Since 2018, New Jersey employees have been entitled to paid sick leave pursuant to New Jersey’s Earned Sick Leave Law. But guidance from the courts on interpreting the law has been sparse.
On January 28, however, New Jersey’s Appellate Division issued a decision that gives employers insight into administering their sick leave policies and defending ESLL claims.
In Cano v. County Concrete Corporation, the two plaintiffs were hourly-paid drivers who were union members. The lawsuit, which was filed as a class action, alleged that the employer did not provide paid sick leave in accordance with the ESLL. The employer was a sand, gravel, and redi-mix concrete supplier who asserted that it was exempt from the ESLL because it was a member of the “construction industry,” and, even if not exempt, its existing vacation policy satisfied the law as a qualified paid time off system.
The trial court granted partial summary judgment to the plaintiffs, finding that the company had failed to post the required written notice under the ESLL. The case then proceeded to a bench trial (non-jury trial before a judge) on the remaining claims.
The judge ruled that the employer violated the ESLL by
- Failing to provide employees proper written notices.
- Failing to provide the plaintiffs with paid sick leave benefits.
- Not maintaining appropriate records.
The court not only issued judgment in favor of the two named plaintiffs, but it also devised a process for determining damages owed to all “similarly situated employees.”
On appeal, the New Jersey Appellate Division upheld the trial court’s decision. In doing so, the court gave some helpful direction to employers looking to avoid the same fate as this employer.
No. 1: Understand the “construction industry” exemption.
The definition of “employer” in the ESLL specifically excludes companies whose employees are “performing service in the construction industry that is under contract pursuant to a collective bargaining agreement.”
In Cano, the employer supplied concrete and other materials for use in construction projects. The court concluded that it was a “material supplier” and not in the business of “constructing houses, schools, or other structures.”
The court also looked to the North American Industry Classification System and observed that the delivery of redi-mix concrete is included in the “manufacturing” sector, not the “construction” sector.
The takeaway here for New Jersey employers is two-fold:
- When relying on the “construction industry” exemption, be sure that your company is actually in the business of “constructing” and not simply supplying materials or engaging in other construction-adjacent business.
- Consult the NAICS codes to determine whether your business fits within the “construction” sector (that is, has a “23” sector code).
No. 2: If your company doesn’t provide an ESLL-specific sick leave bank, make sure your paid time off policy complies with the baseline ESLL requirements.
Employers may satisfy their obligations to provide paid sick leave by maintaining a PTO policy that allows employees to use time off for the purposes outlined in the ESLL, as long as PTO is “accrued at a rate equal to or greater than” the rate set forth in the law.
Employers who do not use a separate sick leave bank – like the employer in Cano – but wish to rely upon their PTO policies to satisfy the ESLL must ensure that their PTO policies do the following:
- Allow employees to take time off for all reasons set forth in the ESLL. For example, not only should the PTO policy allow employees to use time off for an employee’s own illness, but it must allow time off to aid family members who are ill, for circumstances arising out of domestic abuse, to attend child-related school conferences, and for any other reason permitted in the ESLL.
- Do not require a doctor’s note unless an employee takes leave for 3 or more consecutive days. A PTO policy should not require a doctor’s note for an absence of less than three days. Supervisors and managers should be trained to not request a doctor’s note unless and until the three-consecutive-day mark is met.
- Do not allow supervisors or managers discretion to deny a request for sick leave that is covered by the ESLL. Only Human Resources employees have authority to make decisions regarding PTO approval (or disapproval).
- Do not place restrictions on the use of PTO that conflict with the ESLL. For example, the employer’s policy in Cano prohibited employees who worked less than 50 days from taking any paid sick leave, and its vacation policy stated that employees with less than 1 year of tenure were not entitled to PTO. Both of these restrictions conflict with the use and accrual provisions of the ESLL.
No. 3: Post required notices and provide individualized written notices to employees.
The employer in Cano violated the ESLL because it did not adequately post the required notice. In particular, the court found that the notice was posted in only one of several establishments, was in an “obscure” location, and was not accessible to all employees. Moreover, the required individual written notices were not provided to employees upon hire.
No. 4. Keep and maintain adequate records.
The ESLL requires employers to retain records documenting hours worked and earned sick leave taken by employees for a period of five years. An employer who fails to maintain adequate records will be presumed to have failed to provide the earned sick leave unless the employer can demonstrate “clear and convincing evidence” otherwise. This is a high hurdle and virtually guarantees that an employer who has not kept proper records – like the defendant in Cano – will be found in violation of the ESLL.
