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Requiring Time Off for Illness: A Guide to the NYC Earned Sick Time Act

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Requiring Time Off for Illness: A Guide to the NYC Earned Sick Time Act

In New York City, worker advocacy groups have long fought to require businesses to provide paid sick time for employees. And for just as long, business advocacy groups have cautioned against implementing policies that, however well-intentioned, might harm employers. Finally, the City Council passed the New York City Earned Sick Time Act. And HR departments must now educate themselves on the law to ensure compliance. For more insights and perspectives on managing the workplace in addition to the NYC Earned Sick Time Act, discover TemPositions’ blog.

Andrew W. Singer, Esq. (partner) of Tannenbaum Helpern Syracuse & Hirschtritt LLP, supported by Jason B. Klimpl, Esq. (associate), visited TemPositions’ HR Roundtable Series on Thursday, September 26, 2013 to walk attendees through NYC’s new requirements regarding guaranteed time off for illness. The two are particularly well-versed on the topic, as Klimpl (in his capacity as Associate General Counsel of the New York Staffing Association) engaged actively with NYC lawmakers during the legislative process.

Klimpl began by stressing that from the start, he found that NYC employers were supportive of providing paid sick time to workers. The legislative process took many years (it first began in 2009) because both sides lobbied passionately over specific details that they both felt were critically important to their constituents.

As he explained it, business advocates objected to high penalties—which they described as potentially devastating—and the threat of a private right of action (which was removed). While workers’ advocates argued companies should be required to provide at least nine paid sick days per year, businesses argued successfully to reduce the total to five, citing financial strain.

Businesses persuaded lawmakers to require workers to give notice—when they have it—of relevant absences (i.e., scheduled doctor’s appointments). Due to their influence, the legislation only applies to scheduled work hours, not days or hours off.

Ultimately, both sides viewed the Earned Sick Time Act as a “compromise.” Even now, many ambiguities remain, and clarifications will need to be made in subsequent regulations. But guaranteed paid sick time will soon, finally, be law.

Implementation & Enforcement

The effective date for the Earned Sick Time Act is somewhat flexible and will be determined based on reports from NYC’s Independent Budget Office. The city is still recovering from the Great Recession, and lawmakers were sympathetic to the plight of still-struggling businesses. So they established NYC’s recovery as the statute’s trigger.

The Independent Budget Office is now monitoring the NYC Coincident Economic Index of the Federal Reserve Bank of New York (an important indicator of the city’s financial health). Once this index has reached or exceeded its January 2012, pre-recession level, the law will be implemented. The first report on the index will be issued in December 2013.

If the city’s recovery meets the necessary standard at that time, implementation will take place in two waves: the first effective April 1, 2014, and the second effective October 1, 2015. According to business size, eligible employers will be required to provide five days of paid sick time for eligible employees, and remaining NYC employers will be required to provide five unpaid days.

Compliance will be monitored and enforced by NYC’s Department of Consumer Affairs (DCA).

Eligible Employers

The first wave of implementation will impact businesses with 20 or more workers. Provided the economy has sufficiently improved, effective April 1, 2014, these companies will be required to provide paid sick time. Businesses with fewer employees will be required to provide five days of unpaid sick time.

The second wave of implementation, effective October 1, 2015 at the earliest), will impact businesses with 15-19 employees and all employers (regardless of size) of one or more domestic workers. They too will be required to provide paid sick time, though notably, domestic workers will only be entitled to two days, augmenting the three paid sick days they’re already guaranteed (after one year of employment) under the New York State Domestic Workers Bill of Rights.

Specific manufacturing employers are exempt from this law. According to the North American Industry Classification System, those with classification of 31, 32, and 33 will not be required to provide paid sick time. Certain other exemptions exist as well.

It’s important to remember, Singer noted, that there are many laws governing treatment of employees in cases of illness. For example, local New York City disability laws establish requirements for companies with as few as four workers. And if an employee’s health condition is serious, they may be entitled to a longer (though unpaid) leave period of 12 weeks under the Family and Medical Leave Act (FMLA) or Americans with Disabilities Act (ADA).

In this context, it’s wise for employers to tread carefully when any employee suffers an illness. They must consider the many intersecting requirements of medical leave laws and the employee’s unique situation to find the best—and most lawful—path forward.

In the vast majority of cases, Singer and Klimpl agreed, it is in the employer’s best interest to work with an employee and try to offer “reasonable accommodation.” The government expects employers to provide sick workers with opportunities to seek treatment and recover, and has set very high standards for proving that such accommodations constitute an “undue burden.”

When an employee approaches HR with a health issue, they counseled, welcome the dialogue, and communicate honestly about what accommodations the company can reasonably make. The law does not require businesses to cater to a worker’s every request.

Whether or not an employee’s illness falls under ADA, FMLA, or the Earned Sick Time Act, treat workers’ health issues with compassion, he advised. Inform them of their rights under various statutes, and share your process for determining how to handle their individual case.

“Employees appreciate it when you really try to help them,” Singer noted. “When they can see that you’ve really tried, they usually don’t sue.”

Eligible Employees

All workers—whether they are full-time, part-time or temporary—will be eligible for paid sick time if they work for more than 80 hours in a calendar year within the City of New York. Helpfully for employers, the law permits employers to define a calendar year as any contiguous 12 month period.

The law’s leave requirement applies only to workers who are employed within NYC’s five boroughs, Singer stressed. If a company maintains headquarters in Manhattan but also has workers based in Nassau, only those working in Manhattan will be eligible. The law is not 100% clear regarding the accrual of additional leave for workers travelling beyond NYC in the course of their duties. But pending additional regulations, employers can—for now—safely tabulate only the hours these employees work in the city for accrual purposes.

Specific groups of employees are excluded. A subset of workers licensed by the New York State Education Department, most government workers, and bona fide independent contractors (ICs) are not eligible for guaranteed sick time under this law.

Regarding Independent Contractors
When it comes to ICs, Singer and Klimpl agreed, it’s important for employers to ensure that they are bona fide. Misclassification of workers became an especially hot topic in employment law with the onset of the Great Recession, when businesses conducted massive lay-offs—and ICs began applying for unemployment insurance. Whether or not a particular worker was properly characterized as an IC came under sharp scrutiny, and the government identified misclassification as a significant source of lost and potential revenue.

Today, the Internal Revenue Service (IRS) uses a multifaceted test to determine whether a worker is an IC or an employee, and significant case law has also shed some light on the issue. But, Singer noted, it’s still far easier to determine conclusively that a worker is not an IC than that they are.

“It’s a complex process,” he acknowledged. “But one of the most important, key factors is control.” If a worker reports to your office during the same hours as your staff, works directly under the company’s supervision, is required to attend staff meetings, uses a company email address or business card, is forbidden from working with your competitors, etc., it’s likely that the IRS would view them as an employee.

On the other hand, if a worker generates their own marketing materials (e.g., website, business cards, promotional pieces), does not represent the company to third parties, sets their own hours, uses their own equipment/tools, comes with specialized training, and operates beyond the company’s direct control, it’s possible the IRS and other governmental authorities will agree that the worker is a true IC.

Regarding Temporary Employees
One attendee asked about temporary employees, wondering which party would be responsible for administering required sick time—the company or the temporary staffing agency. Per Singer, the temporary agency, as employer of record, would be responsible for providing the paid time. However, both the temporary staffing employer and the “worksite employer” should be mindful of their obligations under the law.

Regarding Interns
Another attendee asked whether paid or unpaid interns were eligible for sick time under the statute. Singer took time to caution attendees on interns, explaining that “it’s very hard to have an unpaid intern and have that be lawful.” The law permits employers to engage unpaid workers under very specific conditions, and standards are strict. In general, the government’s view is that workers are entitled to compensation, and it only makes exceptions in rare, highly-specific cases. In any event, any intern who is an employee of the company will be eligible for paid time off.

Regarding Unionized Employees
The law includes an exemption related to collective bargaining, but does not summarily exclude all unionized workers. The law specifies that most workers covered by a collective bargaining agreement will be exempt from receiving benefits under the Earned Sick Time Act when the agreement specifically waives these workers’ protections and provides “comparable benefits,” or other types of paid time off (e.g., vacation, personal days).

Because the law is new, most collective bargaining agreements that are currently in effect will need to expire before these provisions can be incorporated. Until then, Singer explained, employers with unionized workforces should continue to track relevant work hours, so they will be prepared in the event that labor organizers do not agree to waive workers’ eligibility.

Accruing Sick Time

Most currently-employed workers will begin to accrue sick time as soon as the Earned Sick Time Act goes into effect. Moving forward, new workers will begin the accrual process on their first date of employment. Domestic workers, notably, will only be able to use sick time under this law after a full year of service. Once accrual begins, workers will be subject to a 120-day waiting period before they may use accrued time.

Non-domestic employees will accrue one hour of benefit for every 30 hours worked. (The law assumes exempt employees work a 40-hour week, unless the company can prove they are regularly scheduled for fewer hours.) After the waiting period, employees will be entitled to take up to 40 hours of accrued paid sick time annually (five days). Again, domestic workers are only guaranteed two days of paid sick time under this law.

Interestingly, Klimpl noted, while the Earned Sick Time Act specifies how many days workers may ultimately take, it does not specify how many they can accrue. (For now, employers should continue to track their time as a safeguard.) In addition, accrued but unused sick time must be carried over into the next calendar year.

Keeping good records will be essential, Singer agreed, because the law also includes provisions for re-hired and transferred workers. If an employee is terminated but then rehired within six months, the company must honor their previously-accrued sick time. Workers who transfer between divisions or locations are also protected—their accrued sick time will move with them.

Employers are not required to “pay out” accrued but unused sick time at the end of a calendar year, though they may choose to do so (specific requirements will apply). They are also not required to pay out unused sick time when employees terminate.

Using Paid Sick Time

Employees may use their paid sick time to deal with a wide range of health issues. They will be paid their normal wage rate or salary, and they cannot be required to find their own replacement in order to receive the benefit.

Covered absences include addressing personal health problems (physical or mental), from injuries to chronic conditions, and ranging from preventative care to ongoing treatment. Workers may also use their sick time to care for a spouse, child, parent, or domestic partner, as well as a spouse or domestic partner’s parents or children.

Paid sick time can be used in cases of public health emergency. For example, if a workplace or child’s school is closed under government orders due to health threats, the worker may be absent with guaranteed pay.

There are restrictions. Employers are permitted to set a “reasonable minimum increment” for sick time use, though it cannot be greater than four hours per day. The company can also require “reasonable notice” of covered absences. While not all sick time can be anticipated, much can be (e.g., ongoing physical therapy appointments). In such cases, the company can require employees to give notice as early as seven days in advance or “as soon as practicable.”

Employers are permitted to require workers to verify they are using sick time lawfully. Even for very short absences, they may ask employees to submit a written statement that they are using sick time for appropriate reasons. (Should the worker prove dishonest, disciplinary action applies, as lying is not protected under any law.) Companies are also permitted to require verification from healthcare providers for any absence longer than three consecutive workdays.

As always, sensitivity with medical information is absolutely essential, Singer stressed. Under the Earned Sick Time Act, employers cannot demand detailed medical information from employees or healthcare providers, and verifications must only state that the sick time is being used for reasons that are permitted under the law. Once collected, these written verifications must be stored as securely as the most sensitive employment documents.

Employer retaliation related to this law is strictly prohibited. Companies may not threaten or take retaliatory actions for lawful use of sick time, and also may not threaten or take retaliatory actions against employees who make “good faith complaints” to appropriate authorities about an employer’s perceived non-compliance with the law.

As in much of discrimination and wage and hour law, Singer noted, retaliation claims can be the most financially damaging to companies—even if they’ve demonstrated compliance with every other aspect of a law. Under the Earned Sick Time Act, companies can be required to reinstate unlawfully terminated workers, pay their lost wages, and pay fines of up to $2,500 per violation.

Because retaliation claims are so dangerous, it’s important to avoid any perception of discriminatory treatment. One attendee asked whether it would be appropriate to forward information about an Employee Assistance Plan (EAP) to a worker who appeared to need stress-management counseling. Singer responded that it would be safer to share the information with the entire company, avoiding the potential for a misunderstanding.

“Good intentions are not a defense,” he said. “The laws were put in place to benefit the employee.” With that in mind, HR should respond carefully to employees dealing with health problems covered by the Earned Sick Time Act. If an employee feels they’ve been singled out in any way, they may react more sensitively to future employment actions—and suspect retaliation.

Employee Notifications

Once the Earned Sick Time Act is implemented, employers will be required to notify workers of their rights when employment commences. (While the statute is unclear on notifying existing employees, Singer and Klimpl recommend notifying them as soon as the law goes into effect.) Helpfully, the DCA plans to draft these notices for HR, and they’ll soon be available online.

Interestingly, the law specifies that employers must provide notifications in English and the “primary language spoken by the employee” (if it is not English). Many attendees raised their hands at this, as asking workers about their first language necessarily requires investigating their country of origin. Under anti-discrimination law, HR is not permitted to use such information in employment decisions.

Singer and Klimpl acknowledged this tension, but advised attendees to do their best to gather the necessary information without creating a perception of discrimination. It’s safer, they noted, to ask everyone in the workplace to inform HR if English is not their primary language than to ask a select few, and to specify that HR’s motivation is to ensure compliance with this new law.

Finally, the law states that employers “may also” post workers’ rights under the statute in the workplace. While the language implies this is merely a recommendation, Klimpl strongly suggested that attendees treat it as a requirement and post notifications in a conspicuous location.

If employers fail to notify employees, they may be subject to fines of up to $50 per violation (i.e., per worker who did not receive a notice).

Required Recordkeeping

Employers must maintain records proving their compliance with the Earned Sick Time Act for at least two years. These records should include proof of employee notification(s), tracked hours and accruals, sick time hours paid, etc. In the case of an investigation, the government can compel the company to share these records—they represent an employer’s best defense.

Singer recommended that employees maintain their records for at least six years. Why? Because under New York State law, companies can be sued for failure to pay wages for up to six years.

Enforcement & Penalties

The Earned Sick Time Act affords workers 270 days to file a complaint with the DCA if they suspect their employer has violated the law. Their first recourse will be mediation. But if this fails, the DCA will launch a full investigation.

Penalties will be steep, Singer warned. Companies may be required to pay up to three times the wages that a worker is due and/or provide “equitable relief,” such as reinstatement. In cases of “substantive violations, the City of New York may also impose fines, up to $1,000 per violation.

Recommendations

With so much at stake, it’s time to plan ahead, Singer and Klimpl agreed. Klimpl led the final chapter of the presentation, describing different approaches that employers might take.

First and foremost, Klimpl recommended considering a broad, integrated Paid Time Off (PTO) policy rather than individual policies governing sick days, holidays, vacation, personal days, etc. The law specifically states that employers will not be compelled to provide additional paid leave if they offer enough time to satisfy the law’s requirements. So as long as this broad PTO policy provides workers with more than five paid days off per year, the employer will be compliant.

Employers will still be required to meet all the record-keeping, notification, carry-overs, and other requirements of the law. HR will need to carefully consider how to integrate the administrative burdens of the Earned Sick Time Act into existing practices.

Companies that adopt this policy will need to comply with additional regulations governing PTO. While the Earned Sick Time Act does not require employers to notify workers in writing if they do not plan to pay out unused time upon termination, New York State does require this for companies with broad, single PTO policies. Similarly, the New York Labor Law requires companies to provide different written notices when PTO is integrated.

However companies choose to manage their new obligations, ongoing vigilance will be necessary, Klimpl and Singer agreed. Subsequent legislation and regulations will be written that clarify various aspects of the law. And until then, HR will need to plan for implementation based on the law as it stands today.

“Now’s a good time to start thinking about your policy,” Klimpl stressed. “It might not be on your CEO’s radar just yet, but it will soon be up to you to incorporate the provisions of the Earned Sick Time Act into your company’s existing policies.”
Anne DeAcetis is a freelance writer based in New York. Reach her at anne.deacetis@gmail.com.

The HR Roundtable is a breakfast forum for human resources professionals in New York City sponsored by The TemPositions Group of Companies. TemPositions, one of the largest staffing companies in the New York tri-state area with operations in California, has been helping businesses with their short- and long-term staffing needs since 1962. Visit them online at www.tempositions.com or email them at info@tempositions.com.

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Please note: the information reflected in this post is not official legal advice nor does it necessary reflect the opinions of the associated firms.

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