On June 8, 2011, Governor Malloy signed into law a controversial bill that requires employers with 50 or more employees to provide paid sick leave to certain service workers. The Senate approved the bill by an 18 to 17 vote and, after much debate, the House of Representatives voted 76 to 65 on the bill, making Connecticut the first state in the nation to mandate paid sick leave. Only San Francisco and Washington, D.C. currently require employers to provide their employees with paid sick days, but other cities and states are also considering such legislation.

The Act Mandating Employers Provide Paid Sick Leave To Employees, Public Act No. 11-52, will become effective on January 1, 2012, and will benefit hundreds of thousands of Connecticut workers. While the new legislation is being applauded by family, public health and community advocates and organizations, employers and business groups, including the Connecticut Business & Industry Association, are concerned about the increased costs that will be incurred, especially in these tough economic times, and the burden of keeping track of sick leave accruals.

Covered Employers

The Act will apply to any person, firm, business, educational institution, nonprofit agency, corporation, limited liability company or other entity with 50 or more employees in the State of Connecticut in any one quarter in the previous year as determined on January 1st annually. Specifically exempted are certain manufacturers and nationally chartered 501(c)(3) nonprofit organizations that provide recreation, child care and educational services.

Eligible Employees

A covered employer is required to provide paid sick leave to each of its service workers in Connecticut. The Act broadly defines “service workers” as employees paid on an hourly basis who are primarily engaged in a type of occupation listed in the Act, including food service managers, social workers, librarians, pharmacists, dental hygienists and assistants, registered nurses and nurse practitioners, waiters and waitresses, child care workers, cashiers and retail salespersons, secretaries and administrative assistants, and computer operators. It is clear that the occupational list from the Act is intended to be inclusive and not limiting. Day and temporary workers are not eligible for benefits under the Act.

Qualifying Leaves

Paid sick leave under the Act is intended for: (1) a service worker’s illness, injury or health condition, or preventative medical care; (2) a worker’s spouse’s or child’s illness, injury or health condition, or preventative medical care; or (3) where a worker is a victim of family violence or sexual assault, to obtain medical care or counseling, to obtain services from a victim services organization, to relocate due to such violence or assault, or to participate in any civil or criminal proceedings related to the violence or assault.

The Act permits employers to take disciplinary action against service workers who use paid sick leave for purposes other than those described in the Act.

Accrual and Use of Sick Leave Benefits

Beginning on January 1, 2012 (or, for workers hired after that date, beginning on the worker’s date of employment), eligible workers will be entitled to accrue paid sick leave at a rate of one hour for each 40 hours worked, up to a maximum of 40 hours per calendar year. Employees who do not use their sick leave in one calendar year may carry over up to 40 unused accrued hours to the following calendar year, but an employee may not use more than 40 accrued hours in any year.

An employee may use accrued sick leave once the employee has completed 680 hours of employment. For employees hired prior to January 1, 2012, hours of employment are counted from January 1, 2012. For employees hired after January 1, 2012, hours are counted from the date of hire.

An employee may not use accrued paid sick leave if he or she did not work an average of 10 or more hours a week in the most recent complete calendar quarter.

Upon termination, a service worker is not entitled to be paid for unused accrued sick leave under the Act, unless the employer has established a policy or a collective bargaining agreement exists which provides for the payment of accrued fringe benefits upon termination.

Pay Rate

The sick leave provided under the Act must be paid at a rate equal to the service worker’s normal hourly wage or Connecticut’s minimum wage, whichever is greater. If an employee’s hourly wage varies depending on the work performed, then the employee must be paid the average hourly wage the employee earned in the pay period prior to the one in which leave is taken.

Employee and Employer Notice Obligations

A covered employer must provide notice to each service worker, at the time of hiring, of the entitlement to sick leave, the amount of leave provided, the terms under which leave may be used, that retaliation is prohibited, and that the worker has a right to file a complaint with the Labor Commissioner for any violation. Employers may comply with these provisions by displaying a poster in a conspicuous place that is accessible to service workers and contains the required information in both English and Spanish. Although not specified in the Act, another option would be to include the information in an offer letter or as part of an employee handbook.

The Act states that an employer may require up to 7 days’ advance notice if an employee’s need to use paid sick leave is foreseeable. If, on the other hand, the need for leave is not foreseeable, then an employer may require notice as soon as practicable. It is likely that this notice provision will be construed consistent with the notice obligations under Connecticut’s Family and Medical Leave Act.

Where an employee intends to take three or more consecutive days of paid sick leave for an illness, injury or health condition, the employer may require documentation from a health care provider. If the leave is taken as a result of family violence or sexual assault, the employer may require a court record or other reasonable documentation.

Effect of Other Leave Policies

An employer will be deemed to be in compliance with the Act if the employer offers any other paid leave, or a combination of other paid leaves, as long as the other leave may be used for the purposes of the Act and is accrued at a rate equal to or greater than the rate provided for by the Act. Such other leave may include paid vacation, personal days or paid time off. Employers are also free to provide more paid sick leave than is required, and may establish a policy whereby workers may donate unused accrued paid sick leave to other service workers. However, if an employer utilizes a PTO (paid time off) system that combines vacation, sick time and personal time into one pool of time, care must be taken to ensure that the minimum sick time required under the Act is always available to the eligible employee. Practically speaking, this will mean that the employer must now track how time is used under a PTO policy.

Anti-Retaliation Provision

Employers subject to the Act are prohibited from taking retaliatory action or discriminating against any employee because the employee requests or uses paid sick leave pursuant to the Act. However, the law also protects employees who request or use leave in accordance with the employer’s paid sick leave policy, even if the employee is not a “service worker” under the Act. An employee who files a complaint with the Labor Commissioner alleging a violation of the Act is also protected from retaliation. Nothing in the Act, however, prevents an employer from taking disciplinary action against an eligible employee who uses sick leave for a purpose not permitted under the Act.

Remedies for Violations

An employee who believes his or her employer has violated the Act may file a complaint with the Connecticut Department of Labor. After a hearing, if the Labor Commissioner concludes that the employer violated the Act, such employer will be liable for a civil penalty. An employer who fails to provide the requisite leave will incur a penalty of up to $100 for each violation, and a penalty of $500 will be assessed for each violation of the Act’s anti-retaliation provision. The Labor Commissioner may also order that the employee be rehired or reinstated to his or her previous job, and that the employer pay back wages and benefits.

Practical Considerations for Employers

In preparation for January 1, 2012, when the Act goes into effect, employers with 50 or more employees in Connecticut should seek legal counsel to determine whether they have employees who qualify as “service workers.” Employers may need assistance, as the Act covers employees in occupations spanning a lengthy list of “occupation code numbers and titles, as defined by the federal Bureau of Labor Statistics Standard Occupational Classification system.” Employers should also review their existing leave policies to ensure compliance with the new law. Even if a company already provides paid leave for its employees, such as vacation or personal time, the Act requires that service workers be able to use such leave for the purposes of the Act and such leave must be accrued at a rate equal to or greater than the rate provided for by the Act. Additionally, timekeeping procedures must enable companies to keep track of employees’ hours worked and accrual and use of sick leave. Offer letters and employee handbooks should be revised to comply with the requirement that service workers be notified at the time of hire of their rights under the Act.

In addition, human resources employees, supervisors and managers should be alerted to the fact that the Act protects not only “service workers” from retaliation for seeking leave under the Act, but protects all employees who seek leave under a company’s existing paid sick leave policy.

Employers with worksites outside of Connecticut should consider whether their paid sick leave policies should be limited to Connecticut workers, or whether the paid sick leave entitlement should be extended to workers outside the state.