A Primer on New Jersey’s New Paid Sick Leave Law

Since Phil Murphy’s election to governor of New Jersey, the Garden State has seen several employee-friendly laws proposed and enacted, including the May 2nd enactment of the New Jersey Paid Sick Leave Act (“the Act”), which requires employers to provide paid sick leave to employees for a robust list of qualifying reasons. The Act joins several other leave laws, including the federal Family and Medical Leave Act (FMLA), New Jersey Family Leave Act (NJFLA), New Jersey Family Leave Insurance Law (NJFLI), and New Jersey Security and Financial Empowerment Act (NJ SAFE Act). The new act, which takes effect Oct. 29, has some unique characteristics that make it different from other leave-related laws, some of which are addressed in this article.

Who Is Covered
The differences begin with the Act’s application. The Act applies to any person or entity that employs employees in the state. Other leave laws have a small business exception, including the FMLA and NJFLA, which apply only to employers with 50 or more employees, and the NJ SAFE Act, which applies only to employers with 25 or more employees. The Act also defines “employee” quite broadly and excludes only: (1) employees performing services in the construction industry under contract pursuant to a collective bargaining agreement; (2) “per diem health care employee[s]”; and (3) public employees receiving paid sick leave pursuant to another New Jersey law, rule or regulation. Both part-time and full-time employees are entitled to leave under the Act.

Leave Benefits
The Act requires that employees be paid at their normal rate of pay when they take leave. The Act is the first federal or New Jersey leave statute that provides for paid leave and displaces all municipal ordinances providing for paid sick leave.

Reasons for Leave
Under the Act, leave may be taken under any of five broadly-defined qualifying reasons, which includes the diagnosis, care, treatment or recovery related to the employee’s own illness or a family member’s illness. The term “family member” is defined more broadly under the Act than under the NJFLA and includes grandchildren, siblings, grandparents, a domestic partner, a civil union partner, spouse, or someone “whose close association with the employee is the equivalent of a family relationship.”

Like the NJ SAFE Act, the Act allows employees to take leave for absences resulting from the employee or a family member being a victim of domestic or sexual violence, such as absences for medical attention, services from a designated domestic violence agency or other victim services organization, psychological or other counseling, legal services or relocation. Though the NJ SAFE Act offers leave (but not pay) under similar circumstances, under the NJ SAFE Act, only employees who have worked 1,000 hours in the preceding 12 months are eligible for leave. The Act does not have an hours-worked requirement. The Act also authorizes leave for public health emergencies and attendance at school-related conferences, meetings or events, or other meetings regarding care for the employee’s child, neither of which are covered by any other New Jersey leave law.

Amount of Leave, Carry Over, Increments, Notice by Employee, and Documentation
The Act gives employers two options for providing paid sick leave. The accrual method requires that employees accrue one hour of earned sick leave for every 30 hours worked. With the annual method, an employer can provide employees with the “full complement” of earned sick leave on the first date of the benefit year, which is defined by the employer. In either case, the employer can limit accrual, use, and carry over of earned sick leave to 40 hours.

New employees who become employed after the Act’s effective date can first use earned sick leave on the 120th day after employment begins, regardless of which method is used. Existing employees also have a 120-day delay for use, but the Act suggests that, if an employee has already been employed for 120 days when it takes effect, the use of earned sick leave may be immediate (with the annual method) or as soon as hours are accrued in the increment specified by the employer (with the accrual method).

The Act’s carry over provisions are confusing and depend on whether the employer uses an accrual or annual method. Employers using the accrual method may either allow the employee to carry over unused sick leave to the next benefit year or pay the employee for the unused leave in the final month of the benefit year. Employees are free to accept or decline the payment and carry over unused sick leave to the following year. Employers using the annual method must either allow the employee to carry over unused leave to the next benefit year or pay out the unused leave in the final month of the benefit year. If the employer decides to pay out the unused sick leave, the employee must accept the payment, and the employer is required to use the annual method in the next benefit year. Regardless of the method, employers are under no obligation to allow an employee to use, or to carry over from one benefit year to the next, more than 40 hours of earned sick leave.

Employers have the discretion to choose the increments in which employees can take paid sick leave. This is a more liberal approach than the FMLA, which has very specific requirements and limitations on increments of leave.

When the need for paid sick leave is unforeseeable, the employee must give notice to the employer as soon as practicable. If the leave is foreseeable, seven days’ notice is required, a shorter notice period than that required by the FMLA (30 days) and the NJFLA (15-30 days, depending on the reason for leave). Employers may prohibit employees from using foreseeable sick leave on certain days, and employees are required to “make a reasonable effort to schedule the use of earned sick leave in a manner that does not unduly disrupt the operations of the employer.” Employers need not pay an employee for accrued but unused sick leave at separation.

Employers may request “reasonable documentation” when an employee takes three or more consecutive days of paid sick leave and should provide examples of reasonable documentation for each of the five leave purposes. The three-day requirement differs from the NJ SAFE Act, which allows employers to request documentation right from the start. The FMLA and NJFLA have their own documentation requirements that do not depend on the duration of the leave.

PTO Policies and Record-keeping
Employers that have existing paid time off (PTO) policies are in compliance with the Act if the PTO policy includes personal, vacation and sick days that can be used for the purposes specified by the Act. Employers should review their PTO policies in advance of the Act’s effective date to determine whether modifications are necessary to permitted uses and rates of accrual. Since the employer is required by the Act to maintain records of an employee’s hours worked and earned sick leave taken for a period of five years, the employer should consider how it will track an employee’s use of PTO for paid sick leave purposes.

The Department of Labor and Workforce Development can review the employer’s records to ensure compliance. If an employer fails to maintain records or make them available to the Department, there is a presumption that the employer failed to provide paid sick leave absent clear and convincing evidence to the contrary.

Rebuttable Presumption of Retaliation
As with other laws, the Act prohibits an employer from discriminating against or taking retaliatory personnel action against an employee who requests or uses earned sick leave, and sick leave taken cannot be used to support a violation of any of the employer’s attendance or disciplinary policies. Furthermore, an employee cannot be required to find a replacement worker to cover the leave time or to work additional hours to make up for leave taken. The Act is the only New Jersey leave-related law that contains a rebuttable presumption of retaliatory action when an employer takes an adverse action against an employee within 90 days of when the employee files a complaint with the court or Department of Labor, informs any person that the employer violated the law, cooperates in the investigation or prosecution of an alleged violation of the act, opposes any policy, practice or act under the law, or informs any person of his or her rights under the Act.

Notice to Employees
Like many other leave laws, employers must post notice of the rights under the Act in a conspicuous place and provide written copies of the notice to employees within 30 days of the date on which the Commissioner issues the notice, or at the time of hiring for employees hired after that date.

Penalties and Private Right of Action
The Act contains three provisions that address penalties for violation: in the discrimination/retaliation section; in the recordkeeping section; and in a general penalty provision. Each incorporates the penalties available under the New Jersey Wage and Hour Law, which include fines and administrative penalties.

The employee has the right to pursue a civil action against the employer and could recover the monetary value of the unpaid leave, plus costs and attorney fees. The Act deviates from the New Jersey Wage and Hour Law by providing for liquidated damages in the amount of the unpaid leave.

Preparing for Paid Sick Leave
Before the effective date, an employer has several decisions to make, including whether to use the accrual or annual method, the benefit year, and the increments in which leave may be taken. Leave, PTO, discipline, recordkeeping and attendance policies should be reviewed and updated as necessary to comply with the Act.

The rights afforded by the Act overlap with, are different from, and are sometimes inconsistent with other leave laws, so employers need to be on their toes when fulfilling their obligations under the Act. The Act directs the Commissioner of the Department of Labor and Workforce Development to promulgate regulations to effectuate the Act’s purposes. It is hoped that the anticipated regulations will clarify areas of confusion and provide employers with a clear path toward compliance.

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Reprinted with permission from the July 23, 2018 issue of the New Jersey Law Journal. © 2018 ALM Media Properties, LLC.
Further duplication without permission is prohibited. All rights reserved. For information, contact 877-257-3382 or reprints@alm.com or visit www.almreprints.com.