76 percent of private-sector employers provide paid time off to their workers, the US doesn’t have a federal law mandating paid vacation time or holidays. That is why many workforce members argue about the country falling behind on this aspect compared to other developed nations.
Paid time off (PTO), such as paid annual leave, sick leave, or public and company holidays, are days when a worker can skip work without a corresponding salary deduction. But since there are no federal laws governing it, PTO is a matter of employer-employee contract and not a matter of law.
On the other hand, employees get additional benefits, like paid health insurance and social security. The rise of COVID and its impacts on people’s lives raised conversations about the topic across businesses of all sizes and industries.
Some companies offer paid leave bundled together into a predetermined number of days. This setup is beneficial to both parties so that employees don’t need to decide which category their absence should belong to if they choose not to go to work on the Monday after their vacation. On the other hand, it relieves the employer of the administrative task of keeping track of the number of sick leaves, personal days, and paid vacation time their employees have gained.
Why Is PTO Important?
Paid time off is usually one of the top considerations of applicants nowadays. PTO is key to a healthy work-life balance, making the workplace healthy, productive, and attractive. Employers who take time off once in a while are happier with their work, positively impacting the company with higher quality output.
How Does PTO Work?
The rules may vary from one company to another. The traditional policies typically grant employees 30 paid days off per year – 10 days of paid vacation, eight sick days, two personal days, and 10 paid holidays. But most policies give employees 15 to 20 leaves they can use all year.
An additional provision to the policy may include earning additional days off depending on tenure, being allowed for unused PTOs to roll over to the following year, or being eligible to cash out unused paid time off.
Are Independent Contractors Given PTO?
Unfortunately, independent contractors are not given paid time off. Also known as self-employed individuals, independent contractors are paid for the number of days they worked or for a specific project they received.
This makes worker’s compensation different between employees and freelancers. At the same time, independent contractors are also not given other benefits. Although some kind-hearted companies want to give independent contractors some paid time off, you may want to avoid this to prevent worker misclassification issues.
Is Independent Contractor Compliance Giving You a Headache?
Complying with employment laws can be an additional hassle, especially if you don’t completely understand the rules and regulations. That is why we at ClearPath dedicate ourselves to helping businesses become compliant with laws to avoid penalties.
With our employer of record and independent contractor compliance services, you are sure that you won’t face issues with the IRS. Call us through our contact page today to learn more about how we can help you.