Frequently Asked Questions About the New Jersey Paid Sick Leave Law, Part II

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
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The New Jersey Paid Sick Leave Law (PSLL) goes into effect on October 29, 2018. We have received hundreds of questions in the last few weeks from employers seeking guidance on what they must do to comply with the law in advance of its looming effective date.

This is part two in a three-part series answering some of these frequently asked questions. In part one, we answered questions such as who is covered by the law, how much paid sick leave do employees receive, how do employees earn sick leave, and for what purposes can employees use sick leave?  In part two, we address critical questions about payment for sick leave, employee advance notice and documentation requirements, limitations on the use of sick leave, and carryover requirements.  In the final segment, part three, we will dive deeper into the details of the law, examine the law’s interplay with PTO policies and local paid sick leave laws, explain employers’ recordkeeping and notice posting and distribution requirements, and explain penalties for violating the law. 

Many of the answers provided are based on proposed regulations recently issued by the New Jersey Department of Labor and Workforce Development (NJDOL). Some of these answers could change when the final regulations are issued.

How much are employees paid when using sick leave?

  1. At what rate are employees paid when using sick time?
  • Employers must pay earned sick leave “at the same rate of pay with the same benefits as the employee normally earns,” and it must always be at least the state minimum wage rate.
  • The proposed regulations clarify that, with respect to benefits, “[t]he taking of earned sick leave by the employee shall not result in any diminution in the employee’s benefits; in other words, for the purpose of employee benefits, when an employee takes earned sick leave, it shall be as if the employee worked those hours.”
  1. Do employees get extra pay if using sick leave when scheduled to work overtime hours?
  • No. The proposed regulations provide that “[w]here an employee uses earned sick leave during hours that would have been overtime if worked, the employer is not required to pay the overtime rate of pay.”
  1. Is an employer required to factor into sick leave pay the value of employee bonuses?
  • This is unclear. The proposed regulations state that “[w] here the amount of a bonus is wholly within the discretion of the employer, the employer is not required to include the bonus when determining the employee’s rate of pay for earned sick leave purposes.” That may suggest that nondiscretionary bonus amounts must be included and presumably calculated the same way such payments would be calculated for purposes of overtime compensation under state and federal wage and hour laws.
  1. How do employers pay employees who do not have a fixed rate of pay?
  • The proposed regulations provide further explanation with regard to employees who are not paid a fixed hourly rate or fixed salary, including the following:
    • Where an employee has two or more different jobs for the same employer or if an employee’s rate of pay fluctuates for the same job, the rate of pay for earned sick leave “shall be the amount that the employee is regularly paid for each hour of work as determined by adding together the employee’s total earnings, exclusive of overtime premium pay, for the seven most recent workdays when the employee did not take leave and dividing that sum by the total hours of work during that seven-day period.”
    • Where an employee is paid by commission, whether base wage plus commission or commission only, the employer must pay the employee “an hourly rate that is the base wage or the State minimum wage rate, whichever is greater.”
    • When an employee is paid on a piecework basis, whether base wage plus piecework or piecework only, to calculate the employee’s rate of pay for earned sick leave, the employer “shall add together the employee’s total earnings for the seven most recent workdays when the employee did not take leave and divide that sum by the number of hours the employee spent performing the work during workdays.”
    • When the employee’s pay includes the value of gratuities, food, or lodging, to calculate the employee’s rate of pay for earned sick leave, the employer “shall add together the employee’s total earnings, exclusive of overtime premium pay, for the seven most recent workdays when the employee did not take leave and divide that sum by the number of hours the employee spent performing the work during workdays.” Where it is not feasible to determine the employee’s exact hourly wage for earned sick leave purposes using this method, the employer “shall be deemed to have fulfilled the requirement of this section regarding the payment of earned sick leave if the rate of pay for earned sick leave is based on the agreed hourly wage, but in no event shall earned sick leave be paid at a rate less than the State minimum wage rate.” 

Can employers require advance notice and documentation from employees?  

  1. Can employers require employees to provide notice of their intent to use sick leave?
  • When an employee’s need to use leave is foreseeable, employers can require that employees provide up to seven calendar days’ advance notice of the intent to use sick leave and its expected duration.
  • When an employee’s need to use leave is not foreseeable, employers may require that employees provide notice “as soon as practicable” of the intent to use sick leave and its expected duration, but only if the employer has notified the employee of this requirement in advance (such as in a written policy).
  1. What is “foreseeable” leave?
  • The proposed regulations state that “the need to use earned sick leave shall be considered ‘foreseeable,’ when the employee is able to predict or know in advance that he or she will need to use earned sick leave, such as a scheduled doctor’s visit, a regularly occurring medical treatment, or regularly scheduled therapy appointment.”
  1. What is “not foreseeable” leave?
  • The proposed regulations state that the need to use leave is “not foreseeable” “when an employee requires time to care for, or obtain medical treatment for, themselves or a family member that was not reasonably anticipated,” such as when “an employee wakes up in the morning with a fever and does not feel well enough to report for work that morning.”
  1. Can an employer require documentation from an employee who takes sick leave?
  • When an employee uses three or more consecutive days of sick leave, the employer may require reasonable documentation that the leave is being taken for a permitted purpose.
  • When an employee takes “unforeseeable” leave on a blackout date (see blackout date discussion below), the employer can require the employee to provide reasonable documentation of the need for leave (even if the leave taken is less than three days).
  1. What documentation can an employer require?
  • An employer may require “reasonable documentation,” the definition of which varies depending on the type of leave being taken. When leave is taken for:
    • An employee’s own sickness or that of a family member, an employer may require “documentation signed by a health care professional who is treating the employee or the family member of the employee indicating the need for the leave and, if possible, the duration of the leave.” 
    • Absences due to circumstances resulting from the employee or his or her family member being a victim of domestic or sexual violence, an employer may require “medical documentation; a law enforcement agency record or report; a court order; documentation that the perpetrator of the domestic or sexual violence has been convicted of a domestic or sexual violence offense; certification from a certified Domestic Violence Specialist or a representative of a designated domestic violence agency or other victim services organization; or other documentation or certification provided by a social worker, counselor, member of the clergy, shelter worker, health care professional, attorney, or other professional who has assisted the employee or family member in dealing with the domestic or sexual violence.”
    • School and work closures due to an epidemic or other public health emergency, an employer may require “a copy of the order of the public official or the determination by the health authority.”
    • School needs, such as to attend a school-related conference, meeting, function, or other event required by the school, or to attend a meeting regarding care provided to the child of the employee, an employer may require “tangible proof of the school-related conference, meeting, function, or other event requested or required by a school administrator, teacher, or other professional staff member responsible for the education of the employee’s child; or tangible proof of the meeting regarding care provided to the child of the employee in connection with the child’s health conditions or disability.”
  • Note too that “any information an employer possesses regarding the health of an employee or any family member of the employee or domestic or sexual violence affecting an employee or an employee’s family member shall be treated as confidential and not disclosed except to the affected employee or with the written permission of the affected employee.”

Can an employer impose any limits on the use of sick time?

  1. Can an employer establish minimum increments for the use of sick leave?
  • Yes. Employers can establish the increments in which paid sick leave must be used (e.g., one-, four-, or eight-hour increments), but employers cannot require employees to use more sick leave in a day than they were scheduled to work (e.g., an employer cannot require an employee scheduled to work four hours to use eight hours of sick leave).
  1. Can an employer request that an employee schedule sick leave to minimize disruption?
  • Yes. Employees are required to make a reasonable effort to schedule their foreseeable sick leave so it does not unduly disrupt the employer’s operations.
  1. Can an employer prohibit use of sick leave on certain dates?
  • Yes and no. Employers can establish blackout dates when paid sick leave cannot be used, but only if the employee’s need to use leave is foreseeable. If the need for leave is unforeseeable, an employee must be allowed to use his or her sick time, even if during a blackout period.
  • The proposed regulations state that the blackout dates when an employer can prohibit the foreseeable use of paid sick leave “shall be limited to verifiable high-volume periods or special events, during which permitting the use of foreseeable earned sick leave would unduly disrupt the operations of the employer.
    • An example of a high-volume period would be, for an airline industry employer, the period during which they experience a predictable increase in customer activity (which is to say, flying) in and around a particular holiday, like Thanksgiving.
    • An example of a special event would be, for a manufacturer of retail products, the day or week during which it is making a new product available for the first time (that is, a product launch).”
  • In addition, the proposed regulations state that “the employer shall provide reasonable notice to its employees of [the blackout dates] on which its employees are prohibited from using foreseeable earned sick leave.”
  1. Can employers discipline employees who use sick leave for improper purposes?
  • Yes. The proposed regulations state that “[n]othing in this chapter shall be construed to require an employer to permit the use of earned sick leave for a purpose other than one identified [in the law]” and that “[n]othing in this chapter shall be construed to prohibit an employer from taking disciplinary action against an employee who uses earned sick leave for a purpose other than one identified [in the law].”
  1. Can employers treat properly taken sick leave as an unexcused absence?
  • No. The law provides that “[n]o employer shall count legitimate use of earned sick leave under the Act or this chapter as an absence that may result in the employee being subject to discipline, discharge, demotion, suspension, loss or reduction of pay, or any other adverse action. This includes ‘no fault’ attendance policies, whereby an employee receives a point or a demerit for any absence, no matter the reason, and are subjected to discipline or are foreclosed from a promotional opportunity(ies) after the accumulation of a certain number of points or demerits.”

What happens to unused sick leave at the end of the benefit year?

  1. Are employees entitled to carry over unused sick leave at the end of the year?
  • Unless an employer pays out unused sick leave (as discussed below), employees must be permitted to carry over up to 40 hours of accrued but unused sick leave from one benefit year to the next.
  • However, this does not increase the amount of paid sick leave employees may earn or use in the next benefit year. Stated differently, regardless of how many sick leave hours an employee carries over to the next benefit year, an employee is not entitled to accrue or use more than 40 hours of sick leave in the next benefit year.
  1. If an employer uses the front-load method, does it have to carry over unused sick time?
  • Many employers that plan to use the front-load method have asked if they can simply front-load 40 hours of sick leave at the start of the new benefit year, rather than carry over (and keep track of) unused sick time from the prior year.  Unfortunately, the paid sick leave law does not clearly address this.  Carrying over unused sick time would seem to be unnecessary in this context since employees cannot carry over more than 40 hours of paid sick leave and will get a full allocation of 40 hours of paid sick leave at the start of the new benefit year. Our opinion, subject to clarification by the NJDOL, is that an employer likely does not need to track and perform a technical carryover of unused sick time if the employer front-loads the full 40 hours of paid sick leave at the start of the new benefit year.
  • However, an employer arguably is required to perform a technical carryover if it has a policy of paying out unused sick time at termination.
  1. What is the purpose of carrying over unused sick time if an employee cannot accrue or use more than 40 hours of PSL in the next benefit year?
    • For employers that use the accrual method, carryover allows employees to have access to some sick leave immediately at the start of the next benefit year without having to wait until they accrue additional time in the new benefit year.
    • For employers that use the front-load method, carryover does  not seem to have any obvious purpose, since employees cannot use more than 40 hours of paid sick leave in any benefit year and employees receive 40 hours of paid sick leave immediately at the start of the new benefit year. However, a possible explanation may be that the law requires carryover so that, if the employer has a policy of paying out unused sick time at termination, the employee would be entitled to a payout of any unused sick time (even though the employee could not use that time during employment). 
    1. Can an employer pay out unused sick leave rather than carry it over?
    • When an employer uses the accrual method, an employer may offer (but is not required to offer) employees the option to either (1)be paid for their unused, accrued paid sick leave hours during the final month of the benefit year, or (2) carry over the unused hours.
      • If the employer chooses to offer to pay out unused paid sick leave, the employee must choose, within 10 calendar days, whether to accept the payment. The employee may choose to receive payment of 100 percent or 50 percent of the amount of unused paid sick leave. If the employee declines payment or accepts a 50 percent payment, the employee must be allowed to carry over any unused, unpaid sick leave to the next benefit year.
      • If the employer chooses not to offer to pay out unused paid sick leave, it must carry over the unused paid sick leave hours.
      • This means that when an employer uses the accrual method, it cannot unilaterally pay out unused paid sick leave. The employer’s options are to either offer employees the option to be paid out for their unused paid sick leave or unilaterally carry over the unused paid sick leave.
    • When an employer uses the front-load method, the employer must either (1) pay employees for their unused, accrued paid sick leave hours during the final month of the benefit year, or (2) carry over the unused hours.
      • Here, the employer’s options are to unilaterally carry over the unused paid sick leave or to unilaterally pay out the unused paid sick leave. 
      • However, an employer can chose to pay out unused paid sick leave only if the employer uses the front-load method the following year again for that employee. If an employer switches to the accrual method for the following year for that employee, then it must carry over the unused paid sick leave. 
    • The payment amount must be based on the employee’s rate of pay at the time payment is made.

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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