Duluth, Minnesota Issues Paid Sick and Safe Leave Rules & Revises FAQs

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The City of Duluth has published final rules and revised FAQs implementing its Earned Sick and Safe Time Ordinance. The Ordinance takes effect January 1, 2020 for employers with five or more employees, regardless of whether they work in Duluth.  Under the law, employees accrue, or an employer frontloads, paid sick and safe time (SST) that employees can use for themselves or to care for or assist a covered family member for the following reasons: mental or physical illness, injury, or health condition; medical diagnosis, care, or treatment of a mental or physical illness, injury, or health condition; preventive medical care; and absences connected to domestic abuse, sexual assault, or stalking. Below we discuss whether and how the rules clarify or gap-fill the ordinance's requirements.

Covered Employees

Generally: The ordinance applies to employees who perform work in Duluth for more than 50% of their working time in a 12-month period, or are based in Duluth and spend a substantial part of time working in Duluth and not more than 50% of work time in any other particular place in a 12-month period. The rules clarify that "substantial part of time" means more than 50% of working time. Additionally, the rules clarify that employees working from home, or otherwise commuting, are covered for hours worked in Duluth.

Exceptions: The ordinance does not cover independent contractors, student interns, seasonal employees, and certain railway employees. The final rules incorporate the six-factor test the city previously identified in FAQs to determine whether a worker is an employee or an independent contractor, and include a new nine-factor test specific to the construction industry. Additionally, the rules create a six-factor test to determine whether a worker is an employee or a student intern. Finally, the rules incorporate the FAQs’ definition of seasonal employee: a person employed for no more than 10 months during any consecutive 12-month period, but expected to return to work year after year. The rules say the agency will make employee status determinations on a case-by-case basis.

Using Existing Policies

Under the ordinance, employers with substantially equivalent paid leave policies that provide an amount of leave that can be used for the same purposes, and under the same conditions, as the law requires, and that comply with the law's accrual and carry-over requirements, are not required to provide additional SST. Notably, the rules clarify that collective bargaining agreements negotiated and enacted before January 1, 2020 comply with the law, but those enacted after January 1, 2020 must include a substantially equivalent paid leave policy.

Additionally, the rules address whether and how employers can comply using non-traditional paid leave policies like unlimited or untracked leave. If employers make paid leave available that employees may use for the same purposes and under the same conditions as the law requires, and may be reasonably expected to exceed the law's accrual standards, then such a policy complies.

Accrual & Carryover Requirements

Under the ordinance, covered employees must accrue one SST hour for every 50 hours worked. The rules add that hourly employees accrue SST when they work overtime hours. They also say SST does not accrue when employees use SST; this builds on an existing FAQ that says SST does not accrue when employees use vacation.

The law requires employers to allow employees to carry over up to 40 SST hours to the following year, unless they frontload 40 hours annually. Additionally, with an employee's written consent, the rules allow employers to cash out accrued but unused SST instead of carrying it over. The rules require the cash-out value to be equal to the employee's standard base pay rate.

Use of Leave

Minimum Increment of Use: Under the ordinance, employers can require employees to use a minimum amount of SST for absences if this minimum increment does not exceed four hours. The rules create an exception: if an employee's SST balance is less than the employer's minimum increment, employers cannot enforce the minimum increment and employees must be allowed to use their available SST balance.

When Employees Can Use Leave: The ordinance allows employees to use leave during a scheduled shift. A new rule stipulates employers are not required to permit SST use when an employee is suspended or otherwise on leave for disciplinary reasons. Another rule affirms employees can use SST for overtime hours they are scheduled, or have volunteered, to work.

Requesting to Use Leave: The ordinance sets a general standard for SST use requests: employers must grant leave upon an employee's request, which, if possible, must include the absence's expected duration. Moreover, the ordinance allows employers to require compliance with usual and customary notice and procedural requirement that do not interfere with the leave's purpose. The rules establish notice standards for unforeseeable absences. In these instances, employees or their spokesperson (e.g., spouse, coworker, adult family member, other responsible party) must provide notice as soon as practicable. Under the rules, employees need not explicitly reference the ordinance, but employers can ask whether the absence qualifies under the law if the inquiry does not violate the law's privacy and confidentiality provisions. The rules do not address foreseeable absences, leaving employers free to establish requirements that do not otherwise violate the law.

Documenting Leave Requests: Employers may request reasonable documentation related to SST use if the absence exceeds three consecutive days. The rules clarify the standard is consecutive days an employee is scheduled to work. They also provide examples of what constitutes "reasonable" documentation; for sick time a doctor's note, and for safe time a police report, court order, or an employee's written statement that communicates an employee or family member is experiencing domestic violence, sexual assault, or stalking and the absence was taken for a covered purpose.

Notably, the rules limit how frequently employers may request documentation under certain circumstances:  Adopting a standard only used in Saint Paul, if an employee is absent on two separate occasions, and each absence exceeds three consecutive days, employers cannot request documentation for the second absence unless more than two weeks have elapsed since the first absence. Additionally, the rules state employer requests cannot cause an “unreasonable burden or expense” for the employee. Under the rules, employees can allege the request creates an unreasonable burden or expense and provide an oral or written explanation stating they have used SST for a covered purpose. Upon receiving the explanation, an employer has 10 calendar days to identify and provide alternatives for the employee to satisfy the employer's request, which could include, for example, accepting the explanation or mitigating an employee's out-of-pocket expenses. If the parties cannot reach agreement, they can consult, or an employee can file a complaint with, the enforcement agency.

Payment When Employees Use SST

Under the ordinance, employers must pay SST at the same hourly rate the employee receives from employment. The rules establish pay rate calculations for various types of employees, in addition to standards for hourly and salaried employees the ordinance sets. For employees paid on commission and tipped employees, the hourly rate is an employee's base wage (the ordinance says they are not entitled to compensation for lost tips or commissions). For pieceworkers, employers must divide total earnings for the most recent workweek in which an employee did not use SST by the number of hours worked during that workweek. Also, the rules provide that, if an hourly employee uses SST for scheduled overtime, the hourly rate is the employee's regular, rather than overtime, rate. For indeterminate-length shifts (e.g., a shift defined by business instead of a specific number of hours), employers may determine the pay rate based on hours worked by a replacement employee working the same or a similar shift. Finally, the rules provide when employers must pay employees: the regular payday for the pay period in which an employee uses SST.

Notice / Posting Requirements

Under the ordinance, employers must provide covered employees a notice explaining their rights and protections under the law, including details about their entitlement to and amount of leave, terms of use, rules prohibiting retaliation, and that employees can file a complaint with the city. The rules expand on this notice requirement. First, they allow employers to comply by conspicuously displaying the city-created poster, which is available online. Alternatively, employers may use their own written notice, which, at a minimum, must contain the aforementioned information. Moreover, the rules define what "terms of use" means: when accrual starts; when employees may begin using SST; rate at which an employee accrues SST; maximum number of hours an employee may accrue in a year; and how SST carries over to the next year. Additionally, the rules require that, if an employer frontloads SST, its written policy must specify this to employees.

Recordkeeping Requirements

Under the Ordinance, employers must keep for three years accurate records documenting hours worked, and SST hours accrued and used. The rules clarify hours worked are those in Duluth. Although the rules allow employers to comply by using a substantially equivalent leave policy to record total hours worked instead of hours worked in Duluth, the same leniency is not extended to employers using unlimited or similar paid leave policies. With respect to hours worked, the rules provide that, for salaried employees who work in Duluth more than 50% of their yearly work time, employers may maintain records of the employee’s regular workweek hours, rather than tracking actual hours worked in Duluth, if the hours of a normal work week are used as the actual basis for the employee’s accrued and used SST.

Another recordkeeping difference the rules establish is that employers that are complying by using a substantially equivalent leave policy need not track the specific reasons employees use leave, but those using an unlimited or similar policy must. Finally, the rules explain that employers with unlimited or similar policies need not track accrual (as none occurs).

Prohibited Acts

The ordinance prohibits requiring employees to find replacement worker to cover their shifts when they use SST. The rules expand the list of prohibited conduct, including a very broad anti-retaliation prohibition. The rules say employers cannot interfere with employee rights under the ordinance. Additionally, the rules prohibit retaliating or otherwise taking adverse action against employees for exercising, or attempting to exercise, their rights, e.g., requesting or using SST, informing another person about SST or helping the individual use SST, or lodging a complaint with the city. For example, the rules prohibit counting SST an employee uses as an unexcused absence from work. They also prohibit retaliatory acts such as altering a preexisting schedule, reducing scheduled hours, delaying payment of SST, wages, or tips., However, the rules also provide examples of what does not constitute retaliation.

The rules allow employers to investigate suspected SST abuse if the investigation does not interfere with the employee’s ability to use SST. They also allow employers to take reasonable action, e.g., discipline, when an employee’s SST use is not in good faith, such as a clear instance of abuse. These rules build upon existing FAQs that provide examples of a “clear instance” of abuse: using SST on days when a request for vacation was denied; contemporaneous social media photo or post that conflicts with the stated reason for using SST; a consistent pattern of circumstantial evidence, e.g., repeatedly calling in sick on Fridays.

Penalties & Enforcement

The ordinance allows the enforcement agency to asses an administrative penalty. Revised FAQs clarify the penalty amount: $200. A penalty for more than one day of a continuing violation may be imposed if the violation causes a serious threat of harm to public health, safety, or welfare, or the violator intentionally and unreasonably refuses to comply with requirements. For repeat violations – the second or subsequent offense within one year – each penalty doubles. For example, if there were four qualifying violations, the penalty for the fourth violation is $1,600 (first: $200; second: $400; third: $800; fourth: $1,600).

The rules also allow the suspension or revocation of city-issued licenses for violations. This is in addition to remedies in the ordinance, which include reinstatement and back pay, crediting any SST accrued but not credited, payment of any accrued SST unlawfully withheld, lost wages, injunctive and other equitable relief, and reasonable attorneys' fees and costs.

Recommendations

The Duluth ordinance takes effect in two months, leaving employers little time to review policies, practices, and procedures to ensure they comply with the law. Employers subject to more than one paid sick and safe time law – in Minnesota or throughout the country should determine whether one overall policy is feasible or whether carve-outs – such as for Duluth’s ordinance – will be necessary.  Employers should also consider the impact the Duluth ordinance may have on other policies such as payroll, time keeping and attendance.  Finally, employers should consider consulting with experienced counsel to assist in navigating these compliance challenges. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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