The Accrued Sick and Safe Leave Act of 2008 ("Act") requires D.C. employers to provide employees with paid sick days to care for themselves or their family members and with access to paid leave for work absences associated with domestic violence or abuse. Specifically, the Act provides each worker employed for a 12-month period with three to seven days of paid sick leave, depending on the size of the employer. The Act also requires employers to post the Act's provisions in a "conspicuous place" that is accessible to employees.
On June 19, 2013, the Office of the District of Columbia Auditor ("ODCA") released its first audit of the Act. The ODCA conducted this audit from fiscal year ("FY") 2008 through FY 2013, as of November 1, 2012. The Act is administered by the Department of Employment Services ("DOES"). For purposes of the audit, the ODCA reviewed official documents, including DOES rulemakings, correspondence between the DOES and employers, employee complaints and investigations, unannounced site visits and questionnaires of business owners, and the policies and procedures of the District of Columbia Department of Human Resources for intermittent employees. Additionally, the ODCA conducted interviews with business owners and other relevant representatives.
The ODCA acquired all of this information to meet the following objectives of the audit:
to determine the level of employer compliance with the Act's posting requirements;
to determine whether the administration of the Act by D.C. agencies was consistent with the requirements of the Act; and
to assess the economic impact of the Act on the private sector.
The ODCA made recommendations for improvement based on the results of those findings. Agency response to those recommendations varied, but all evidenced resolve to ensure compliance. Additionally, the DOES took action to finalize the hardship exemption rules for employers in response to the audit. However, the future applicability of the exemption still remains uncertain.
Audit Findings and Recommendations:
1. Compliance with the Posting Requirement
As set forth above, the Act requires all D.C. employers to post a notice of the Act's provisions in a conspicuous place. The Act provides for a penalty of $100 for each day that the employer fails to post the notice, not to exceed $500. The notice informs employees of the employer's obligation to provide paid leave, the eligibility requirements for employees, the number of hours an employee can accrue, and how to file a complaint.
To determine compliance, the ODCA conducted unannounced inspections of 161 businesses spread throughout each ward of the District of Columbia, including restaurants, banks, grocery stores, barber shops, nail salons, auto parts stores, dry cleaners, and convenience stores. Of the 161 businesses inspected, the ODCA found that 91 percent complied with the posting requirement. Additionally, the ODCA found that, since the Act took effect, only two complaints have been filed with the DOES. The ODCA, however, explained that these findings should not create the assumption that employers are actually providing paid sick leave because posting alone does not show that leave is actually being paid. Thus, the ODCA recommended that the DOES "(e)stablish a process to review employer compliance with the provisions" of the Act. The ODCA also recommended that the D.C. Council amend the Act to require employers to retain records documenting hours worked by employees and paid sick leave taken by employees, and provide the ODCA with access to such records.
2. Economic Impact on the Private Sector
The ODCA assessed whether the Act encouraged business owners to move their businesses from the District of Columbia or discouraged business owners from establishing businesses in the District. A total of 800 D.C.-based businesses received a questionnaire for purposes of this assessment. Additionally, the ODCA interviewed business owners with D.C.-based businesses to evaluate the Act's impact on choosing a business location.
Approximately 87.5 percent of the respondents to the questionnaire stated that the requirement to provide paid sick leave would not cause them to relocate their businesses out of the District of Columbia. Furthermore, the business owners interviewed reported that the Act neither discouraged them from establishing businesses in the District nor encouraged them to leave the area. Therefore, the ODCA concluded that the Act did not appear to have an economic impact on a business owner's choice of whether to move his or her business into or out of the District.
3. Other Findings—Hardship Exemption Not Finalized
Although the Act purports to allow for an exemption from its provisions based on hardship, the hardship exemption rules have never been finalized. The ODCA found that the proposed hardship exemption had been transmitted to the D.C. Council, but the Council took no action. The proposed exemption expired in January of 2009. At the time of the audit, the DOES had not published the final hardship exemption rules. Therefore, businesses facing hardship because of the requirements of the Act had no recourse to obtain an exemption. Based on this finding, the ODCA recommended that the DOES publish final hardship exemption rules in the District of Columbia Register ("Register").
Agency Response to ODCA Findings
1. DOES's Response to Recommendations
The DOES responded directly to all recommendations provided by the ODCA, agreeing to publish the final Accrued Sick and Safe Leave Act hardship exemption rules in the Register but rejecting the ODCA's recommendation to establish a process to review employer compliance with the Act's requirement to provide paid sick leave, as recommended by the ODCA.
a. Hardship Exemption Rules
The DOES published its proposed hardship exemption rules in the May 24, 2013, edition of the Register and the proposed rules were transmitted to the D.C. Council on May 22, 2013, for approval. The proposed rules provide a process by which business owners can apply for a hardship exemption from the Associate Director of the Office of Labor Standards of the DOES and give criteria for the exemption. Section 3218.3 of the proposed hardship exemption qualifies a hardship as "a negative impact caused or to be caused by the Act that (1) threatens or will threaten the financial viability of the employer; (2) jeopardizes the ability of the employer to sustain operations; (3) significantly degrades the quality of the employer's operations; or (4) creates a significant negative financial impact on the revenues or income of the employer." The proposed rules also put a durational limit on the exemption of one year and provide for an appeals process. As of this date, the D.C. Council has not taken any action on the proposed rules.
b. Process to Review Employer Compliance
The DOES pointed out that its established process to investigate employer compliance is outlined in Sec. 3216.4 of the Act and disagreed with the ODCA's recommendation that it review payroll records to ensure employer compliance. Procedurally, leave accrual may not be kept on payroll records, and, as a result, the DOES found that reviewing them may not be advantageous. However, the DOES verified that it would continue to seek all relevant documents for purposes of monitoring compliance, including reviewing payroll records, where relevant. Additionally, the DOES added two full-time program analysts to monitor compliance and committed all agency resources to fulfilling its oversight purpose, including using other employer violation enforcement activities as appropriate.
What Employers Should Do Now
While many employers already voluntarily provide some type of paid time off ("PTO"), either through sick or vacation leave, if your company does business in the District of Columbia, you should continue to ensure compliance with the specific requirements of the Act. This may include:
reviewing your current PTO policy to confirm that it provides the right number of paid sick days, describes the expanded reasons for sick leave under the Act, and makes clear that sick days may be carried over the following year;
confirming that you have posted the required notice in a "conspicuous place" that is accessible to employees, such as a break room, locker room, or other area where you regularly post employee notices;
modifying your retaliation policy and training managers and supervisors so that they understand that employees may not be retaliated against for taking protected sick leave under the Act; and
keeping good records of all requests for leave, and tracking the amount of days taken by employees pursuant to the Act.