Are You Ready for the Paid Sick Leave Act?

Are You Ready for the Paid Sick Leave Act?

The New Jersey Paid Sick Leave Act will go into effect on October 29, 2018.   The Act has created many questions in the world of employment. Although some questions remain unsolved, New Jersey Department of Labor released proposed Regulations on September 18, 2018, that address these issues.

Did you know:

  • All private-sector employers are covered
    • There is no small employer exception
  • Nearly all employees are covered
    • Except construction employees under a union contract and per diem healthcare employees; and
  • Both fulltime and part-time employees are covered
    • Even if the employee works a minimal amount of hours per week.

Once the Act is in effect, all employers are required to provide employees with up to 40 hours of paid sick leave per benefit year. Sick leave can either be accrued at the rate of one hour for every thirty hours worked, or the employer can advance to employees all 40 hours at the beginning of the benefit year.

Did you know:

  • Each employer must define its benefit year – a 12 month period
    • And changing that benefit year must be done with 30 days advance notice to the State;
  • If you advance paid sick leave to employees, you must give those employees 40 hours
    • Regardless of their part-time status, fulltime status, or starting part-way into the benefit year; but
  • The Act does not prohibit employers from providing sick leave differently to different employees based on non-discriminatory categories
    • Such as:
      • advancing 40 hours to full-time employees but using accrual part-time employees;
      • advancing 40 hours of to exempt but using accrual for nonexempt employees
      • advancing 40 hours to existing employees but using accrual for new employees;
      • or a combination of those categories! 

New employees must accrue leave at their start date, but employers can choose to require employees wait 120 days before using that sick leave.  For existing employees on October 29, 2018, the regulations state they must begin to accrue paid sick leave and can be required to wait 120 days to use that leave.  However, if you already have a sick leave program in place, you cannot require your employees to wait to use the leave you have already provided them.

Did you know:

  • Unused sick time at the end of the benefit year must either be paid out to employee or rolled over to the next year
    • Or 50% cashed out and 50% rolled over;
  • No employer is required to allow employees to use more than 40 hours in a benefit year;
    • So it is unclear how a roll-over of time would help an employee who is advanced his/her sick leave; and
  • Employers must pay-out accrued unused sick leave at the employee’s regular rate of pay
    • Which can be calculated as
      • the employee’s normal hourly rate; or
      • the base rate of pay or the minimum wages, whichever is greater, for employees who earn commissions; or
      • an average hourly rate for the past week (but not less than minimum wage)
        • for employees who earn 2+ rates; or
        • employees whose wages include other benefits (food lodging); or
        • employees who earn a piecework rate of pay). 

Paid sick leave does not have to accrue or be paid to independent contractors.  The State will following the “ABC” test to determine if a worker is an employee or independent contractor.  The ABC test is from N.J.S.A. 43:21-19(i)(6):

(A) Such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact; and

(B) Such service is either outside the usual course of business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and

(C) Such individual is customarily engaged in an independently established trade, occupation, profession or business. 

Employers can “blackout” certain time periods where employees cannot take foreseeable leave.  However, employers must be able to verify these are high-volume periods or special events, during which permitting the use of foreseeable earned sick leave would unduly disrupt the operations of the employer.

Did you know:

  • Employers are required to post a notice about the paid sick leave
    • Copy of the notice is located here;
  • Employers are required to maintain records of employee hours worked and paid sick leave used for a period of 5 years
    • This includes records of: sick leave that is accrued, advanced, used, paid, paid out, and carried over; but
  • Employers are not required by this Act to keep records of the hours worked for exempt employees
    • And for purposes of this Act, employers can presume exempt employees work 40 hours per week for the purposes of accrual of paid sick leave time. 

Employers can use a PTO (unified paid time off) policy to comply with the Paid Sick Leave Act and do not have to specifically designate certain time as sick leave.  However, that PTO policy must 1) provide for accrual or advancement of PTO at an equal or greater rate than that under the Act provides; 2) authorize PTO to be used for the same reasons as in the Act; 3) calculate the rate of pay of the PTO in reference to the Regulations; and 4) provide for payment or carryover of unused PTO.

Did you know:

  • There is protection from retaliation or discrimination against employees who request to use sick leave (whether under the Act or under the employer’s own policies) or files a complaint about violations of the Act or informs someone of their rights under this Act.
    • And importantly, there is a legal presumption of retaliation (shifting the burden to disprove relation to the employer) when there is an adverse employment action taken within 90 days of the employee
      • files a complaint with the State or with a Court alleging violation of the Act;
      • informs anyone about an alleged violation of the Act;
      • cooperates with an investigation about an alleged violation of the Act; or
      • opposes any policy, practice, or act that would be unlawful under the Act.
    • Penalties for knowing or willful violations of the Act include
      • Conviction of a disorderly person’s offense;
      • Fines of $100-$1000 for a first offense;
      • Imprisonment for 10-90 days; or
      • Both a fine and imprisonment.

This Act has made significant changes to the obligations of employers regarding sick leave and all employers should review its requirements carefully to ensure compliance.  If you have further questions regarding the Regulations and the New Jersey Paid Sick Leave Act, please do not hesitate to contact Laddey, Clark & Ryan’s Employment and Labor Practice Group: Thomas Ryan, Esq. (tryan@lcrlaw.com), Ursula Leo, Esq. (uleo@lcrlaw.com), or Jessica Jansyn, Esq. (jjansyn@lcrlaw.com).  Our attorneys can also be reached by phone at (973) 729-1880.