No End In Sight For Wave of Paid Family and Sick Leave Laws

Proskauer - Law and the Workplace
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  • Employees would be able to utilize paid leave after 60 days of employment
  • Unused accrued sick time would carry over from year to year
  • Employers would not be required to pay out unused accrued sick time upon termination of employment
  • Employers would have to reinstate accrued unused sick time if they rehire an employee within one year
  • Remedies for violations would include lost wages or if no wages lost, actual monetary losses up to 56 hours of pay, liquidated damages, equitable relief such as reinstatement, and recovery of attorneys’ fees and costs

A major problem with the proposed law from an employer standpoint is that it would not supersede or preempt the multitude of state and local laws with more generous paid sick leave laws.  Its passage would thus result in even more complex sick leave policies, as employers will need to sift through the differences between and among state and local laws and the federal law to ensure that employees are receiving the benefit of the most generous law.  Some local laws provide for a higher amount of possible leave.  For example, San Francisco’s sick leave law provides for accrual of up to 9 days of paid sick leave.  Other laws have different rules regarding reinstatement of unused accrued leave.  For example, under New York City’s sick leave law, employers must reinstate accrued unused sick leave if they rehire an employee within six months, unless the employer paid out the accrued unused leave upon termination of employment.

Of course, the greater the complexity, the greater the cost and administrative burden on companies.  One uniform federal law across all states and localities would allow for easier administration of sick leave and provide a national standard applicable to employees regardless of location.

The proposed law’s one-size-fits-all approach is also problematic.  Under the proposed law, there is no pro-rating for part-time employees, leading to the absurd result that a part-time employee could receive more protected leave days than a regular full-time employee.  Similarly, there is no undue hardship provision that would allow an employer to deny sick leave or fire a covered temporary, occasional or seasonal employee who is unavailable for work.  This could lead to an employer having to pay two employees for one limited-term job (or part of one job).  The problems with the federal law as proposed also exist with most of the newly enacted state and local sick leave laws.

The President also intends to ask Congress for more than $2 billion in new spending to encourage states to create paid family and medical leave programs like those in Connecticut, California and Rhode Island.  In these states, employees can receive partial wage replacement during otherwise unpaid leaves of absence, such as those taken under the Family and Medical Leave Act (FMLA).  These programs, unlike the paid sick leave laws, are easier for employers to administer because the pay is funded through a payroll tax or deduction similar to state laws that provide for paid short-term disability benefits, and the benefit is not paid directly by the employer.  Rather, the employer simply provides the unpaid statutory leave, such as FMLA leave, and the employee applies independently for the paid benefit.

It is unlikely Congress will pass the Healthy Families Act.  However, the greater national focus on the issue of paid leave will likely incent more states and cities to enact their own paid sick leave laws, further complicating leave administration for employers.

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Proskauer - Law and the Workplace
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