prescription for a solution: critical issues in paid sick ... · montclair, nj morristown, nj...

Jill Lowell & Adam Fiss

June 2018

Prescription for a Solution:

Critical Issues in Paid Sick Leave Compliance

Presented By

Jill Lowell

Shareholder, Rochester

[email protected]

585.203.3405

Adam Fiss

Shareholder, San Jose

[email protected]

408.795.3438

© Littler Mendelson, P.C. | 2018 Proprietary and Confidential

• Paid Sick & Safe Time Laws Generally

• Universal Policies

• Unlimited Policies

• High Risk Areas You Should Focus On & How Scared You Should Be

• Proposed Federal Exemption Under ERISA

• Available Resources

Today, we will be discussing…

Paid Sick & Safe

Time 101


Current Status of Paid Sick Leave Laws

TX

OR ID

MT ND

WY

SD

NV UT

AZ

CO

NM

AK

HI

OK

KS MO

NE

MN

WI

IA

IL IN

AR

LAMS

FL

ALSC

TN

KY

OH

ME

NY

PA

WV

NC

VA MDDC

DE

NJ

NH

MARI

CT

Bloomfield, NJ

East Orange, NJ

Elizabeth, NJ

Irvington, NJ

Jersey City, NJ

Montclair, NJ

Morristown, NJ

Newark, NJ

New Brunswick, NJ

Passaic, NJ

Paterson, NJ

Plainfield, NJ

Trenton, NJ

Seattle, WA

Sea-Tac, WA

Spokane, WA

Tacoma, WA

New York, NY

Philadelphia, PA

Pittsburgh, PA

Washington, D.C.

WA

• States with Mandatory

Paid Sick Leave

Requirements

• Counties with

Mandatory Paid Sick

Leave Requirements

• Cities with Mandatory

Paid Sick Leave

Requirements

• Federal Contactors

with Paid Sick Leave

Requirements

Montgomery County, MD

Minneapolis, MN

St. Paul, MN

VT

CA

MI

GA

Berkley, CA

Emeryville, CA

Long Beach, CA

Los Angeles, CA

Oakland, CA

San Francisco, CA

San Diego, CA

Santa Monica, CA

Chicago, IL

Cook County, IL


Current Status of Paid Sick Leave Laws

CA

ID

MT

WY

SD

COKS MO

NE

MN

WI

MIIA

IL IN

AR

LAMS AL

GA

SC

TN

KY

OH

ME

WV

NC

VA MDDC

DE

NJ

NHRI

CT

Seattle, WA

Sea-Tac, WA

Spokane, WA

Tacoma, WA

New York, NY

Philadelphia, PA

Pittsburgh, PA

• States with Mandatory

Paid Sick Leave

Requirements

• Counties with

Mandatory Paid Sick

Leave Requirements

• Cities with Mandatory

Paid Sick Leave

Requirements

• Federal Contactors

with Paid Sick Leave

Requirements

WA

OR

NV UT

AZ NMOK

TX

NY

ND

PA

MA

FL

AK

HI

Washington, D.C.

Montgomery County, MD

VT

Chicago, IL

Cook County, IL

Minneapolis, MN

St. Paul, MN

Berkley, CA

Emeryville, CA

Long Beach, CA

Los Angeles, CA

Oakland, CA

San Francisco, CA

San Diego, CA

Santa Monica, CA

Bloomfield, NJ

East Orange, NJ

Elizabeth, NJ

Irvington, NJ

Jersey City, NJ

Montclair, NJ

Morristown, NJ

Newark, NJ

New Brunswick, NJ

Passaic, NJ

Paterson, NJ

Plainfield, NJ

Trenton, NJ


• “There’s a 50-state solution for this”

• “You can give the employer your latest and greatest template”

• “This won’t take long. Only 30 minutes, right?”

• There is a definitive [or quick] answer to the employer’s question(s)

• The policy only requires a few tweaks

Fact or Fiction?


• Where are your employees located?

• How many employees are located in each jurisdiction?

• Are you a federal contractor? When were these contracts entered into? What do they cover?

• Which types of benefits are offered?

• How much paid time off do you provide?

• Do benefits accrue or are they frontloaded?

• When is someone eligible to receive benefits?

– Job classification

– At what point in employment?

• When can benefits start to be used?

• For what purpose(s) can the benefits be used?

• In what increment(s) can the benefits be used?

Just An Illustration: How Complicated Is It?

(Legal Considerations)


• Stakeholder concerns

• Different challenges

– Multiple businesses or units

– Different employee populations

– Attendance

– Different recruiting / tenure / retention issues

• Historical practice(s)

Just An Illustration: How Complicated Is It?

(Company Considerations)


• Accrual Rate: The amount of sick leave accrued per hour worked

• Annual Accrual: The maximum amount that can be accrued in a

year

– Not all laws place a limit on how much can be accrued in a year

• Maximum Bank / Floating Bank: A maximum amount that an

employee may have banked for use at any given time; when an

employee reaches this maximum amount, they will stop accruing

further leave until some is used

• Frontloading: Providing a lump-sum of paid sick leave at hire and

the start of each benefit year thereafter

• Use Cap: Maximum amount of paid sick leave that can be used in

a year

Definitions

Universal Policy


• Accrual with Caps

– Can you systems handle varying caps?

– Use Cap vs. Bank Cap vs. Carry-Over Cap

• Frontloading

– Some laws require carry-over regardless

– Some laws don’t expressly allow frontload

Universal Policy: One Size Fits All

Paid Sick & Safe

Time Challenges:

Accrual Caps

© 2018 Littler Mendelson P.C. Proprietary and Confidential

Adding Insult to Injury:

Varying Use Amounts

40 24 48 72 40 + 20 64

60 80 100 32 60 + 40

NO LIMITWhat is accrued and available

© 2018 Littler Mendelson P.C. Proprietary and Confidential

Adding More Insult to Injury:

Varying Carryover Amounts

40 24 48

72

20 but

could be 40

6480

56

NO LIMIT7 days


• Not all laws are the same – there are differences between:

– Reasons for use

– Documentation / verification

– Reinstatement upon rehire requirements

– Notice provisions

– Rate of pay

– Which classifications of employees will be covered

Universal Policy: How Generous?


• A universal PTO policy that includes sick

time is difficult

• Tension between state law on vacation/PTO and the

various paid sick leave rules

– Different rules on pay out upon termination

– Different rules on use-it-or-lose-it

– Different rules on carry-over

– Rules regarding reinstatement upon rehire

Another Consideration: PTO vs. Sick Only


• California & Illinois: An amount not less than what would be accrued in a 6-month period

• Maryland: Can use earned paid leave to attend to the illness of a child, spouse, or parent

• Massachusetts: Paid leave can be used for a child’s or elder relative’s medical appointment or another appointment related to the elder’s care

• Minnesota: No less than 160* sick leave hours in a 12-month period can be used for relatives’ illness or injury, or for reasons connected to sexual assault, domestic abuse, or stalking

• Texas: If sick leave can be used for a biological or adoptive child, it can also be used for a foster child

• Washington: Sick or “other paid time off” may be used to care for family members

An Additional Ailment: Kin Care Laws


• Georgia: Up to 5 sick days may be used to care for family members

• Maine: Up to 40 sick hours may be used to care for family members

• Vermont: Accrued paid leave can be used to accompany a covered relation to medical or professional services appointments and/or responding to a medical emergencies

An Additional Ailment: Kin Care Laws


• While not all PSL laws are created equal, many have some common dominators:

– 1 for 30 accrual rate

– An accrual cap of 40 hours

– A carryover cap of 40 hours

– A use cap of 40 hours

– Limit use to one’s own illness,

– No payout at termination

One Size Fits Most?


• Reporting

• Posting

• Notice requirements

• Tracking requirements

With Any Approach – the Devil Is in the Details


• Many jurisdictions require employers to report on

paid sick leave to employees

– Most are each time wages are paid (some

monthly, quarterly, or on demand)

– Paystub (or some allow electronic portal 24/7)

– Most only require amount of paid leave

available for use

• Some amount accrued or reduced

Employer Reporting Requirements


• Employer failed to provide notice to employees about their rights under the law

• Enforcement agency assessed a $60,000 penalty

Notice Violation


• Why Important?

– If you don’t get it right, you now have paid

the employee incorrectly

– This is not just a PSL violation, but also a

wage & hour violation

– Failing to pay correct amount may trigger

late payment of wages penalties

Calculating the Rate of Pay

25


• Methods for calculating differ across jurisdictions

– Base rate of pay (if base wage is minimum wage or higher)

– Rate in effect

– Blended rate of pay

• Calculations aren’t just different – they are difficult too!

– Especially if you have incentives as a pay component

– Puts a stress on your payroll systems and staff

Calculating the Rate of Pay:

It’s Not Just “The Regular Rate”

•


• Employer said it was not aware of a detail in an ordinance dictating how

salespeople who worked on commission were to be paid when they took paid

sick & safe time

• Enforcement agency investigated and employer agreed to pay employees

the difference between how pay was – and should have been – calculated

when leave was used

Case Study: Commissioned Salespeople


• Aggrieved employee claims that employer failed to provide required notice of

PSL

• Employee seeks compensatory, special, and general damages, & civil and

statutory penalties for paystub violations, under the PSL law, and under PAGA,

along with fees, costs and interest

• Employer files a motion to dismiss the PSL related claims, including PAGA

Case Study: Private Attorney Generals Act (PAGA)


Important Outcomes

• No private right of action for failure to provide employee with amount of PSL information on a wage statement or other writing (under the PSL law)

• No right to seek paystub violation penalties under Labor Code 226 because PSL prohibits this

• No PAGA action based on failure to provide notice in paystubs -- PAGA suit not permitted for violations of “notice” provisions, except for a narrow category of government-required reporting or filing

*But Note: Only 2 federal cases have come out this way. There are no state cases yet. It’s a matter of time before someone does a deeper dive and makes new arguments.

Case Study: Private Attorney Generals Act (PAGA)

Location Specific

Policies


• Pros

– Provides the minimum required by each law so cost savings when compared to other

approaches

– Simple policies that track legal requirements

– Clear guidelines for managers

Standalone Sick Leave Policies


• Cons

– Administrative nightmare

• Not all timekeeping and payroll systems allow for 40+ variations to account for

different sick leave requirements

• Need to create 40+ policies

– Difficult to track employees who relocate to another location

– More and more laws are being enacted

Standalone Sick Leave Policies

prescription for a solution: critical issues in paid sick ... · montclair, nj morristown, nj...

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