On March 24, 2011, the Wisconsin Court of Appeals (District I) dashed the hopes of most employers when it upheld the Milwaukee Paid Sick Leave Ordinance. The appellate court sent the case back to the Circuit Court with instructions to lift the permanent injunction against the Ordinance. Once that occurs, the Ordinance will become law, and employees in Milwaukee will start to earn paid sick leave a short time later. While a legislative solution may be in the works, its impact on the Ordinance is uncertain. Employers with employees working in Milwaukee need to dust off their notes regarding the Ordinance and think about their next steps. What follows is a summary of the relevant issues and practical recommendations.
Overview of Ordinance
On November 4, 2008, Milwaukee voters passed a referendum mandating paid sick leave for all private sector employees working within the geographic boundaries of the City of Milwaukee. The referendum became the Milwaukee Paid Sick Leave Ordinance. Under the Ordinance, all employers must provide any person who is “employed within the geographic boundaries of the city” with one hour of paid sick leave for every 30 hours worked, not to exceed 72 hours (or nine days) per calendar year. Employers with fewer than 10 employees must provide 40 hours (or five days) of paid sick leave per calendar year. The Ordinance expressly covers all temporary and part-time employees, and employees are eligible to use their paid sick leave allotment after their 90th day of employment. Paid sick leave must be compensated at the employee’s regular hourly rate of pay.
Under the Ordinance, employees can use paid sick leave for a broad range of personal and family needs that far exceed the coverage granted under Wisconsin and federal family and medical leave acts. Specifically, an employee is permitted to use paid sick leave for his or her own physical or mental condition, for any treatment related to a physical or mental condition or for any “preventative [sic] medical care.” The Ordinance also covers absences related to domestic assault, sexual abuse or stalking. Employees are entitled to take paid sick leave to care for a “family member” for the same reasons. Under the Ordinance, the term “family member” includes children, parents, spouses, grandparents, spouses of grandparents, grandchildren, domestic partners, siblings, spouses of siblings and “any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.” This definition is so broad it includes close friends, girlfriends and boyfriends.
The Metropolitan Milwaukee Association of Commerce (“MMAC”) challenged the Ordinance in court. On February 6, 2009, four days before employees could begin to accrue sick leave, Judge Thomas Cooper of Milwaukee County Circuit Court granted a temporary injunction stopping implementation of the Ordinance. After a hearing, Judge Cooper made the injunction permanent on June 12, 2009.
On July 20, 2009, 9to5 National Association of Working Women, Milwaukee Chapter, appealed the ruling to the Court of Appeals. On February 18, 2010, the Court of Appeals certified the case to the Wisconsin Supreme Court without issuing a substantive decision. On March 16, 2010, the Wisconsin Supreme Court accepted the case. On October 14, 2010, the Wisconsin Supreme Court issued a decision that it was equally divided (3 - 3 with one justice not participating in the case) whether to affirm or reverse the decision of the Circuit Court. As a result, the Wisconsin Supreme Court rejected the certification and returned the case to the Court of Appeals. On March 24, 2011, the Court of Appeals (District I) upheld the Ordinance.
At the Court of Appeals, the MMAC argued there were technical deficiencies with the referendum, it violated substantive due process, violated a constitutional prohibition against impairment of contracts, improperly regulated activity outside the City of Milwaukee, and was pre-empted by various state and federal laws. The appellate court rejected all of the MMAC's arguments.
The MMAC announced on March 25, 2011 that it would file a motion asking the Court of Appeals to reconsider its decision. The MMAC has 20 days to file its request. Wis. Stat. § 809.24(1). The MMAC has 30 days from the date the Court of Appeals decides the motion for reconsideration to seek review of the decision by the Wisconsin Supreme Court by filing a petition for review. Wis. Stat. § 808.10(2). If the Wisconsin Supreme Court accepts the case and remains equally divided, as it was when it returned the case to the Court of Appeals, the Court of Appeals' decision would almost certainly be affirmed. See State v. Elam, 195 Wis. 2d 683, 538 N.W.2d 249 (1995). Justice Prosser, a conservative justice who previously voted to affirm the preliminary injunction sought by the MMAC, is up for re-election against a liberal candidate, JoAnne Kloppenburg, on April 5, 2011. If Kloppenburg defeats Prosser, it would likely result in moving the vote on the case from 3-3 and one abstention to 2-4 in favor of rejecting the injunction and one abstention. As a result, an appeal seems unlikely to result in a win for the MMAC. On March 24, 2010, the MMAC's Director of Government Affairs told The Business Journal that an appeal to the Wisconsin Supreme Court was unlikely.
When Will the Ordinance Go Into Effect?
The implementation and enforcement date of the Ordinance is a moving target dependent on many elements, such as the MMAC’s actions in the pending litigation and the City of Milwaukee’s Equal Rights Commission (“ERC”)'s interpretation of the Ordinance, among other things. On March 25, 2011, the ERC stated the implementation and enforcement of the Ordinance would occur no sooner than 31 days after the date (March 24, 2011) of the Court of Appeals’ decision, noting that was the soonest date the Circuit Court could lift the injunction. The ERC further stated the period may be extended if the MMAC files a motion to reconsider or a petition for review by the Wisconsin Supreme Court. The basis for the ERC’s position is unclear. Since the MMAC already announced it would file a motion for reconsideration, the ERC will likely further delay the Ordinance's date of implementation and enforcement.
Potential Solution Pending in the Legislature?
On March 3, 2011, the Wisconsin Senate passed Senate Bill 23. The bill provides that family and medical leave is a statewide concern and prohibits local governments from enacting any ordinance requiring an employer to provide leave for an employee’s or family member’s:
- illness, injury, need for treatment or preventive medical care;
- need for medical attention or counseling to recover from any health condition caused by domestic abuse, sexual abuse, or stalking;
- need for services as a victim of domestic abuse, sexual abuse, or stalking;
- need to relocate due to domestic abuse, sexual abuse, or stalking; and
- involvement in any civil or criminal action or proceeding relating to domestic abuse, sexual abuse, or stalking.
These reasons for leave match the permitted reasons for leave under the Ordinance. Senate Bill 23 would also modify the Wisconsin Family and Medical Leave Act. An identical companion bill (Assembly Bill 41) was introduced on March 8, 2011 in the Wisconsin Assembly. As of March 25, 2011, it was pending before the Committee on Labor and Workforce Development. A public hearing is set for both bills on March 30, 2011 at 10:30 a.m., 300 Northeast at the Capitol.
Even if the Legislature passes both bills, if Governor Walker signed the bill, and if the bill became law, that may be after the Ordinance gives employees the right to accrue sick leave. It is also reasonable to assume that advocacy groups supporting the Ordinance will attempt to prevent the implementation of any new law by seeking an injunction in court to block it. If that were granted, the Ordinance would presumably remain in effect.
What Should Employers Do Now?
The first step for employers is to decide whether to take a “wait and see” approach or to try to come into compliance and if so, to what extent. Waiting to see how things develop may be a bad gamble. Employers should realize that disciplining or terminating an employee for absences becomes tricky after the Ordinance goes into effect because of its new leave entitlement and non-retaliation prohibitions. If an employer ignores the Ordinance, its policies related to employee notice of absences, required documentation for absences, permissible reasons for excused absences, and tracking of hours worked for the accrual of paid time off risk creating violations of the Ordinance if those policies do not comply with the Ordinance. The City already issued final rules in May 2010, and those rules contain a complaint process, which is similar to the administrative process at the Equal Rights Division for violations of the Wisconsin Fair Employment Act. See Rule 23.
Employers that are not physically located in the City of Milwaukee but have employees that work in the City face a special challenge in tracking hours worked in the City and formulating a plan. Unionized employers must consider how to implement the requirements in light of their union contracts and how to address the issues with unions, since paid leave is typically a mandatory subject of bargaining. For many issues related to the Ordinance, retroactive compliance is more expensive and time consuming than planning for it beforehand. That is not to say, however, that compliance will be easy or cost-free. Developments are changing; employers must remain nimble and understand they do not have the benefit of knowing how the variables related to the Ordinance will unfold. Each covered employer needs to make its own determination in consultation with its employment law counsel.
Milwaukee employers that want to take some action to come into compliance rather than taking a “wait and see” approach should consider doing the following:
- Watch for the ERC’s Milwaukee Paid Sick Leave poster and post it. The ERC has not prepared a poster yet. The ERC’s regulation provides that the poster must address employee eligibility for paid sick leave, the amount of paid sick leave, terms of its use that are guaranteed under the Ordinance, and no retaliation against employees who request or use paid sick leave. Rule 1.
- Review existing sick leave, vacation, paid time-off policies and union contracts to determine the extent to which they already comply with the Ordinance or could be made to do so with minimal cost.
- Review their attendance policies — particularly if they are using a no-fault policy — to incorporate an exception for sick leave covered by the Ordinance. The Ordinance prohibits an employer from disciplining an employee for taking a sick day, even if it is unplanned.
- Review temporary worker and outside employment staffing service agreements to assess the likelihood of any of those workers in the City of Milwaukee successfully claiming an entitlement to sick leave and formulate a response, such as asking the staffing agencies to cover the cost of defending any claims from these workers for sick days and paying the cost of those days, if a worker is found to be entitled to them.
- Review their notification and certification requirements for time off to see whether they pass muster under the Ordinance while nevertheless protecting business interests. The Ordinance prohibits “unreasonable barriers” and “unreasonable documentation of illness” by employers. Employers should review their call-in processes and consider whether they are likely to be acceptable under the Ordinance.
- Set up a process to track employee eligibility for the additional sick days and exhaustion of the sick days.