United States: Does That Law Apply To Me? Sick Leave Laws Raise Questions For Out-Of-State Employers

Last Updated: February 6 2018

Authored by Holly Jones

Maryland is now the ninth state to have enacted a paid sick leave law. Effective February 11, 2018, the Healthy Working Families Act became law as the result of a veto override, which understandably means there are still a few details related to the law's enforcement and implementation to be ironed out. In fact, Maryland Governor Larry Hogan promptly created, by Executive Order, a Small Business Regulatory Assistance office to smooth the transition and help Maryland employers comply with the new law.

Yet, while Maryland officials work to draft sample policies and notices, and while other states wrestle with their own legislative developments, an increasingly-common question arises from employers outside the enacting state: "Does this law apply to us"?

The New Normal

It's one thing to be uncertain how a law applies, but it used to be a rare occasion to be uncertain whether a law applies to you in the first place. If you were a California employer, then California employment law applied. If you were a Texas employer, then Texas law applied. Sure, New York employers might have workers travel in from New Jersey to perform work, but they were still confident in their status as New York employers subject to New York employment laws.

Yet, now geographic boundaries simply aren't sufficient. I may be a Tennessee business, yet my employees may be residing in and, most notably, working from six different states.

Fortunately, lawmakers are becoming more aware of the increasingly multistate nature of work and business, drafting laws to specifically explain, "This law only applies to businesses with geographic boundaries in the state of Rhode Island" or "These rights extend to any worker who works a minimum of 20 hours per week in the geographic boundaries of the city."

But this is not always the case, and the new Maryland law is one such circumstance.

Which 15 Employees? From Where?

Specifically, Maryland's new law requires:

  • An employer that employs 15 or more employees to provide an employee with earned sick and safe leave that is paid...
  • An employer that employs 14 or fewer employees to provide unpaid earned sick and safe leave.

For many employers, this will be a reasonably clear requirement. Either you have 15 employees or you don't, right? But:

  • What if you are a Minnesota employer, yet you have one employee working remotely from Maryland? You aren't a Maryland employer, yet the law applies to employers "with 14 or fewer employees." Does your one employee who, arguably, is working in Maryland mean you are subject to the law? If so, how do you count your employees?
  • What if you are a Maryland employer with 12 workers in state, yet you have three remote workers in Delaware? In this case, it's clearer that the paid sick leave law applies to you—after all, you are a Maryland employer—but do you have 15 employees or not?

Unfortunately, the law as drafted does not clearly answer these questions. "Employer" is defined broadly—in fact, the text of the law only notes that employer includes (1) a unit of state or local government; and (2) a person that acts directly or indirectly in the interest of another employer with an employee.

Well, OK, then.

The law does provide some exemptions for employees—for example, independent contractors are not considered employees, nor are workers under the age of 18. But the law, as drafted, still does not include any other explicit exceptions, exemptions, or compliance guidance for employers not headquartered in Maryland.

Fortunately, this may simply be an oversight in this particular law. In other comparable Maryland laws, the law generally does define how "employer" will be interpreted. For example, the Healthy Retail Employee Act specifies that "employer" means a person engaged in a retail establishment business in the state. Similarly, the state's law relating to adoption leave specifies that "employer" means a person engaged in a business, industry, profession, trade, or other enterprise in the state.

It is possible that the Healthy Working Families Act was intended to include similar language but, unfortunately, as the Act was drafted and passed, it does not. As a result, it is unclear whether the law is intended to cover employers who are not headquartered in Maryland, but who may have as few as one worker within the geographic boundaries of the state.

Agency Guidance

For additional assistance, we reached out directly to the aforementioned Maryland Small Business Regulatory Assistance department. While the department was able to helpfully confirm that the Act is meant to apply only to Maryland employees, the department also confirmed that the extent to which the law may apply to scenarios such as the two examples above is uncertain and will have to be addressed in future guidance.

Best Practices

Meanwhile, employers should note that the Maryland law, as with most other comparable state sick leave laws, does provide exceptions for employers with existing leave policies that are at least equivalent (in accrual and reasons for use). So, if an organization with 15 or more employees already provides paid leave that meets the minimum amount granted under this law and that can be used for the reasons permissible by this law, then the employer is not required to offer additional leave.

Finally, though the current effective date is February 11, there are efforts underway to delay the effective date of the law for another 60 to 90 days in order to allow some of these questions to be resolved, to develop sample policies, and to complete other implementation actions.

Bottom Line

As remote work and telecommuting have become more common, these types of cross-border inquiries are increasingly common. Unfortunately, few state laws are drafted with this sort of remote work in mind, so the requirements are often unclear.

It is increasingly important for state legislators to understand that, to their residents and voters, "employer" doesn't always mean a physical brick and mortar entity in the geographic boundaries of the state. Meanwhile, the best way for legislators and labor departments to understand this need is through questions and feedback from their constituents and affected employers.

Questions on the Maryland law can be directed to the Office of Small Business Regulatory Assistance at Small.Business@Maryland.gov. The Office will also be hosting a public comment period to help address employer concerns such as these.

When similar issues and questions arise in other states, alerting the appropriate Departments of Labor of these issues can be incredibly helpful in ensuring that appropriate guidance and consideration is made available to multi-state employers when these laws are initially proposed and drafted.

And, of course, we will keep you posted as additional guidance is made available on the Maryland law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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