Since New Jersey’s paid sick leave law (which allows employees to earn up to 40 hours of paid leave) was signed a little over a month ago, one question keeps popping up: If I have an existing paid time off (PTO) policy, will it need to be changed? The answer is, it depends.
Here’s a little background.
NJBIA was able to get a significant change to the law that permits existing paid time off (PTO) plans to satisfy the law’s requirements, even if the policies don’t specifically designate sick time and instead lump it into one time-off bank. That was a huge victory. As a result, employers now have a choice to make before the law takes effect on Oct. 29: leave their existing policies alone; establish a separate leave bank specifically for sick leave provided in the new law; or bring an existing policy into compliance.
As you evaluate which is the right decision for your business, here are a few things you should consider.
To be in compliance with the law, your policy must allow your employees to earn at least one full hour of time for every 30 hours worked until they reach at least 40 hours for the year. To make your accounting easier, you may “frontload,” or award the full 40 hours at the beginning of your benefit year.
If you’re like many employers, you have a “use-it-or-lose-it” policy, where employees may not carry over any accrued, unused time off from year to year, or your carryover is limited to a certain number of hours or days.
Learn more about paid sick leave at NJBIA’s Hard Decisions, Hot Topics and Your Legal Questions on July 11.
To comply with the law, your PTO policy must allow employees to carry over at least 40 hours per year. (Although the law does not require you to permit an employee to use more than 40 hours in one benefit year.) The alternative is that you can offer to payout your employees for their unused time. With this option, your employee can choose whether to be paid out for their full amount of unused sick leave or for 50 percent of it. If your employee declines a payout entirely or agrees to only be paid for 50 percent of their unused leave, they would still carry over the balance.
Call Out & Discipline Procedures
Once an employee earns paid sick leave and uses it for a valid reason, it is illegal for you to count that absence toward them getting disciplined, demoted, suspended or terminated, at least in most cases. That means you cannot discipline an employee who does not give you advanced notice or does not find their replacement (even for shift work). Remember, notice only has to be provided “as soon as practicable” under the law.
In addition, with limited exceptions, you cannot require a doctor’s note from an employee unless the employee is out for more than three consecutive days.
Uses of Sick Leave
Under the law, paid sick leave must be available for more instances than just when an employee actually is sick, like parent-teacher conferences. Likewise, your employees must be able to take it for a broad range of relatives, including anyone whose close association with them is the equivalent of a family relationship.
Since many sick leave policies do not cover as many relationships or give as many options for taking leave as the law provides, some employers have considered just applying vacation time to fill in the gaps. Debatably this makes another case for just adopting one time-off bank. However, as we discuss below, the recordkeeping provisions included in the law could make that difficult unless the New Jersey Department of Labor & Workforce Development includes some clarifying language in the regulations to address the issue. We are hopeful this will be the case.
The law requires you to keep records documenting the hours worked and the paid sick time earned and used by each of your employees for at least five years. In the example we give above, it could be difficult to keep track of when an employee uses vacation time for a reason covered under the sick leave law.
Similarly, if one bank is established, you would have to ask the reason for the time off to ensure you were properly recording the use of the paid sick leave. Keeping track of it is important because if your employee claims you did not provide the paid sick leave they were entitled to and you do not have the necessary records, it’s assumed you did not provide the leave.
Need a deeper dive? Attend our seminar covering paid sick leave on July 11th. You can register by clicking here.