Private employers not already complying will need to do so by an effective date to be determined by the City’s economic performance.

Overriding a veto by Mayor Michael Bloomberg, the New York City Council, on June 26, 2013, enacted a law which amends the New York City Charter and Administrative Code to require many employers to provide paid sick time to employees. Once effective, the new law, known as the Earned Sick Time Act (the Act), will require certain New York City employers to provide each employee up to five paid sick days per year. New York joins the cities of Portland, OR, San Francisco, CA and Seattle, WA — as well as the state of Connecticut and the District of Columbia — in enacting such sick time requirements. This Client Alert describes the Act and provides guidance on compliance for employers with operations in New York City.

The Earned Sick Time Act

Eligibility

Eligible employees under the Act include any person employed for hire within New York City for more than 80 hours in a calendar year, whether on a full-time or part-time basis.1

Exclusions

Excluded from the Act are persons employed by the US government, the State of New York or the City of New York. Independent contractors, certain hourly professionals licensed by the New York State Department of Education, employees compensated by or through qualified scholarships and participants in certain work study programs are also excluded from the Act. Unionized employees covered by a collective bargaining agreement will be permitted expressly to waive the requirements of the Act, provided the collective bargaining agreement covering such employees contains comparable time off benefits. Unionized employees in the construction and grocery industries may elect to waive the provisions of the Act regardless of whether the collective bargaining agreement provides for comparable time off benefits.

Sick Time

The Act will require employers in New York City with 20 or more employees to provide paid sick time to eligible employees, at a minimum accrual rate of one hour of sick time for every 30 hours worked. This requirement will be extended to employers with 15 or more employees 18 months after the Act goes into effect. Employers with less than the minimum number of employees will be required to provide commensurate unpaid sick time to their eligible employees.

Although New York City employers may provide sick time in excess of its requirements, the Act only requires a maximum of 40 hours of paid or unpaid sick time per employee in each calendar year. An employer must allow an employee to carry over any accrued but unused sick time to the next calendar year. Notwithstanding the foregoing, employers will be permitted to limit the use of sick time to the 40 hours per calendar year maximum, regardless of the amount of sick time carried over from any prior calendar year. Although sick time begins to accrue as of the effective date (or at the time of hire, if later), employees are not entitled to use such sick time until 120 days after the sick time begins to accrue. The Act permits employers to set reasonable minimum increments for the use of sick time; however, the minimum increment cannot exceed four hours per day. Employers are not required to cash-out any accrued and unused sick time upon an employee’s termination of employment for any reason.2

Use of Sick Time

The Act provides that eligible employees will be entitled to take sick leave due to the employee’s own, or a family member’s, mental or physical illness, injury, or health condition, or need for medical diagnosis, care or treatment of any of the foregoing. Under the Act, a “family member” includes an employee’s spouse or registered domestic partner, parent, parent-in-law or parent of a domestic partner, and child or child of a domestic partner (including biological, adopted or foster children). The Act will also allow sick time to be used in the event that the employer’s place of business is closed due to a public health emergency or in the event an eligible employee needs to care for a child whose school or childcare provider has been closed due to a public health emergency. Employers are permitted to request reasonable notice of the use of sick time (up to seven days for foreseeable events requiring the use of sick time and as soon as practicable for unforeseeable events). Employers are also permitted to require reasonable documentation from a licensed health care provider for absences in excess of three consecutive work days, establishing the need and duration of sick time. However, employers requesting such documentation will not be permitted to require disclosure of the nature of the injury, illness or condition giving rise to the absence and any health information provided must be treated as confidential.

Notice and Record Retention

The Act requires employers to provide notice to employees, at the time of hire, of such employee’s right to sick time. The required notice must specifically inform the employee of the rate of accrual and use of sick time, the computation year of the employer, and the employee’s right to be free from retaliation and to bring a complaint to the Department of Consumer Affairs (which, surprisingly, is the agency charged with enforcing the Act). The Department of Consumer Affairs will provide sample notices on its website. Employers must retain, for a period of two years, records regarding the hours worked and sick time accrued for and taken by each employee. The Department of Consumer Affairs may audit such records upon request.

Enforcement by the Department of Consumer Affairs

Importantly, the Act does not create a private cause of action. Instead, the Department of Consumer Affairs will establish a system to receive and timely investigate complaints regarding non-compliance. Employees have 270 days from the time a violation is deemed to occur to file a complaint. All such complaints will initially be subject to mediation. If mediation is unsuccessful, in the event that the Department of Consumer Affairs has determined that a violation has occurred, the case will proceed to a hearing before an administrative tribunal. In the event that the tribunal finds that the employer has violated the law, the Department of Consumer Affairs must issue a civil penalty not to exceed $500 for the first violation, $750 for a second violation within a two year period and $1,000 per violation for each occurrence thereafter. Willful failure to provide the notice required by the Act to newly hired employees may result in a fine of $50 per employee. In addition to civil penalties, the Department of Consumer Affairs has authority to grant employees monetary and equitable relief, including reinstatement.

Effective Date

The effective date of the Act is uncertain, as the New York City Council tied implementation to the performance of the New York City economy, as measured by the New York City Coincident Economic Index. In the event that, as of December 16, 2013, the New York City economy is performing at or better than its performance level as of January 2012, the Act will go into effect on April 1, 2014. In the event that New York City’s economy is performing worse than it was in January 2012, economic performance will be measured every six months thereafter. Once the New York City economy is performing the same as or better than it was as of January 2012, the Act will become effective on the following April 1 or October 1, whichever is earlier.

Complying With the Earned Sick Time Act

Notably, New York City employers that already provide paid leave in an amount equal to or greater than the sick time required under the Act (including paid leave classified as vacation, sick time or personal days) will not be required to provide additional paid sick time as long as such paid time off is permitted to be used for the same purposes and under the same circumstances as sick time required pursuant to the Act. Employers with operations in New York City should review their existing time off policies to determine whether revisions are needed to comply with the Act.

Trends in Sick Time Legislation

Although the Family and Medical Leave Act requires covered employers with more than 50 workers to provide unpaid leave under certain circumstances, currently there is no federal law that requires employers to provide paid sick days to employees. However, federal legislation (known as the Healthy Families Act) mandating paid sick days to recover from an illness, care for a sick family member or seek preventive health care has been introduced as recently as March 20, 2013 and is currently being considered by the Senate Committee on Health, Education, Labor and Pensions. Signaling a national trend, campaigns to enact paid sick time legislation are currently underway in Arizona, California, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Miami (FL), Michigan, Minnesota, New Jersey, New York State, North Carolina, Orange County (FL), Pennsylvania, Philadelphia (PA), Vermont and Washington State.