New York City Earned Sick Time Act Significantly Expanded

New York City Earned Sick Time Act Significantly Expanded Ellen R. Storch

“Beginning this year, getting sick will no longer mean losing a day’s pay, or potentially a job, in the City of New York.”

New York City Mayor Bill de Blasio made this pronouncement when he proposed an expanded version of the Earned Sick Time Act to the New York City Council. The amended act was passed by the City Council on Feb. 26, 2014, and signed into law on March 20, 2014. It goes into effect on April 1, 2014, and requires covered city employers to give workers up to 40 hours of paid sick time per year. However, business advocates fear that the act will not achieve de Blasio’s goal of saving jobs. Some, like council member Vincent Ignizio, predict that the law could force businesses to cut jobs.

Business groups have also expressed concerns with the act’s complicated rules and documentation requirements, like those relating to leave accrual. Small employers without human resources personnel may unintentionally violate the act, and could then be subject to significant fines.

This article explains which employers and employees are covered by the act, discusses employer obligations, identifies penalties for violations of the act and points out aspects of it that are unclear.

Who Is Covered?

The act requires employers with five or more employees to provide paid sick time. NYC Admin. Code §20-913(a)(1) (2014). It defines an “employee” as an individual who works in New York City for more than 80 hours per year, whether on a full-time, part-time or temporary basis. Id. §20-912(f).

With minor exceptions, all employees of covered employers are entitled to paid sick time. Employers are not required to provide paid sick time to “hourly professional employees,” who are defined as physical therapists, occupational therapists, and speech-language pathologists who determine their own schedule, and who earn at least four times the minimum wage. Id. §20-912(j). The act also does not require employers to provide paid sick time to independent contractors.

The act will not apply to employees covered by a collective bargaining agreement (CBA) in effect on April 1, 2014, until the CBA terminates. Thereafter, unionized employees will not be covered by the act as long as their CBA expressly waives the employees’ rights under the act. For unionized employees outside the construction and grocery industries, the CBA must also provide benefits comparable to those provided by the act.

While the statute is ambiguous, it seems that businesses with fewer than five employees may also have obligations. The act states that “[a]ll employees not entitled to paid sick time pursuant to this chapter shall be entitled to unpaid sick time.” Id. §20-913(a)(2). Presumably this provision was intended to apply to an employee of a business with fewer than five employees. If this interpretation is correct, those businesses must allow their employees to take up to 40 hours of unpaid sick time per year.

Accrual of Sick Time

Current employees begin to accrue sick time on April 1, 2014. Employees hired after that date begin to accrue sick time on their first day of employment. Sick time accrues at the rate of one hour for every 30 hours worked, up to 40 hours per calendar year. Employers may determine what consecutive 12 month period constitutes a “calendar year.” Id. §20-912(a).

The accrual rules differ for nonexempt and exempt employees. Nonexempt employees accrue sick time based on the hours they work, though the act is silent on whether paid vacation time or paid holidays count as hours worked. For exempt workers, employers are to assume that they work 40 hours per week for accrual purposes, unless the worker typically works less than 40 hours. In the latter case, sick time accrues based upon the number of hours regularly worked by the exempt employee. Notably, while federal and state labor laws do not require employers to track hours worked by exempt employees, the act effectively imposes that obligation for exempt employees who work fewer than 40 hours per week. However, it would seem that employers could avoid the obligation to track those hours by allowing a part-time exempt worker to accrue sick time as though they worked 40 hours or more per week.

While employers may allow employees to borrow against unearned sick time, the act does not require them to do so.

Although the act does not expressly permit employers to implement “use it or lose it” policies regarding sick time, an apparent drafting oversight may inadvertently permit them. The act allows employers to either pay out unused sick time at year end or to carry it over to the next calendar year. Notably, employers do not have to allow employees to use more than 40 hours of sick time in a year, and do not have to pay out unused sick time at termination. So, employers could permit carry over, but no matter how much sick time an employee carries over, employers do not have to let them use more than 40 hours in a year and do not have to pay out unused sick time when employment ends. In such cases, employees who do not use earned sick time effectively lose it.

If an employer chooses to pay out unused sick time at year end, the act is unclear as to how much paid sick time employees are entitled to at the beginning of the following year. An employer who pays out unused sick time must “provide the employee with an amount of paid sick time that meets or exceeds the requirements of this chapter for such employee for the immediately subsequent calendar year on the first day of the immediately subsequent calendar year.” Id. §20-913(h)(ii). The drafters may have intended this language to require employers to provide 40 hours of paid sick time at the beginning of the year. However, such a requirement would defeat the purpose of the accrual rules. Alternatively, the language may mean that on the first day of the new year, an employee starts accruing one hour of sick time for every 30 hours worked. Given the act’s lack of clarity, and the stiff penalties for noncompliance, employers who choose to pay out unused time at year end should consider giving employees 40 hours of sick time as of the new year.

Whether an employer allows employees to carry over unused sick time, or pays it out, the process should be well documented, and such documentation should be retained for three years.

Employee Use of Sick Time

Current employees may start using sick time on July 30, 2014. Employees hired after April 1, 2014, may begin to use it after four months of employment.

The act requires employers to pay employees if they are absent for reasons that go beyond the employee’s illness. Employees can also use paid sick time: (1) for preventative care; (2) if the employer is closed for a public health emergency; (3) to care for a child whose school or day care is closed for a public health emergency; and/or, (4) to care for the employee’s “family member” who is ill or who needs preventative care.

In the act’s original form, “family member” meant an employee’s spouse, domestic partner or parent, or the child or parent of an employee’s spouse or domestic partner. Under the revised act, “family member” was broadened to include an employee’s sibling, grandchild and grandparent. Id. §20-912(h). “Sibling” includes half-siblings, step-siblings and siblings related through adoption. Id. §20-912(v).

Employees can determine when and how to use sick time, subject to certain limitations. First, where the need for leave is foreseeable, employers may require advance notice of up to seven days. For unforeseeable absences, employers may only require notice “as soon as practicable.” Id. §20-914(b). Second, employers may set a minimum increment of sick time to be used, as long as the increment is four hours or less. Employers should require the maximum increment (of four hours) so employees cannot claim “paid sick time” every time they are a few minutes late.

Documentation

Many employers require employees to produce a doctor’s note in order to be eligible for sick pay. This requirement may run afoul of the act.

For absences of fewer than three consecutive work days, employers may only request “written confirmation that an employee used sick time pursuant to [the act].” Id. §20-914(d). Presumably, as the statute is worded, a note or text from the employee “confirming” that he was out for a permissible reason would be sufficient.

An employer can only require medical documentation after an employee has been absent for more than three consecutive work days. Such documentation can be signed by a “licensed health care provider” (i.e., a doctor, nurse or emergency room personnel) and may only indicate “the need for the amount of sick time taken.” Id. §20-914(c). Employers cannot require that the documentation “specify the nature of the employee’s or the employee’s family member’s injury, illness or condition, except as required by law.” Id. (emphasis supplied). Presumably, to the extent applicable, employers can require information about the “nature” of the condition under other statutes, like the Americans with Disabilities Act and/or the Family and Medical Leave Act.

Liability Under the Act

The act permits employers to discipline employees who use sick time for unauthorized purposes, up to and including termination. However, employers may be subject to significant liability for such discipline if it is deemed retaliatory. For each retaliatory firing, an employer could be liable to the employee for $2,500 and for lost wages and benefits, and could be liable to the city for additional penalties. Reinstatement could also be ordered.

Further, employers may be subject to penalties each time they fail to pay an employee sick time, deny requested sick time, or otherwise violate the act.

Employers with fewer than 20 employees and/or who manufacture certain goods will not be subject to a civil penalty for violations that occur prior to Oct. 1, 2014 (but equitable relief could be ordered).

Regulation and Enforcement

Although not typically charged with enforcing labor laws, the Department of Consumer Affairs will regulate the act. Under the amended act, the department can initiate investigations. It can also hold hearings, assess penalties and monetary damages (like lost pay), and order equitable relief (like reinstatement).

There is no private right of action.

While the act allows employees two years to file a complaint with the department, there is no limit on the department’s time to investigate an employer.

Notice and Record-Keeping

Employers must give workers notice of their rights under the act, including the right to file a complaint with the department. The act requires the department to create the notice; however, as of this writing, the department has not distributed it. The notice must be in English and in the primary language spoken by the employee (provided that the department has provided a translation of the notice in the employee’s primary language).

Employers must maintain records demonstrating their compliance with the act for three years. As well, employers must allow the Department to access the records, with appropriate notice and at a mutually agreeable time.

Revising Policies

Employers who already give employees paid time off sufficient to satisfy the act do not have to provide additional paid sick time. However, because of the act’s detailed requirements regarding the benefit, most employers will have to revise their policies to ensure compliance, even if they already pay employees for 40 hours off or more. For example, policies must allow employees to accrue paid sick time at the rate specified in the act (or earlier).

Ellen R. Storch is a partner in the Woodbury, N.Y., office of Kaufman, Dolowich & Voluck. Leslie M. DiBenedetto, an associate at the firm, assisted in the preparation of this article.

LOAD MORE
Practice Area(s):