The Washington State Department of Labor and Industries has now published final regulations implementing Initiative 1433 — the new statewide paid sick leave law passed by the voters in November 2016. These regulations have been much-anticipated by Washington employers, and they provide new details about how employers will be expected to comply with the statewide paid sick leave law that goes into effect on January 1, 2018. Lane Powell’s Employment Team has read the final regulations and compiled this handy list of the top 10 takeaways from the paid sick leave regulations:
1. Which employees are covered? Every non-exempt employee who works in the state of Washington is entitled to accrue paid sick leave starting on January 1, 2018. Non-exempt seasonal, temporary, on-call and part-time employees are all covered. Many employers’ current paid sick leave and/or PTO policies do not extend to these employee classifications and will need to be updated before the New Year.
2. Does that mean that exempt employees are not covered by Washington State’s paid sick leave law? Yes. Exempt employees are not covered by the state law. But exempt employees are covered by other local ordinances, including Seattle’s Paid Sick and Safe Time Ordinance, so be careful. An employer may be more generous than legally required, and provide paid sick leave to exempt employees, even if not legally required to do so. Extending paid sick leave benefits to exempt employees may also make sense from a practical standpoint.
3. How much paid sick leave do employees get? Covered non-exempt employees must accrue paid sick leave at the rate of one hour of paid sick leave for every 40 hours worked.
4. May employers place caps on the amount of paid sick leave employees can accrue or use? No caps on accrual or use are permitted. Employees must be allowed to accrue paid sick leave on all hours worked for the entire year.
5. May employers pay premium pay in lieu of providing leave? No. Although some local ordinances allow premium pay in lieu of leave, this is not permitted under the Washington paid sick leave law.
6. May employers offer employees the option to cash out their accrued, unused leave balances at year-end? Yes. Although employees must be allowed to carry-over up to 40 hours of unused paid sick leave to the next year, an employer may elect to cash out an employee’s accrued, unused paid sick leave balance which exceeds 40 hours.
7. May employers frontload paid sick leave? Yes, but the amount of paid sick leave that the employer frontloads must equal or exceed the amount the employee would receive if he or she accrued leave at the rate of one hour of leave for every 40 hours worked. Unless the employer knows with certainty the number of hours the employee will work during the year, calculating the amount of leave to frontload may be difficult. Additionally, unlike many local ordinances, frontloading leave does not exempt employers from the requirement to allow carry-over of up to 40 hours of leave to the next year.
8. What is the rate of pay for paid sick leave? For each hour of paid sick leave used, an employee must be paid the greater of: (a) minimum wage, or (b) the employee’s “normal hourly compensation,” which means the rate of pay the employee would have earned for the hours had the employee come to work. However, the “normal hourly compensation” does not include overtime, tips, gratuities, service charges, holiday pay or other premium rates, unless the employer or a collective bargaining agreement allows for such considerations. On the other hand, where an employee’s normal hourly compensation is a shift-differential, the differential rate is the “normal hourly compensation” and must be paid for paid sick leave.
9. May employers request verification for use of paid sick leave for absences less than three days? No. Verification may be requested for absences exceeding three days. For shorter absences, verification is not permitted, even in instances of perceived patterns of abuse. Washington’s paid sick leave law does, however, allow employers to request medical verification if permitted or required to do so under other federal, state or local laws or ordinances.
10. May employers withhold payment of paid sick leave if the leave was not for an authorized purpose? Yes. If an employer can demonstrate that an employee’s use of paid sick leave was for a purpose not authorized by the law, the employer may withhold payment for the use of paid sick leave. However, the employer may not subsequently deduct those hours from an employee’s accrued, unused paid sick leave bank.
Most employers doing business in Washington will need to update their handbook policies to comply with this new law. Plan now to attend Lane Powell’s upcoming Paid Sick Leave webinar on November 15th, during which we will discuss Washington’s paid sick leave law and regulations in detail and provide practical advice on what employers should do now to prepare for the law to take effect in January.