United States: New Jersey Passes Paid Sick Leave Law

On May 2, 2018, New Jersey Governor Phil Murphy signed into law Assembly Bill No. 1827, the long-awaited, statewide Paid Sick Leave Law, which follows a wave of paid sick leave ordinances enacted by numerous cities and municipalities throughout the State of New Jersey over the last few years. New Jersey is the 10th state to pass legislation requiring employers to provide paid sick leave to employees. New Jersey's Paid Sick Leave Law will take effect on October 29, 2018.

Covered Employees

New Jersey employers have had wide latitude for a long time with regard to establishing the policy and practice for payment of sick leave, unless governed by a municipal or city ordinance mandating such leave. Effective October 29, however, all employees, full-time and part-time, will be eligible for paid sick leave, with the following limited exceptions:

  • Persons performing construction services pursuant to a collective bargaining agreement;
  • Per diem healthcare workers; and
  • Public employees who are provided sick leave with full pay pursuant to any state law, rule or regulation.

Employer Requirements

The Paid Sick Leave Law applies to all employers, regardless of size, and requires that employers provide employees with a maximum of 40 hours of paid sick leave per year. Employers can choose whether to subscribe to the minimum accrual method set forth in the statute or an accrual method that is more favorable to employees, or employers may allot the full amount of paid sick leave to staff the first day of a "benefit year" (meaning a consecutive 12-month period chosen by the employer). Under the accrual method, employees1 will accrue paid sick leave from their start date at a rate of one hour for every 30 hours worked up to the 40-hour maximum. Paid sick leave shall be payable at the employee's regular rate of pay.

Waiting Period

While employees begin to accrue paid sick leave from day one on the job, they are not eligible to use paid sick leave during the first 120 calendar days of their employment, unless authorized by the employer.

Use of Paid Sick Leave

Employers may establish the increments in which paid sick leave can be used (such as one-hour increments, half day, etc.), so long as the increment does not exceed the employee's scheduled work hours on any given day.

Under the Paid Sick Leave Law, an employee can use paid sick leave for the following reasons:

  • To care for, treat, or recover from the employee's own mental or physical illness, injury or condition, or to obtain preventive medical care;
  • To care for a covered family member during diagnosis or treatment of, care for, or recovery from a mental or physical illness, injury or condition, or to obtain preventive medical care for the family member;
  • For certain absences from work that are necessary due to domestic or sexual violence against the employee or the employee's covered family member;
  • For time an employee is unable to work due to the closure of the employee's workplace or a child's school or place of care because of a public health emergency or a determination that their presence jeopardizes the health of others; or
  • For time needed for an employee to attend a child's school-related conference or any meeting requested by a school administrator.

Carry Over of Paid Sick Leave

When employers utilize the accrual method for earning paid sick leave, employees can carry over up to 40 hours of unused, earned paid sick leave from one benefit year to the next, unless the employer offers to pay employees for unused, earned sick leave in the final month of the employer's benefit year. If an employer offers payment for unused, earned sick leave, employees have the option to accept or decline the offer within 10 days. If an employee chooses to accept the payout of sick leave time, the employee has the option to be paid for 50 percent or 100 percent of the unused, earned sick leave. If the employee opts to be paid for 100 percent of the unused, earned sick leave, the employee is not entitled to carry over any paid sick leave. If the employee declines payment or agrees to payment of 50 percent of the amount of unused sick leave, the employee is entitled to carry over the balance of unused and unpaid, earned sick leave, subject to the 40-hour maximum per year.

Employers who forego the accrual process and instead provide employees with the full complement of earned sick leave on the first day of the benefit year have the option to pay employees in full for the amount of unused, earned sick leave in the final month of the employer's benefit year or carry forward any unused sick leave to the next benefit year, subject to the 40-hour maximum per year. Employers who exercise either of these options at the end of a benefit year must forgo using the accrual process for earned sick leave during the next benefit year. The Paid Sick Leave Law is clear that employers cannot change the benefit year or alter the method of accrual of paid sick leave in a way that prevents the accrual or use of paid sick leave by an employee.

Employee Notice Requirements and Documentation

Where the need for paid sick leave is foreseeable, employers may require employees to provide seven days' advance notice; otherwise, employees must provide notice as soon as practicable. Employers are permitted to deny requests for paid sick leave on "certain dates" (an undefined term under the statute) and may require documentation justifying the use of paid sick leave for three or more consecutive days.

Employer Notice, Posting and Record-Keeping Requirements

Employers must provide notice to employees of their rights under the Paid Sick Leave Law in the form issued by the Commissioner of the New Jersey Department of Labor and Workforce Development (NJDOL). This includes conspicuously posting the notice in the workplace and providing written notice to employees: (1) no later than 30 days after the date the notification is issued; (2) at the time an employee is hired; and (3) upon request by an employee. Employers should provide the notice in English, Spanish or any other language that is the first language of a majority of the employer's workforce. We await the NJDOL's publication of the required notice.

Employers must maintain records of all hours worked by employees and paid sick leave used by employees for at least five years. If an employee makes a claim under the Paid Sick Leave Law and the employer fails to maintain or retain adequate records, there is rebuttable presumption that the employer violated the law.

Treatment of Paid Sick Leave Upon Termination, Reinstatement or Acquisition

Employers are not required to pay employees for any unused, earned paid sick leave at their time of separation from employment, unless required by employer policy or a collective bargaining agreement. It is advisable that employers clearly communicate their policy in writing regarding payment of sick leave upon termination and enforce the policy uniformly. If an employee is rehired within six months after separation from employment, the employer must reinstate any unused, earned sick leave that the employee had at the time of separation and must count the prior employment with the employer toward meeting the eligibility requirements for use of paid sick leave. Further, an employer that acquires another company and hires its staff must allow employees to retain all unused, earned paid sick leave accrued as of the date of the acquisition.

Prohibition on Retaliation

An employee's use of paid sick leave for any of the reasons stated above is considered "protected leave," and employers are prohibited from retaliating against an individual for taking protected leave, meaning the employee cannot be subject to discipline to using paid sick leave and cannot have an absence properly designated as paid sick leave counted as a violation of the employer's attendance policy. Employers are permitted to take disciplinary action against any employee who uses earned sick leave for purposes other than those permitted by the Paid Sick Leave Law.

Significantly, employers will be presumed to have engaged in unlawful retaliation if they take adverse action against an employee within 90 days of the employee:

  • Filing a complaint alleging discrimination or retaliation under the law;
  • Informing any person about an employer's alleged discrimination or retaliation under the law;
  • Cooperating with an investigation or prosecution of the employer's alleged discrimination or retaliation under the law;
  • Opposing any policy, practice or act that the employee believes in good faith constitutes discrimination or retaliation under the law; or
  • Informing any person of his or her rights under the discrimination or retaliation provisions of the law.

Penalties for Violations

Under the Paid Sick Leave Law, employees have a private right of action and may file suit in court to enforce their rights under the law. Employees can seek actual damages suffered as a result of any violation of the Paid Sick Leave Law, plus an equal amount of liquidated damages, as well as court costs and attorneys' fees. The Commissioner of the NJDOL will oversee enforcement of the Paid Sick Leave Law and has the authority to investigate violations, hold hearings and impose penalties of up to $250 for a first violation and $500 for each subsequent violation of the law.

What This Means for Employers

New Jersey employers should review their current paid time off policies, including combination paid time off policies that cover personal, vacation and sick days, to determine if they meet the requirements of the Paid Sick Leave Law. Given that the statute contains ambiguities that will require interpretation or further clarification through regulations, employers should confer with counsel concerning compliance with the requirements of the Paid Sick Leave Law before the effective date of October 29, 2018. In particular, policies must address accrual and carryover, the circumstances in which sick leave may be used, as well as whether unused, earned sick leave will be paid out upon termination of employment.

Employers must also ensure that they comply with the record-keeping and retention requirements discussed above. Failure to do so will have adverse consequences to the employer. Additionally, employers should consider training managerial employees on the specific details of the Paid Sick Leave Law. This is especially important given the rebuttable presumption of retaliation under the law if an employer takes adverse action against an employee within 90 days of the employee's exercise of certain protected outlined above.

For Further Information

If you have any questions about this Alert, please contact any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Footnote

1. The Paid Sick Leave law does not distinguish between exempt and non-exempt employees for purposes of accrual. Thus, unlike sick leave laws in other states, there is no presumption that exempt employees work 40 hours per week.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

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