Beginning next year, employees in New York City will be entitled to paid sick leave pursuant to a new, somewhat complex statutory scheme.

Although Mayor Michael Bloomberg vetoed the legislation, the New York City Council had enough votes to override him and pass the Earned Sick Time Act, which requires all private-sector employers in the city (with the exception of those in the manufacturing industry) to provide paid sick time to employees.

Employers with at least 15 employees or at least one domestic worker are covered by the new law and must provide one hour of sick time for every 30 hours worked, to a maximum of 40 hours per calendar year. Time begins to accrue on an employee’s start date or the effective date of the legislation. Use of the time may begin on or after the employee’s 120th calendar day of employment.

Leave can legally be used for a mental or physical illness, injury or health condition or need for medical diagnosis; care of a family member for the same list of needs; or reasons related to a public health emergency. Employees must be allowed to carry over accrued unused time from one year to the next (although employers can cap usage at 40 hours each calendar year), but employers do not have to pay out accrued time when an employee’s tenure ends. Employees are also allowed – with the agreement of an employer – to work additional hours instead of taking leave, subject to specific requirements.

In another twist, employers not covered by the paid requirements must still provide the same time to employees for sick leave, although it may be unpaid.

The legislation grants employers some controls, however. Businesses can set a requirement for a minimum-increment use of up to four hours and request reasonable notice prior to the use of paid sick leave, up to seven days for foreseeable usage. Documentation to support the reason for leave after more than three consecutive work days may be requested by the employer. Covered employers already offering paid leave sufficient to meet the law’s requirements are not required to provide additional time off.

Exceptions are provided under the Act for employers in the manufacturing sector (such as factories and mills, some bakeries, candy stores, and custom tailors), as well as federal, state, and local governmental employers. Specific rules also apply to domestic workers and union employees covered by a collective bargaining agreement.

Records documenting an employer’s compliance with the law must be maintained for two years and notice of an employee’s rights under the law must be provided at the time of hire. Although the law does not include a private right of action, employees alleging a violation (including retaliation for making use of their leave) can file a complaint with the Department of Consumer Affairs. The agency is responsible for enforcement of the law, with penalties ranging from payment of lost wages to reinstatement of a terminated employee to civil penalties.

To read the Earned Sick Time Act, click here.

Why it matters: The law is set to take effect on a staggered basis beginning next year, beginning April 1, 2014, for employers with at least 20 employees and Oct. 1, 2015, for employers with 15-19 employees (although these employers must provide unpaid sick leave as of the April 1, 2014, date). One possible complication: The City must be in the same economic position it was in January 2012 (or better), as measured by a financial index maintained by the Federal Reserve Bank of New York. If the economy has dropped below the January 2012 level, implementation of the law will be delayed. With passage of the bill, New York City joins a growing number of jurisdictions, including Connecticut and cities like Portland, Ore., San Francisco, and Seattle, in mandating paid sick leave for employees.