One of the biggest challenges facing employers today is how to ensure compliance in the perennially evolving field of employee benefits. In that vein, employers in certain states and localities across the country must now gear up for implementing the next new benefit: paid sick leave. Paid sick leave laws challenge employers to comply yet again with a new governmental standard, which could potentially mean significant adjustments to their Human Resources policies.
Currently, no federal law requires paid sick leave in private industry. The Family and Medical Leave Act only allows employees to utilize up to 12 weeks of unpaid leave in a 12-month period under special circumstances. It is therefore estimated that 40 million Americans who predominantly work in part-time or minimum wage jobs are not afforded any paid sick leave. Employee advocates, including President Obama, regard paid sick leave as a necessity for all workers. As a result, paid sick leave laws are steadily gaining momentum and are poised to become the new-normal in offices around the country. In the past year, several American cities and states have passed legislation providing for paid sick leave to employees, and such measures are only gaining more traction by the day.
In August 2014, California passed a Healthy Workplaces, Healthy Families Act of 2014, which imposes new requirements on California employers for paid sick leave. The Governor thereafter signed the law, which requires that once an employee has worked for an employer for a period of 30 days, an employer is thereafter obligated to provide the employee with at least one hour of sick time for every 30 hours the employee works. The California law allows for a maximum of three paid sick days, or 24 hours of total paid leave time. The employee is to be paid at his or her standard hourly rate. Similarly, in November 2014, Massachusetts voters approved a statewide ballot measure guaranteeing paid sick leave, which will go into effect next month as of July 1, 2015. The Massachusetts law mirrors California, in that an employer must provide 1 hour of earned sick time for every 30 hours an employee works. However, in Massachusetts, an employee may not begin to use sick time until the 90th calendar day from the date of hire. Other states like Washington and Maryland are currently primed to consider a statewide paid sick leave bill.
These changes are occurring on a small scale as well, as many cities have also taken up the issue individually in lieu of action by the state government. The local city council of Philadelphia, Pennsylvania passed a paid sick leave law in February 2015. Paid sick leave is required for all employers within San Francisco’s city limits. New York City requires employers with 5 or more employees, who work 80 plus hours a calendar year, to be provided with up to 40 hours of paid sick time.
In New Jersey, despite significant opposition from Governor Chris Christie, nine municipalities have passed paid sick laws and plan to enforce them without the assistance of the state government. One such city, Newark, approved a Paid Sick Leave Ordinance which provides that an employee, regardless of whether he or she is full-time or part-time, is eligible for sick leave as long as the employee works 80 hours per year. Employees will earn sick leave at a rate of 1 hour for every 30 hours of work, and may begin to use accrued sick leave after 90 days of work. Employers with 10 or more employees will have to provide up to 40 hours of paid sick leave annually, while employers with less than 10 employees are only obligated to provide up to 24 hours.
There also appears to be a counter trend of states passing measures that effectively ban their municipalities from passing paid sick leave laws. In such states, legislators worry that varying laws regarding sick leave across a state would make it difficult for large employers to implement consistent, uniform policies for offices throughout a state.
Despite this resistance, employers must act to ensure full compliance in cities and states that already have laws requiring paid sick leave. Employers in these covered jurisdictions should review their existing Human Resources policies to determine whether modifications are necessary to meet the law’s provisions in their individual jurisdiction. Given the number of different laws in effect, an employer must first determine the parameters and limitations of its jurisdiction’s paid sick leave law. Such factors to be considered are whether the law leaves discretion for the employer to determine when, how, and for what purpose, sick leave is to be utilized, whether an employer must employ a minimum threshold of employees for the law to be applicable, if the accrual of paid sick leave can be capped at a maximum amount, and whether any unused leave time can be carried over to the next year.
It is especially important for employers to revisit the terms of paid time off contained in their employee manuals. For instance, if the law, or an employer wishes, to require a note from a doctor, it should be specifically outlined in the employee manual or posted conspicuously in the office. Employers subject to paid sick leave requirements should also speak with their payroll administrators or outside vendors to discuss the necessary changes to the administration system and database. Human Resources departments must be able to track an employee’s hours in relation to their accrual of paid sick time. Employers should also consider including a brief tutorial along with their onboarding resources, so that employees are aware of the requirement that they must work a certain number of hours to be eligible. Revisiting the terms of employment contracts and collective bargaining agreements will be essential to determine if negotiations are necessary in the future. As always, employers should liaise with any staffing companies they utilize to determine who bears the responsibility for tracking hours and leave information for independent contractors.