Sick leave policies have become a hot topic for many New Jersey employers, and for good reason: On May 2, 2018, New Jersey became the 10th U.S. state to enact a mandatory law governing paid sick leave when Governor Phil Murphy signed The New Jersey Paid Sick Leave Act (the “Act”) into law. New Jersey employers of all sizes are now required – as of October 29 – to provide up to 40 hours of paid sick leave per year to covered employees.
Nearly every business with employees in New Jersey will feel the impact of these new laws in one way or another, and many have already begun to ensure their policies and practices are compliant with the Act. This article will outline the law and what you, as an employer in New Jersey needs to know in order to become compliant or stay compliant.
Who Is Covered?
Covered employees: Almost all employees working in New Jersey “for compensation” whether full or part time. The Act expressly excludes employees: (i) in the construction industry who are employed under a collective bargaining agreement; (ii) per diem healthcare employees; and (iii) public employees who already have sick leave benefits.
Covered employers: The Act broadly applies to any business entity, irrespective of size, that employs individuals in the state of New Jersey, including temporary help service firms. The Act however expressly excludes public employers who are already required to provide their employees with sick leave.
How Is Leave Accrued?
Accrual period: The Act requires employers to designate any period of 12 consecutive months as a “benefit year.” Any employee that was on your payroll as of October 29, 2018, began accruing sick time, while any employee hired after October 29, 2018, will begin accruing sick time on the first date of their employment.
Accrual limits: In each benefit year, an employee will accrue up to 40 hours of sick time at a rate of one (1) hour for every 30 hours worked. Alternatively, an employer may “frontload” the full 40 hours at the beginning of the benefit year. That said, if you are an employer with an existing paid time off (PTO), personal days, vacation days and sick-day policies, the Act will not apply to you if:
- Your employees are able to use the time off in the same manner required by the Act, and
- The PTO policy accrues time at a rate equal to or greater than the Act.
In the case of a temporary help service firm placing an employee with client firms, paid sick leave will accrue on the basis of the total time worked on assignment with the firm, not separately for each client firm to which the employee is assigned.
How Can Leave Be Used?
The Act provides employers with the discretion to choose the increments in which its employees may use accrued sick time, and employers are not required to permit employees to use more than 40 hours of sick leave in a benefit year.
Employees can use accrued sick time after the 120th day of their first date of employment for any of the following reasons:
- Diagnosis, care or treatment of – or recovery from – an employee’s own mental or physical illness, including preventive medical care.
- Aid or care for a covered family member during diagnosis, care or treatment of – or recovery from – the family member’s mental or physical illness, including preventive medical care.
- Circumstances related to an employee’s or their family member’s status as a victim of domestic or sexual violence (including the need to obtain related medical treatment, seek counseling, relocate or participate in related legal services).
- Closure of an employee’s workplace or of a school/childcare of an employee’s child because of a public official’s order relating to a public health emergency.
- Time to attend a meeting requested or required by school staff to discuss a child’s health condition or disability.
What Rules Govern Carryover and Payout?
Maximum carryover: The Act does not require employers to permit employees to carry over more than 40 hours of accrued sick time in a single benefit year.
Optional buyout: Employers may, but are not obligated to, offer to pay employees for their unused accrued sick time in the final month of the benefit year, and the payment amount shall be based on the same rate of pay that the employee earns at the time of the payment. If employees agree to receive the buyout payment, they may choose (i) a payment for the full amount of their unused accrued sick time or (ii) or to take payment for fifty percent (50%) of the accrued time , while choosing to carry over the remaining fifty percent (50%) of sick days to the next benefit year.
What About Local Paid Sick Leave Laws?
The Act preempts all existing and future municipal ordinances in New Jersey regarding paid sick time. Prior to the Act, there were 13 New Jersey municipalities with paid sick time ordinances, but all have become moot as of the effective date of the Act.
How Will the Law Be Enforced?
Employees may sue their employers for violating the Act and can seek actual damages suffered as a result of the violation, plus an equal amount of liquidated damages.
What Should Employers Do Now?
Prepare Decision Makers.
Employers in New Jersey should begin to educate their leadership, decision makers and supervisors on the Act and its ramifications for the company, including:
- How, and for what reasons, the accrued time can be used
- Measures for ensuring that all personal information provided by the employee is kept confidential
- Information on the protections for staff against retaliation
- Penalties for non-compliance
Set Payroll Systems or some other accounting method for the Legal Requirements.
Once the company benefit year has been determined, the next steps are to decide:
- Whether employees will accrue the potential 40 hours over time or receive them all upfront; and
- If a payout and/or carryover for unused sick time will be provided.
Hire Legal Counsel to Review Personnel Policies
Employee handbooks, personnel policies and other written guidelines should all be up to date with regard to this law. Employers will also want to confer with their legal counsel to:
- Check their definition of “family”
- Ensure time off can be used for the permissible reasons of the law
- Clarify the attendance policy, including advanced notice of foreseeable absences or documentation for absences due to illness
- Educate all staff on the consequences for retaliation or non-compliance
Determine any Industry and Organization Blackout Days
Blackout dates give employers “protected” days during which employees cannot request time off for foreseeable issues – and these dates should be noted in the company’s written personnel policies, including the company’s handbook. For an airline industry employee, for example, his or her employee may state that sick time will not be granted during periods of predictable increases in customer activity, like on or around Thanksgiving or Christmas.
For more information on how to properly realign your own company’s policies and procedures in compliance with the New Jersey Paid Sick Leave Act, contact Concierge Law today to schedule a consultation.