July 30, 2018

The Basics of the New Jersey Paid Sick Leave Law

Posted in Employment Law by Gene Killian |

I once had a boss who insisted (literally) that calling in sick was a sign of weakness. He once gave me a hard time for not coming to work with a 102° fever and strep throat. The strange thing is, I liked the guy anyway. But truth be told, who wants a sick employee coming to work?  All you end up with is more sick employees, and productivity goes south. 

I guess he’d be unhappy to run a company in New Jersey these days, where, as of October 29, 2018 (three months from now as I write this), we’re about to have mandatory paid sick leave.  Pretty much every New Jersey employer will be affected. And yes, employees can sue for violations of the law.

Besides allowing sick workers to stay home (which in my view is a good thing), the law has other benefits.  Even though the state didn’t have a paid sick leave law, 13 New Jersey municipalities had enacted separate local paid sick leave ordinances. This created a regulatory pain for some companies, which will now be solved by having one law that preempts all others.  

Here’s how the new law will work:

Who’s covered?

The law applies to every business in the state, regardless of size, including temporary help firms.  (No 50-employee requirement like the FMLA.)  It excludes public employers that are required to provide their employees with sick leave, though.  It also excludes employees in the construction industry employed under a collective bargaining agreement, per diem healthcare employees, and public employees who already have sick leave benefits.

What leave do employers have to to provide?

Employers of all sizes have to provide up to 40 hours of paid sick leave per year to covered employees. (The bill initially proposed 72 hours, but got whittled down in negotiations between the politicos.) Employers have to designate any period of 12 consecutive months as a "benefit year." Employers cannot change the established benefit year without first notifying the New Jersey Department of Labor and Workforce Development. Under the act, current employees begin accruing sick time on the effective date of the act (10/29/18). New employees hired after the effective date of the act begin accruing sick time on the first date of their employment.

In each benefit year, an employee will accrue up to 40 hours of sick time at a rate of one hour for every 30 hours worked. Employers have to option to "frontload" the full 40 hours at the beginning of the benefit year. Employers with existing paid time off (PTO), personal days, vacation days and sick-day policies can use those policies to satisfy the requirements of the act, as long as employees can use the time off as required by the act.

In the case of a temporary help service firm placing an employee with client firms, paid sick leave will accrue on the basis of the total time worked on assignment with the firm, not separately for each client firm to which the employee is assigned.

Employers are not required to permit employees to use more than 40 hours of sick leave in a benefit year.

How can leave be used?

Employees can use accrued sick time after the 120th day of their first date of employment for the following reasons:

  • Diagnosis, care or treatment of—or recovery from—an employee's own mental or physical illness, including preventive medical care.
  • Aid or care for a covered family member during diagnosis, care or treatment of—or recovery from—the family member's mental or physical illness, including preventive medical care.
  • Circumstances related to an employee's or their family member's status as a victim of domestic or sexual violence (including the need to obtain related medical treatment, seek counseling, relocate or participate in related legal services).
  • Closure of an employee's workplace or of a school/childcare of an employee's child because of a public official's order relating to a public health emergency.
  • Time to attend a meeting requested or required by school staff to discuss a child's health condition or disability.

The act broadly defines "family member" to include individuals related by blood to the employee or whose close association with the employee is the equivalent of a family relationship.

Employers can’t require an employee to find a replacement to cover the employee's absence. 

Is there carryover?

Judging from the questions we’ve gotten so far, this issue seems to be causing the most angst to employers and HR departments.  Yes, employees can carry time over. But employers don’t have to permit employees to carry over more than 40 hours of accrued sick time in a single benefit year.  The way this appears to work is as follows.  Assume that Mary has 20 hours of accrued unused sick time in a benefit year.  She can carry that over to the next year, giving her 60 hours of sick time, but the employer can limit her use of that total sick time to 40 hours for the next benefit year.

Also, employers may, but are not obligated to, offer to pay employees for their unused accrued sick time in the final month of the benefit year. If employees agree to receive the payment, they may choose a payment for the full amount of their unused accrued sick time or for 50 percent of such time.

The payment amount has to be based on the same rate of pay that the employee earns at the time of the payment. If an employer frontloads the entire amount of sick time, then the employer has to pay the employee for the full amount of unused accrued sick time in the final month of the employer's benefit year, or carry forward any unused sick time to the next benefit year. Employee approval is not required.

Can employees use leave in increments?

Employers can choose the increments in which employees use accrued sick time. The largest increment chosen may not be larger than the number of hours an employee was scheduled to work in a given shift. For example, if an employee is scheduled to work a 7-hour shift, the employer cannot mandate that the employee use paid sick time in increments of 8 hours.

What Happens Upon Transfer, Separation or Reinstatement?

If an employee is employed by a successor employer or transferred to a separate division, entity or location of the same employer, the employee can still use all accrued sick time.

Unless the employer has a policy or collective bargaining agreement providing for the payment of accrued sick leave upon termination, resignation, retirement or other separation from employment, the employer does not have to pay employees for unused accrued sick leave upon the separation from employment.

If an employee is separated from employment but then reinstated within six months, then all of the employee's unused and accrued sick time must be reinstated.  

What Notice and Documentation Is Required?

This is an area that all employers should have a look at, since employment manuals often specify how much notice needs to be given to take time off.

First of all, for  foreseeable absences, employers can require advance notice, not to exceed seven calendar days, of the intention to use the leave, and the expected duration. Employers can also require employees to make a reasonable effort to schedule the use of sick leave in a way that doesn’t cause too much angst to business operations. Employers can also prohibit employees from using foreseeable sick leave on certain dates, and can require reasonable documentation if sick leave that isn’t foreseeable is used during those dates.

With respect to unforeseen absences, employers can require employees to give notice of the intention to use the leave “as soon as practicable,” as long as the employer has notified the employee of this requirement.

If an employee is absent for at least three consecutive days, the employer can require documentation (from a doctor) that confirms that the employee used sick leave for a covered purpose.

Notice and Record-Keeping Rules

In a move that should make poster-makers happy, employers must post a notification of employees' rights under the act and provide employees with a written copy of the notice within 30 days after the NJDOL issues a model notice.  Also, you have to give a notice of employee rights whenever an employee is hired or requests the info. And you have to keep records documenting hours worked by employees, and paid sick time taken by employees, for a period of five years, and allow the NJDOL access to those records.

On at least a monthly basis, an employer must provide electronically or in writing to each employee a statement showing the amount of the employee’s available earned sick time. The employer also must maintain records establishing the amount of earned sick time accrued and used by each covered employee.

What If You Have a Collective Bargaining Agreement?

The act does not apply to employees covered by a collective bargaining agreement in effect at the time of the effective date of the act, at least until the CBA expires. Employees or their representatives can waive their rights under the act during the negotiation of the CBA.

Yes, employees can sue (of course)

Employees can sue their employers for violating the act and can seek actual damages suffered as a result of the violation, plus an equal amount of liquidated damages. As you probably know if you read our firm’s blogs, we do a lot of policyholder-side insurance coverage work. One thing you might want to do is review your company’s EPLI policy to confirm that it will provide coverage for any claims made under the new act. (If not, see whether your broker can negotiate expanded coverage.) But really, as always, the key is not to get sued in the first plaace.

How Does the Anti-Retaliation Provision Work?

The anti-retaliation provision of the act includes a rebuttable presumption that an employer's actions are unlawful if it takes “adverse action” against an employee within 90 days of the employee engaging in activity protected under the act. Protected activity includes such actions as filing a complaint with the NJDOL, cooperating with an investigation, opposing policies and practices that are unlawful under the act, or informing other employees of their rights under the act. 

What Should Employers Do Now?

Review your paid time off, vacation or other paid leave policies and figure out whether you need to change your PTO policy. Educate managers and supervisors.

Revise your employee handbooks and make sure employees know their rights under the new law.

And then, get on with business.