On May 2, 2018, New Jersey Governor Phil Murphy signed a state-wide earned sick leave law, which explicitly preempts the various local paid sick leave ordinances in effect in municipalities across the state. New Jersey Assembly Bill No. 1827 (the “Act”) follows similar laws enacted in recent years in several states, such as California, Connecticut, Massachusetts, Oregon, and Washington, as well as municipalities such as Washington, D.C., and New York City. The Act is effective on October 29, 2018.
Private employers in New Jersey are covered by the Act. Specifically, the Act defines the term “employer” broadly to encompass any entity that employs workers within the state, including temporary help service firms, but excludes public employers which are already required to provide paid sick leave. There is no minimum number of employees an employer must employ before being covered by the Act. Employees of temporary help service firms will accrue sick leave based upon their total time worked on assignment with the firm, rather than separately for each client to which they are assigned by the firm.
As with the definition of employer, the Act also defines the term “employee” broadly, as any individual engaged in service to an employer in the business of that employer for compensation. That said, the Act excludes employees working in the construction industry who are already covered by a collective bargaining agreement. For non-construction employees who are covered by a collective bargaining agreement as of the effective date of the Act, the law will not apply until the expiration of that agreement. Additionally, non-construction employees and their union representatives may agree to waive the applicability of the Act in subsequent collective bargaining agreements.
Notably, the Act also exempts “per diem health care employees,” a term which may include licensed healthcare professionals; individuals who are in the process of applying for a license to perform healthcare services (but are already employed by a licensed healthcare facility); and first aid, rescue, or ambulance squad members employed by a hospital system. To qualify for exemption, the per diem healthcare employee must: work on an as-needed basis to supplement a healthcare employee, or to replace or substitute for a temporarily absent healthcare employee; work only when the individual indicates that they are available to work, and have no obligation to work otherwise; and either have the opportunity for full- or part-time employment for a healthcare provider that offers paid time-off benefits that are greater in length than those required by the Act or have waived sick leave benefits under the Act in favor of receiving alternative benefits or consideration.
Employees will accrue one hour of paid sick leave for every 30 hours worked, up to 40 hours of accrued leave per “benefit year.” A benefit year is a period of 12 consecutive months, as determined by the employer, during which an employee may accrue and use earned sick leave. Existing employees and employees who are hired before the Act’s effective date will begin accruing leave pursuant to the Act on the effective date, and will be permitted to use the leave after 120 days of employment. Employees who are hired after the effective date begin accruing leave at the commencement of their employment and are permitted to use the leave beginning on their 120th day of employment. There is no minimum number of hours that an employee must work before becoming eligible for leave.
Employers are not required to allow employees to use, accrue, or carry over more than 40 hours of earned sick leave into a successive benefit year. Alternately, employers have the option of foregoing the accrual of sick leave, and instead “front-loading” by providing employees with a full complement of earned sick leave in advance — on the first day of the benefit year. Employers who use the front-loading method do not have to track accruals or permit their employees to carry over unused sick leave, provided that they pay their employees for any unused sick leave in the final month of the benefit year. While employers who use the accrual method under the Act may offer employees payment for unused sick leave in an attempt to avoid carryover, these employees have the option of declining such a payment (or only accepting partial payment) and carrying over up to 40 hours of leave into the next benefit year.
The Act does not require employers to pay their employees for any unused sick leave upon termination of employment unless the employer’s policy states otherwise. Sick leave must be paid at the employee’s applicable rate of pay, which may not be below the applicable New Jersey minimum wage.
The Act does not require employers who provide their employees with other forms of paid time off (such as sick, vacation, or personal time) to provide additional leave, provided that this other paid time off accrues or is front-loaded as required by the Act and may be used for the same purposes and in the same manner as required by the Act (as discussed below). Employers may also specify the minimum increments of leave that may be used by employees, although such increment may not exceed the number of hours that an employee was scheduled to work during a given shift for which leave is requested.
Employees may use sick time under the Act for the following purposes:
The Act defines the term “family member” broadly. The term encompasses a child, grandchild, sibling, spouse, domestic partner, civil union partner, parent, or grandparent of an employee; a spouse, domestic partner, or civil union partner of a parent or grandparent of the employee; or a sibling of a spouse, domestic partner, or civil union partner of the employee. Notably, the term family member also includes any other individual related by blood to the employee or whose close association with the employee is the equivalent of a family relationship.
Where an employee’s need to use leave is foreseeable, the employer may require the employee to provide no more than seven days’ notice of their intention to use leave and the duration of such leave, and to make a reasonable effort to schedule the leave in a manner that does not unreasonably disrupt the employer’s operations. Where the need for leave is not foreseeable, the employer may require the employee to provide notice as soon as practicable.
Employers may also prohibit employees from using foreseeable leave on certain dates, or to require “reasonable documentation” if unforeseeable leave is used on those dates. Where the leave is taken for three or more consecutive days, the employer may require reasonable documentation that the leave is being taken for permissible purposes. The Act specifies the type of reasonable documentation that will suffice depending upon the reason for the leave.
Employers are prohibited from discriminating or taking any form of retaliatory personnel action against an employee who requests or uses leave under the Act, informs another person of their rights under the Act, or files a complaint with the New Jersey Commissioner of Labor and Workforce Development (the “Commissioner”) alleging that the employer violated the act. The Act provides that there is a rebuttable presumption that a personnel action is unlawful if the action is taken within 90 days of when the employee files a complaint regarding a violation of the Act; informs any other person of an alleged violation of the Act; participates in an investigation regarding the employer’s alleged violation of the act; informs any person of their rights under the act; or opposes any policy, practice, or other act made unlawful by the Act.
Employers must retain records for a period of five years that reflect hours worked and sick leave taken by their employees. Employers must also post a form notification in the workplace to their employees of employees’ rights under the Act, which will be issued promulgated by the Commissioner. Employers must also provide each employee with a copy of the notification no later than 30 days after the notification is issued by the Commissioner, and must provide any employee hired after the notification is issued with the notification at the time of hire. The notification must also be provided to employees on request.
The Act will be enforced by the Department of Labor and Workforce Development, but also includes a private right of action as part of the New Jersey State Wage and Hour Law. As a result, employers may be subject to the penalties and remedies provided by the Wage and Hour Law for failure to pay wages, for discrimination or retaliation, and/or for failure to maintain required records.
While the Act has now been signed into law, the task remains for the Commissioner to issue the notice of employee rights required by the Act, and to promulgate rules and regulations to put its terms into effect. Accordingly, employers should look for these developments over the next few months, which may provide clarifications. That said, employers should begin working to ensure that they will be able to track the accrual and use of leave properly as required under the Act, and should begin reviewing their paid time off policies to determine how best to comply with the Act.
The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.
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