Patchwork Paid Sick Leave Laws

When it comes to initiating employment legislation, we're living in a time when state and city lawmakers are the change agents. From adopting equal pay legislation to raising the minimum wage or instituting paid parental leave, inaction by the United States Congress has resulted in many states and cities taking matters into their own hands.

One notable example is the recent paid sick leave mandates. To date, five states ' California, Connecticut, Massachusetts, Oregon, and Vermont ' have adopted paid sick leave laws that affect a significant number, if not all, of the employers in those states. In addition, numerous cities ' including New York City, Philadelphia, San Francisco, Seattle, Washington, DC, and most recently, Minneapolis ' have adopted paid sick leave ordinances. Adding to the list, many states and cities have recently introduced and/or are contemplating paid sick leave measures. These include but are not limited to ' Alaska, Florida, Georgia, Hawaii, Louisiana, Maryland, Michigan, Minnesota, Nevada, New York, North Carolina, Chicago, Los Angeles, and Saint Paul.

The new laws can create administrative and employee relations headaches not only for employers in these jurisdictions, but for those who have locations in multiple jurisdictions or otherwise send their employees to work in these jurisdictions. To help employers understand what to expect and better understand the paid sick leave laws, this article outlines how the majority of the recent paid sick leave provisions operate, addresses common compliance difficulties, and provides insight and counsel on compliance and future planning for all employers.

Commonalities in the Paid Sick Leave Laws

While these various state and municipal paid sick leave laws differ, most of them are developed with a similar structure that includes the following:

• Broad definitions of “employer” and “employee” for coverage purposes;
• An accrual mechanism;
• Rules regarding permissible use of leave;
• Requirements for handling accrued leave upon an employee's separation from employment or transfer to a new location;
• Record-keeping requirements;
• Notice requirements;
• Carryover allowance mandates; and
• Enforcement provisions, which include investigatory powers, imposition of penalties, and possible civil actions in which damages and attorneys' fees may be recovered.

Definitions

The definition of “employer” varies from jurisdiction to jurisdiction when it comes to which companies are affected, but broadly speaking, the scope is expansive. For example, the state of California and the city of San Francisco include all private employers regardless of business size. Other jurisdictions, like Minneapolis and Philadelphia, do not require the mandated leave to be paid if the employer is small enough, but they still require provision of leave. Some take into account industry sector. Connecticut's law excludes manufacturers whereas Minneapolis' law exempts certain construction workers who receive a state-defined prevailing wage.

As the general trend seems to be toward inclusion of all employers, the definition of covered “employee” seems to be expanding to cover most employees, as well. Minneapolis' recently adopted ordinance is a good example. It includes “any individual employed by an employer, including temporary employees and part-time employees, who perform work within the geographic boundaries of the city for at least 80 hours in a year for that employer.”

While the original proposal made some exceptions for very small employers (less than six employees), even those provisions were watered down before the ordinance's adoption. Similarly, Philadelphia's ordinance covers anyone who works within the city for at least 40 hours a year; and the ordinance in Emeryville, CA, requires otherwise eligible employees to work in the city for a mere two hours in one week to qualify for sick leave accrual. As a result of the broadening definition of “employee” under the various sick leave laws, any employer who has workers in a jurisdiction with mandatory paid sick leave, regardless of the employer's actual location, must track those hours worked by its employees in the covered jurisdiction and allow for paid sick leave to be accrued if the hours-worked threshold is met.

Coverage

In contrast to the great variety of coverage definitions, the rules for accrual of sick leave do not actually differ much in most jurisdictions. For the most part, the laws allow employees to accrue one hour of sick leave for every set number of hours they work, and they provide for a yearly cap on accrual that typically ranges from three to seven days. In addition, many of the laws also require employees to wait a certain number of days before they can start using their accrued leave.

Furthermore, the uses of accrued leave outlined in the laws mainly include, but are not limited to, taking time off to: receive preventative care; care for a sick family member or obtain preventative care for a family member; recover from or treat an injury or illness; care for a child whose school or daycare has closed because of inclement weather or for other reasons; or to seek medical attention or other assistance due to domestic abuse or sexual assault. Included in most of the current and pending laws is a requirement for employers to wait at least three days until they seek documentation for the leave before alleging potential abuse thereof.

Included in the laws is also the ability to carry over accrued but unused pay, meaning that employees may be able to build a bank of accrued leave. So far, the laws don't require employers to pay the existing accrued balance upon an employee's separation. However, employers may have to retain a terminated employee's accrued balance for a certain amount of time in case the employee returns to employment, at which point the balance must be reinstated. The same is true for employees who transfer to a different location. Their sick leave balances may need to be retained and then reinstituted upon returning to a covered location.

A familiar and favorable detail in the rules is that it does not require employers to adopt additional sick leave if they already provide at least the same amount of paid sick or paid leave. However, employers must still comply with other requirements of the new laws (record keeping and notice provisions, etc.) if those weren't previously accounted for, which means that even more generous employers should take note of the growth of state and local sick leave mandates.

Potential Compliance Challenges for Employers

Needless to say, there is significant room to make compliance errors, and the accompanying legal liability for those who have not taken the time to completely understand the laws and their requirements may be substantial.

It also isn't surprising that employers have recently run into compliance challenges because of the current sick leave laws' patchwork existence. Employers that operate in multiple jurisdictions may need to adopt different policies and accrual systems for each unique jurisdiction. Another solution would be to adopt one system for all employees that fulfills the strictest employer requirements.

Employers that require employees to work in an area with a paid sick leave ordinance in effect may find themselves in a situation where some but not all of their employees are entitled to earn and use paid sick leave. This can cause administrative difficulty and possible employee relations issues. For example, a soft drink vendor located outside of a covered jurisdiction that sends its employees on delivery routes in a covered jurisdiction like Minneapolis or Philadelphia for a few days a week could quickly find itself needing to implement a system to track those employees' covered hours and allow them to accrue and use paid sick leave in accordance with the applicable law. Similar issues could be true for employers who aren't based in a covered jurisdiction but allow employees to routinely work at home when those employees live in a covered jurisdiction.

More portable industries ' like food trucks, consulting, health care, and construction ' may face some difficulty due to how the paid sick leave laws are structured, as the nature of their businesses require them to send employees where their clients or their work is located.

Employers with employees who work a certain number of hours in an area with a paid sick leave ordinance or industries that require employees to travel to these areas for their clients or work are faced with difficult choices. First, they must determine which employee will receive the shifts that make them eligible. This can result in angered employees and possible disparate treatment claims. To avoid some of these issues, employers have four choices, each of which presents various challenges:

1. Adopt a compliant paid sick leave policy for all employees. This policy may need to comply with state and local laws, depending on where an employer's employees work. For example, if an employer sends employees into San Francisco, whatever policy it adopts must comply with both San Francisco's and California's paid sick leave laws.

2. Develop a paid sick leave system for only covered employees while ensuring that employees are selected for the covered work fairly. This may involve a seniority or rotational system that gives numerous employees access to coverage, or provides other benefits to non-covered employees.

3. Develop a rotational work system that prevents any one employee from reaching the coverage threshold, which may be next to impossible for some employers or in some jurisdictions.

4. End all employees' work in covered jurisdictions. While in some ways this is a simple solution, it also is likely impossible for many, if not most, employers if they want to continue operating their businesses as they do now.

Employers that assume their current paid time off programs are sufficient under the law may also run into compliance issues. For example, an employer that allows for accrual of paid sick leave but does not allow for accrual quickly enough or does not allow sufficient carryover time may be in violation of the applicable law. The same is true for an employer that meets all other requirements of the law but fails to maintain a terminated employee's sick leave balance for the requisite amount of time or fails to post the required notice. Therefore, it is crucial for all employers who may be affected by a newly enacted paid sick leave law to closely examine their current paid leave policies and programs to ensure full compliance.

Time tracking can also cause compliance concerns. This is especially true for exempt employees who generally don't keep detailed tabs on their work hours. To reduce the administrative burden, employers may need to purchase or develop technical solutions to track hours worked in covered jurisdictions.

Advice for Employers

There doesn't seem to be an end in sight for the wave of paid sick leave laws, and with the nature of the laws being technical, complex, and fraught with compliance challenges, it's advantageous for employers to be proactive and take intentional steps.

The first action to take is to determine if the business and/or which employees are operating in a covered jurisdiction. Employers should consider all risks and develop solutions.

If the business operates in a covered jurisdiction, or if at least of some its employees do, employers should examine the existing policy (if developed) to determine if it's compliant and/or make the needed changes, create and implement a sick leave program if needed, and apply updates to the employee handbook to include the new or revised sick leave program. They should then implement record-keeping mechanisms, ensure proper notice is delivered to employees, and provide needed training to employees who are tasked with administering the program.

In addition, employers should consider hiring competent employment counsel to review their sick leave policies and procedures to ensure compliance, and stay up-to-date with state legislators and city council members regarding the adoption of paid sick leave laws. In the event legislation is in the process of being considered, employers can convene or participate with the local chambers of commerce in meetings to discuss the proposal, attend or testify at hearings on the proposed legislation, and advocate for paid sick leave laws that work for both employees and employers.

Lisa Schmid is an attorney with Nilan Johnson Lewis in Minneapolis. She can be reached at [email protected] or 612-305-7549.