Tired of waiting for Washington to act,2 cities and states have resorted to legislative vigilantism and in the process they have created a patchwork of paid sick leave laws across the United States. Although the rationale for such action is the fact that some 41 million workers in the U.S. lack access to paid sick leave, with low income workers being least likely to have access,3 the laws have created a headache for employers with multiple facilities within the U.S. or even within the same state.
II. Landscape of Paid Sick Leave Activism
A. Rush to Legislate
During the first three months of 2014, four paid sick leave laws have or are scheduled to become effective. As of mid-March 2014, there were pending proposals for paid sick leave legislation in nearly 20 states: Alaska, Arizona, California, Hawaii, Illinois, Iowa, Maryland, Massachusetts, Michigan, Nebraska, New Jersey, New York State, North Carolina, Oregon, South Carolina, Vermont and Washington. Pending bills in many cases differ quite significantly from sick leave laws currently effective either at a state or local level.
For example, some proposed legislation allows for fast accrual of paid sick time. Iowa’s proposed legislation sets a sky-high accrual rate of five and fifty-four one hundredths hours of paid leave for every 40 hours worked, with a cap of nearly 18 full work days per year.4 New York State’s proposed legislation also allows for fast accrual: one hour of paid leave for every 20 hours worked.5 However, New York State’s proposed accrual rate is somewhat tempered by its 80 or 40 hour accrual cap.6
B. Not in my Backyard - States Attempt to Reign-in Activist Cities
Ten states - Georgia, Wisconsin, Louisiana, North Carolina, Tennessee, Mississippi, Kansas, Arizona, Indiana, and Florida - have enacted preemption laws prohibiting cities, counties, and other state municipalities from passing mandatory paid sick leave laws.7
For example, the Louisiana preemption law, which became effective in 2012, restricts local governments from passing any workplace protections regarding minimum wage, employee benefits, vacation days, and sick days.8 The stated justification for these preemption laws is twofold: 1) paid sick leave laws hurt businesses by imposing burdensome costs; and 2) enacting paid sick leave legislation on a city or county-wide level will create patchwork, inconsistent legislation throughout the state.
State preemption laws may preempt a local government’s previously enacted paid sick leave law, as some have been retroactively applied.9 It is thus vital for employers and employees alike to track not only laws favoring mandatory paid sick leave, but also laws opposing them since seven of the current ten state preemption laws have gone into effect since 2013.
C. Employer Headaches
Paid sick leave, previously a wholly unregulated area of employment within which employers had free reign, is now becoming highly regulated. This push towards increased regulation means heightened administrative burdens and costs.
Employers with pre-existing paid sick leave policies may need to revise their policies to ensure compliance with applicable legislation, while employers without a pre-existing policy need to create an entirely new policy. Concurrent with the adaption or drafting of a policy is the question of how such policies will be administered. For starters, employers must decide how they will record and monitor employees’ hours, both for purposes of determining how much paid sick leave an employee accrues and when an employee becomes eligible for paid sick leave.10 Employers may also need to consider whether any previously used timekeeping systems are sufficient for these purposes, and whether the individual or department responsible for tracking time can handle this increased workload.
These laws impose new direct costs for some employers who previously did not provide paid sick time, including the cost of the actual paid sick days themselves, and overtime exposure for replacement workers. Even though most large employers already have sick leave policies and are not subject to new cost issues, these employers will face significantly increased administrative burdens resulting from the need to sync the new legal requirements with their existing leave policies. For example, the concept of sick time accrual in hourly units is a foreign concept to most companies that have traditionally dealt in the accrual of sick time in units of days. Carryover of sick days from one year to the next is a new requirement for many employers and, to make it worse, some laws require the employer to provide employees records of current and carryover accrued sick days every payroll day.11 Most of the laws place significant restrictions on when employers can request documentation of the employee’s inability to work, and raise the specter of retaliation claims if the employer uses government imposed sick days as a basis for disciplinary action.
The list of headaches created by paid sick leave legislation is even longer for multiple location employers, because of differing and conflicting requirements and the inability to craft a one size fits all policy. For example, this will be especially true for employers with operations in both Jersey City and Newark, New Jersey.12 Although there is some overlap between the two ordinances, there are critical differences. For example, while both require private employers with ten or more employees to provide paid sick time,13 the Newark ordinance also requires that each calendar year employers with fewer than ten employees provide i) child care, home health care, and food service worker employees with a maximum of five days of paid sick time, and ii) all other employees with a maximum of three days of paid sick time.14
These differences will require Newark and Jersey City-based employers to expand their paid sick leave coverage in certain situations, based solely on whether employees work in Newark or Jersey City. The challenge of complying with inconsistent legislation may also create employee dissatisfaction, in the event that employees in different locations are perceived as being offered more favorable paid sick leave than other employees.
In short, the transition from unregulated to regulated brings with it a multitude of headaches for employers.
III. Legislative Activism in the New York Metropolitan Area
A. Jersey City, NJ
There are at least three paid sick leave ordinances currently effective or slated to become effective in the New York City metropolitan area in 2014. The first of these is the Jersey City Earned Sick Time Ordinance (“JCESTO”), which became effective on January 24, 2014.15 Under JCESTO, employers with ten or more Jersey City employees must provide employees one hour of paid sick leave for every 30 hours worked, up to a maximum of 40 hours each year.16 Employees of employers with fewer than ten Jersey City employees accrue at the same rate and are subject to the same caps, but the leave is unpaid.17 Employees are only covered by JCESTO if they work at least 80 hours per year in Jersey City.18
Additionally, if an employee’s accrued sick time goes unused within a given calendar year, up to 40 hours of sick leave will carry over to the following year.19 However, employees are subject to a usage cap of 40 hours per calendar year.20
B. New York City, N.Y.
New York City’s Earned Sick Time Act (“ESTA”), the next anticipated effective paid sick leave ordinance in the metropolitan area, will become effective as of April 1, 2014. ESTA requires employers with five or more New York City employees to provide a minimum of one hour of paid sick time for every 30 hours worked,21 up to a maximum of 40 hours per calendar year.22 ESTA only covers employees who work at least 80 hours per year in New York City.23
ESTA does not establish usage caps, but does cap employees’ carryover of their accrued, unused leave from one calendar year to the next at 40 hours.24 As an alternative to carrying leave over from one year to the next, employers can pay employees the cash equivalent of their unused, accrued sick time at the end of the year.25
C. Newark, NJ
Finally, Newark’s Sick Leave for Private Employees Ordinance (the “Newark Law”) will go into effect on May 29, 2014.26 Under the Newark Law, employers with ten or more Newark-based employees must provide up to five days of paid sick leave per year, and employers with fewer than ten employees must provide up to three days of paid sick leave per year.27 An employee must work at least 80 hours in Newark in a single calendar year to obtain the paid leave.28
Under the Newark Law employees’ usage of leave and carryover of unused, accrued leave from one year to the next is capped at 40 hours per year. In lieu of carryover, employers can opt to pay employees the cash value of any accrued, unused leave at the end of the year.29
IV. Early Frontrunners of Paid Sick Leave Activism
A. San Francisco, CA
Other states and cities’ legislative activism on paid sick leave may have helped pave the way for the recent wave of activism in the New York metropolitan area. On February 5, 2007, the San Francisco Paid Sick Leave Ordinance (the “SF Law”) became the first operative paid sick leave law.30 Under the SF Law, employees who perform more than 56 hours of work in San Francisco in a calendar year, regardless of employers’ location or size. accrue one hour of paid leave for every 30 hours worked.31 For employers with fewer than ten employees (defined as “small businesses”), employees’ accrual is capped at 40 hours. For employers with ten or more employees, employees’ accrual is capped at 72 hours.32
In addition, under the SF Law, employees’ unused, accrued paid leave carries over from one calendar year to the next, but this carryover is capped at the maximum number of hours that employees can accrue.33
B. Washington, D.C.
The Washington, D.C. Accrued Sick and Safe Leave Act (the “DC Law”), with an effective date of November 18, 2008, was the next paid sick leave law to become operative.34 Under the DC Law, employers with 100 or more employees must provide employees one hour of paid leave for every 37 hours worked, of up to seven days per calendar year. Employers with at least 25, but not more than 99 employees, must provide employees one hour of paid leave for every 43 hours worked, of up to five days per calendar year. Finally, employers with 24 or fewer employees must provide employees one hour of paid leave for every 87 hours worked, of up to three days per calendar year.35
The DC Law covers employees who spend more than 50% of their time working in the District of Columbia, regardless of employers’ size or location.36 Under the DC Law, employees’ unused, accrued leave carries over from one calendar year to the next, with no cap.37 The DC Law does, however, limit employees’ usage of paid leave to the maximum number of hours that employees can accrue per calendar year.38
The Connecticut Paid Sick Leave Law (the “Conn. Law”), which became effective on January 1, 2012, is currently the only state-wide mandatory paid sick leave law. The Conn. Law mandates that employers with 50 or more employees in the state provide employees who are service workers39 one hour of paid sick leave for every 40 hours worked, up to 40 hours per year.40 Employees must work 680 hours in Connecticut during the calendar year to be eligible to use accrued leave.41 Under the Conn. Law, employees’ usage of leave and carryover of accrued, unused paid sick time from one calendar year to the next is capped at 40 hours per year.42
D. Seattle, WA
The next effective paid sick leave law was Seattle’s Paid Sick and Safe Time Act (the “Seattle Law”), which became operative on September 1, 2012.43 Under the Seattle Law, employers with more than four and fewer than 250 employees must provide employees one hour of paid leave for every 40 hours worked.44 Employers with more than 250 employees must provide employees one hour of paid leave for every 30 hours worked.45 The Seattle Law covers employees who work at least 240 hours in Seattle in a calendar year for employers with five or more employees, regardless of the employers’ location.46
The Seattle Law does not limit employees’ accrual of paid leave. Although employees are allowed to carryover their accrued, unused leave from one calendar year to the next, there is a carryover cap, which varies between 40 and 72 hours, depending upon the employer’s size.47 The Seattle Law also establishes usage caps, which generally match the accrual caps.48 The Seattle Law also requires employers to give employees notification, either by paystub or online, of their available paid sick and safe leave each time wages are paid.49
E. Portland, OR
In addition to the new legislation in the New York metropolitan area, Portland’s Protected Sick Time Law is another new ordinance, becoming effective on January 1, 2014 (the “Portland Law”).50 Under the Portland Law, employers with six or more employees must provide their employees one hour of paid sick leave for every 30 hours worked. Employers with five or fewer employees must provide their employees one hour of unpaid sick leave for every 30 hours worked.51
The Portland Law covers employees who perform any work within Portland’s city limits, regardless of the employer’s location; however, employees are only eligible to begin using accrued leave when they have worked within Portland’s city limits for at least 240 hours in a calendar year.52 The Portland Law establishes accrual, usage and carryover caps for employees, all of 40 hours per year.53
IV. A Future Common Ground
As evidenced by the above, the frontrunners of paid sick leave activism have enacted patchwork, widely varied legislation which differs with respect to coverage, accrual, and usage. Notwithstanding these differences, this legislation, at baseline, evidences a common desire for employees to have access to paid sick leave, a desire that is echoed by the paid sick leave legislation current pending in roughly 20 states,54 as well as the Healthy Families Act, which has recently received additional support.55 The growing state-wide push for paid sick leave legislation and renewed support for the Health Families Act arguably indicates a trend towards more widespread support for such laws, and corresponding turn away from preemption efforts.
Notwithstanding this apparent trend, it is unlikely the Healthy Families Act will be passed in 2014, opening the door for additional, piecemeal legislation at the city and state level, and perpetuating the employer headaches associated with the compliance obstacles of these laws. Moreover, even if federal legislation is passed in the future, it is doubtful that it will preempt existing state and city laws, but rather, like the federal and state WARN laws, it will just create yet another layer of regulatory compliance imposed on employers.