It's Catching: Is the Spread of Paid Sick Leave Laws Making Employers Ill?

19 May 2014 Labor & Employment Law Perspectives Blog

As winter has turned to spring, and flu season has turned to allergy season, have your employees been accruing government-mandated paid sick leave? They might be if they happen to work in New York City (NYC), Newark, or Connecticut or other localities where employers are increasingly being required to provide paid sick leave to employees.

In recent months, the city councils in NYC, Newark, and Jersey City, New Jersey, all have passed mandatory paid sick leave laws, following other jurisdictions that had previously done the same (e.g., Connecticut, Seattle, San Francisco, and Washington, DC). Generally, these laws require employers to give their workers paid time off to deal with their own illness or take care of a child or other close relative who is sick.

While these new paid leave laws are not identical from jurisdiction to jurisdiction, recent iterations generally share common core requirements. For example, in Newark and NYC, here are some key terms:

  • Employees who work at least 80 hours a year in the city are eligible.
  • Leave time is paid based on employer size (5 or more employees in NYC; 1 or more employees in Newark).
  • Employees accrue one (1) hour of leave time for every 30 hours worked, up to a maximum of 40 hours of leave time per year (although in Newark, for employers with less than 10 employees, the annual accrual of leave time is capped at 24 hours).
  • Up to 40 hours of accrued, unused leave time must be carried over from year to year, but employers may limit the use of leave time to no more than 40 hours annually and are not required to pay separating employees for any accrued, unused sick time.
  • A city-created written notice of rights must be given to new hires and current employees.
  • If an employee is absent for more than 3 days, the employer may require a doctor’s note to support the leave request (but not disclosure of any health information).
  • Retaliation is prohibited against employees who exercise their rights.
  • Remedies include restitution, penalties, and reinstatement (in instances of retaliation).
  • Employers do not have to provide additional leave if they already have a paid leave or PTO policy that provides at least the minimum required leave time and otherwise meets the terms and requirements of the law.

These mandates have raised a host of compliance questions for employers, especially for those that have adopted all-in-one PTO policies to cover all contingencies, including sickness and vacation, and operate in “use it, or lose it” states (such as New York and New Jersey), where year-to-year carryover, and payouts upon separation, of unused PTO are not required. Employers who intend to comply with these new laws by sticking with their more generous PTO programs must nevertheless attend to the carryover (and other) requirements of the new laws. In doing so, this could lead to situations where employees end up carrying larger amounts of accrued PTO, which, in turn, could lead to larger payouts of unused PTO at separation (whether made voluntarily by the employer as matter of policy or otherwise mandated by applicable wage law, such as in California).

PTO policies also are often applicable only to full-time employees. These new laws do not discriminate in this fashion, and part-time and temporary employees are eligible to accrue paid sick leave provided they meet the minimal threshold of 80 annual work hours (i.e., the equivalent of two weeks of full-time work). Consequently, to comply with the new laws, employers who have not previously given any PTO or sick time to part-time or temporary employees are now making them eligible under their current policies or creating separate, narrow sick leave policies for them under the new laws.

In recent years, employers began moving to unified PTO policies to simplify things in the face of ever expanding categories of leave. Given the associated complications under these new laws, many employers who have adopted such a PTO policy may find it easier simply to revert to separate vacation and sick time policies, while others will try as they can to mesh the policy with these new laws.

The new laws are confounding for employers in other ways, whether it is trying to convert an old policy that calculates leave in days into one based on hours (in accordance with the new laws), or to reconcile the new laws with other health-related leave laws. For example, when it comes to medical documentation, these new laws prohibit any inquiry into the nature of an employee’s illness and thus are in conflict with the Family and Medical Leave Act (FMLA) and other leave laws. Without a proper medical certification describing the nature of the subject illness, employers will be hard-pressed to designate an absence “due to sickness” as FMLA qualifying.

Only time and experience with these new laws will sort out these and other questions. In the meantime, with NYC and Newark taking the plunge, it looks like mandatory paid sick time for employees is ready to spread, with legislative activity reportedly ongoing at the state level in California, Massachusetts, Oregon, and Vermont, as well as at the local level, e.g., in Tacoma, Washington. Battle lines, however, have clearly been drawn by business interests who contend that such laws have a negative economic impact and drive employers to states and cities that are free of such regulation. At least 10 states – Wisconsin, Indiana, Florida, Georgia, Kansas, Louisiana, Mississippi, North Carolina, Tennessee, Florida – have all enacted laws barring localities from adopting paid leave legislation, and other states appear ready to join the fight.

As the battle wages on, stay tuned and be ready. For those employers already subject to paid leave laws, and their contradictions and ambiguities, be wary. The difficulties in trying to sync your current policies and practices with these laws require careful attention and might just drive you mad or make you sick. You may need not only a lawyer, but also a doctor.

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