What Is Third-party Sick Pay?

It is necessary for an organization to stay compliant with the numerous sick leave laws. A lot of organizations have turned to third parties to manage the sick pay of the employees. 


When it comes to paid sick leave, organizations are trying to figure out effective ways to provide it to their workers. This is a small, but growing number of organizations are turning to third-party sick pay services to help their employees. These third-party sick pay providers have a number of different options available for employers to choose from.


Read the article to find out about third-party sick pay and obligations related to it. 


What Is Third-party Sick Pay?


Sick pay is an important benefit for any employee. The majority of employers in the United States have sick pay included in their benefits package, and it is a benefit that employers should be familiar with. It is important to understand how sick pay works and how it is funded, as well as the circumstances under which the employee will be paid.


The third-party sick leave laws vary by state. Third-party sick pay is the provision of additional remuneration for illness, injury, or disability (SIID) payments to employees. This form of compensation is provided by an employer to an employee as a means of assisting the employee to return to work post an illness, injury, or disability. 


When an employee is unable to perform their job duties due to illness, injury, or disability, they are entitled to receive regular wages, which are called “third-party sick pay”. This type of sick pay is usually paid for by the company that employs the employee, but in some cases, the employee may choose to receive the third-party sick pay directly from the provincial government.


How Third-party Sick Pay Works?


Third-party sick pay (TSP) is a type of employee benefit plan that is designed to provide short-term or long-term income support for an employee who is unable to work due to illness or injury. These programs are typically designed for short-term absences, lasting from a few days to several months. Depending on the type of policy, an employee’s employer will typically contribute a great deal of money to his or her TSP account, which will then be used in the event that an employee is unable to work.


Third-party sick pay is required by the Fair Labor Standards Act (FLSA) and is a form of compensation that is payable to an employee who has been absent from work due to illness or injury. It is a way of filling the gaps that can happen when a job-based health insurance plan is not enough. Third-party pay is a way of supplementing the income of a family who has lost a wage earner to illness or injury. Some employers may be able to offer third-party pay for employee-based health insurance, but it is not something that is always included as part of a standard employer benefit package.


To know more about third-party sick pay and how it works, attend the Compliance Prime webinar. The webinar will also include topics like W-2 reporting requirements for third-party sick pay, ways in which organizations can handle third-party sick pay, how to handle waiting periods, and more. 

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