Legal Insights

New Jersey Paid Sick Leave Law Takes Effect

November 7, 2018
By: Andrea M. Kirshenbaum and Benjamin S. Teris

On October 29, 2018, the New Jersey Earned Sick Leave Law (Sick Leave Law) took effect. New Jersey joins nine other states, including California, Massachusetts, and Vermont, with mandatory paid leave laws - no comparable federal law exists. The Sick Leave Law applies to all employers with employees in New Jersey, regardless of size.

Employers with New Jersey operations will need to ensure that they have begun tracking their employee’s hours for accrual of leave in accordance with the new law (presuming they chose not to advance employees 40 hours of sick leave).

Under the Sick Leave Law:

• Employees accrue one (1) hour of earned sick leave for every thirty (30) hours worked, for a maximum of forty (40) hours of earned sick leave per year. Leave begins to accrue on the Law’s effective date (October 29, 2018).
• Employees may use their earned sick leave 120 days after they commence employment or, if already employed as of the effective date of the Law, on February 26, 2019. Alternatively, employers may advance employees forty (40) hours of earned sick leave to use throughout the benefit year.
• Employers must pay employees using earned sick leave at the same rate of pay as employees normally earn.
• Employees may carry forward up to forty (40) hours of their earned sick leave at the end of the benefit year or have it purchased by their employer.
• Employers must maintain records regarding hours worked and earned sick leave time used.

Excluded from the Sick Leave Law are public employees who already receive sick leave benefits, employees who work in the construction industry who are employed under a collective bargaining agreement, and per diem healthcare employees. New Jersey residents who work out of state are likewise ineligible. Employers with preexisting paid time off (PTO) policies may continue with those policies so long as they meet or exceed the requirements of the Sick Leave Law—including buyback, carry forward, and recordkeeping. There is no requirement for employers to compensate employees for unused sick leave upon separation of employment.

The New Jersey Department of Labor and Workforce Development (Department) has promulgated regulations and issued a list of frequently asked questions that provide guidance to employers to assess compliance with the Law.

Proposed Regulations

On September 13, 2018, the Department proposed regulations to implement the Sick Leave Law. The proposed regulations contain definitions and clarify several issues, including notification requirements, accrual methods, limits on use, payout, recordkeeping requirements, and penalties for violations. A public hearing on the proposed regulations is scheduled for November 13, 2018. Any written comments on the proposed regulations must be submitted by December 14, 2018.

Notification

Employers must conspicuously post notice of the Law at all New Jersey worksites in a form published by the Commissioner of the Department (Commissioner) by November 29, 2018. The required notice is available at:

https://nj.gov/labor/forms_pdfs/mw565sickleaveposter.pdf

Accrual

The proposed regulations clarify several issues concerning the accrual of earned sick leave, including:

• If an employer does not record an exempt employee’s hours (either under the Fair Labor Standards Act (FLSA) or New Jersey Wage and Hour Law (NJWHL)), the employer must either record the employee’s hours for purposes of calculating earned sick leave accrual or presume that the employee works forty (40) hours per week.
• Employees who are transferred to a different work location in New Jersey retain all earned sick leave they have already accrued.
• Employees who are separated from an employer (termination, layoff, etc.) for a period of six (6) months or less must receive all unused sick leave that they had accrued prior to their separation upon rehire or reinstatement.
• If a successor employer takes the place of an existing employer (e.g. through a purchase or merger), employees of the predecessor employer retain all earned sick leave accrued while working for the predecessor employer.

Limits on Use

The reasons an employer must allow employees to use earned sick leave under the proposed regulations are as follows:

• For diagnosis, care, or treatment, or recovery from a mental or physical illness or other adverse health condition;
• For preventative medical care for the employee;
• To provide aid or care to a family member for medical issues;
• For absence due to the employee or employee’s family member being a victim of domestic violence;
• For closure of the employee’s workplace or the employee’s child’s school or place of care due to a public health emergency; and
• To attend a required school-related conference, meeting, or event related to the employee’s child.

The proposed regulations also clarify when an employer can require advance notice from an employee for “foreseeable leave,” which is defined as “when the employee is able to predict or know in advance that he or she will need to use earned sick leave, such as a scheduled doctor’s visit, a regularly occurring medical treatment, or regularly scheduled therapy appointment.” Even where the employee’s leave is not foreseeable, the employer may require an employee to provide notice as soon as practicable (similar to what is required under the Family and Medical Leave Act).  

Recordkeeping

The proposed regulations state that employers must retain records for all eligible employees for a period of five (5) years, documenting:

1. Hours worked;
2. Earned sick leave accrued or advanced;
3. Earned sick leave used, including payment to the employees;
4. Buyback of any unused earned sick leave at the end of the benefit year; and
5. Earned sick leave carried over to the subsequent benefit year.

The recordkeeping requirement for hours worked does not apply to employees who are exempt under the FLSA or NJWHL and for whom employers either advance earned sick leave or for whom employers choose to presume work forty (40) hours per week. The records must be available for inspection by the Commissioner “at any reasonable time.”

Independent Contractors

Independent contractors are not considered employees under the Sick Leave Law. The proposed regulations provide that independent contractor status should be determined in accordance with the criteria identified in the Unemployment Compensation Law, commonly referred to as the “ABC test.” Under the ABC test, a worker is an independent contractor if the worker is free from control and direction of the employer in the performance of his or her work, the work performed by the worker is outside the usual course of business of the company, and the worker is customarily engaged in an independently established trade, occupation, or business.

Violations

The proposed regulations also provide that employers can be penalized for failing to make or maintain the required records, falsifying records, failing to comply with the Commissioner, and any other violation of the Sick Leave Law or regulations. Employers are prohibited from retaliating or discriminating against employees who exercise their rights under the Sick Leave Law.

Employers face a $250 penalty for their first violation of the Law and a $250 to $500 penalty for a second or subsequent violation. Employers who knowingly or willfully violate any provision of the Sick Leave Law or regulations face a $100 to $1,000 fine and/or a term of imprisonment of ten (10) to ninety (90) days. A second or subsequent knowing or willful violation will result in a $500 to $1,000 fine and/or a term of imprisonment of 10 to 100 days. If an employer is required to provide backpay to an employee, the employer must pay administrative fees in the amount of ten (10) percent of the back pay award for the first violation, eighteen (18) percent for the second violation, and twenty-five (25) percent for the third or subsequent violation. Every day on which any employee is not provided earned sick leave under the Sick Leave Law constitutes a separate offense. The regulations provide a hearing procedure prior to the issuance of any penalties.

Frequently Asked Questions

The Department released a comprehensive list of frequently asked questions (FAQs) to provide employers guidance on the Sick Leave Law. Of particular note for employers with employees who work both in and out of New Jersey, the FAQs provide direction on who is and who is not covered by the Sick Leave Law. According to the FAQs, the eligibility for such employees depends on how much time they spend working in New Jersey. If an employee routinely performs work in New Jersey and the employer’s headquarters is in New Jersey or the employee’s work is directed from a New Jersey location then the employee must receive earned sick leave under the Sick Leave Law. It is anticipated that the Department of Labor and Workforce Development will promulgate additional regulations to clarify this issue.

The FAQs are available at:

https://www.nj.gov/labor/forms_pdfs/lwdhome/Legal/earnedsickleave.pdf

As noted, to the extent employers with New Jersey operations have not done so already, they should ensure that they have begun tracking their employee’s hours for accrual of leave in accordance with the Sick Leave Law (presuming they chose not to advance employees 40 hours of sick leave).

Employers with existing PTO policies are not exempt and if employees accrue PTO on their hiring anniversary under an existing policy, the policy must be revised so that PTO accrues for all employees annually on a designated benefit year. It is unclear when employers may be subject to an audit for compliance with the Sick Leave Law, however, violations, including recordkeeping deficiencies, can result in penalties that employers will certainly want to avoid.

If you have any questions about New Jersey’s Earned Sick Leave Law, contact Andrea M. Kirshenbaum, Chair of the Firm’s Wage and Hour Practice Group (akirshenbaum@postschell.com), Benjamin S. Teris, Associate in the Firm’s Employment & Employee Relations and Wage and Hour Practice Groups (bteris@postschell.com), or any member of the Firm’s Employment & Employee Relations Practice Group.