Jill Lowell & Adam Fiss
June 2018
Prescription for a Solution:
Critical Issues in Paid Sick Leave Compliance
Presented By
Jill Lowell
Shareholder, Rochester
585.203.3405
Adam Fiss
Shareholder, San Jose
408.795.3438
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• Paid Sick & Safe Time Laws Generally
• Universal Policies
• Unlimited Policies
• High Risk Areas You Should Focus On & How Scared You Should Be
• Proposed Federal Exemption Under ERISA
• Available Resources
Today, we will be discussing…
Paid Sick & Safe
Time 101
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
Current Status of Paid Sick Leave Laws
TX
OR ID
MT ND
WY
SD
NV UT
AZ
CO
NM
AK
HI
OK
KS MO
NE
MN
WI
IA
IL IN
AR
LAMS
FL
ALSC
TN
KY
OH
ME
NY
PA
WV
NC
VA MDDC
DE
NJ
NH
MARI
CT
Bloomfield, NJ
East Orange, NJ
Elizabeth, NJ
Irvington, NJ
Jersey City, NJ
Montclair, NJ
Morristown, NJ
Newark, NJ
New Brunswick, NJ
Passaic, NJ
Paterson, NJ
Plainfield, NJ
Trenton, NJ
Seattle, WA
Sea-Tac, WA
Spokane, WA
Tacoma, WA
New York, NY
Philadelphia, PA
Pittsburgh, PA
Washington, D.C.
WA
• States with Mandatory
Paid Sick Leave
Requirements
• Counties with
Mandatory Paid Sick
Leave Requirements
• Cities with Mandatory
Paid Sick Leave
Requirements
• Federal Contactors
with Paid Sick Leave
Requirements
Montgomery County, MD
Minneapolis, MN
St. Paul, MN
VT
CA
MI
GA
Berkley, CA
Emeryville, CA
Long Beach, CA
Los Angeles, CA
Oakland, CA
San Francisco, CA
San Diego, CA
Santa Monica, CA
Chicago, IL
Cook County, IL
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
Current Status of Paid Sick Leave Laws
CA
ID
MT
WY
SD
COKS MO
NE
MN
WI
MIIA
IL IN
AR
LAMS AL
GA
SC
TN
KY
OH
ME
WV
NC
VA MDDC
DE
NJ
NHRI
CT
Seattle, WA
Sea-Tac, WA
Spokane, WA
Tacoma, WA
New York, NY
Philadelphia, PA
Pittsburgh, PA
• States with Mandatory
Paid Sick Leave
Requirements
• Counties with
Mandatory Paid Sick
Leave Requirements
• Cities with Mandatory
Paid Sick Leave
Requirements
• Federal Contactors
with Paid Sick Leave
Requirements
WA
OR
NV UT
AZ NMOK
TX
NY
ND
PA
MA
FL
AK
HI
Washington, D.C.
Montgomery County, MD
VT
Chicago, IL
Cook County, IL
Minneapolis, MN
St. Paul, MN
Berkley, CA
Emeryville, CA
Long Beach, CA
Los Angeles, CA
Oakland, CA
San Francisco, CA
San Diego, CA
Santa Monica, CA
Bloomfield, NJ
East Orange, NJ
Elizabeth, NJ
Irvington, NJ
Jersey City, NJ
Montclair, NJ
Morristown, NJ
Newark, NJ
New Brunswick, NJ
Passaic, NJ
Paterson, NJ
Plainfield, NJ
Trenton, NJ
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• “There’s a 50-state solution for this”
• “You can give the employer your latest and greatest template”
• “This won’t take long. Only 30 minutes, right?”
• There is a definitive [or quick] answer to the employer’s question(s)
• The policy only requires a few tweaks
Fact or Fiction?
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• Where are your employees located?
• How many employees are located in each jurisdiction?
• Are you a federal contractor? When were these contracts entered into? What do they cover?
• Which types of benefits are offered?
• How much paid time off do you provide?
• Do benefits accrue or are they frontloaded?
• When is someone eligible to receive benefits?
– Job classification
– At what point in employment?
• When can benefits start to be used?
• For what purpose(s) can the benefits be used?
• In what increment(s) can the benefits be used?
Just An Illustration: How Complicated Is It?
(Legal Considerations)
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• Stakeholder concerns
• Different challenges
– Multiple businesses or units
– Different employee populations
– Attendance
– Different recruiting / tenure / retention issues
• Historical practice(s)
Just An Illustration: How Complicated Is It?
(Company Considerations)
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• Accrual Rate: The amount of sick leave accrued per hour worked
• Annual Accrual: The maximum amount that can be accrued in a
year
– Not all laws place a limit on how much can be accrued in a year
• Maximum Bank / Floating Bank: A maximum amount that an
employee may have banked for use at any given time; when an
employee reaches this maximum amount, they will stop accruing
further leave until some is used
• Frontloading: Providing a lump-sum of paid sick leave at hire and
the start of each benefit year thereafter
• Use Cap: Maximum amount of paid sick leave that can be used in
a year
Definitions
Universal Policy
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• Accrual with Caps
– Can you systems handle varying caps?
– Use Cap vs. Bank Cap vs. Carry-Over Cap
• Frontloading
– Some laws require carry-over regardless
– Some laws don’t expressly allow frontload
Universal Policy: One Size Fits All
Paid Sick & Safe
Time Challenges:
Accrual Caps
14
© 2018 Littler Mendelson P.C. Proprietary and Confidential
Adding Insult to Injury:
Varying Use Amounts
40 24 48 72 40 + 20 64
60 80 100 32 60 + 40
NO LIMITWhat is accrued and available
© 2018 Littler Mendelson P.C. Proprietary and Confidential
Adding More Insult to Injury:
Varying Carryover Amounts
40 24 48
72
20 but
could be 40
6480
56
NO LIMIT7 days
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• Not all laws are the same – there are differences between:
– Reasons for use
– Documentation / verification
– Reinstatement upon rehire requirements
– Notice provisions
– Rate of pay
– Which classifications of employees will be covered
Universal Policy: How Generous?
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• A universal PTO policy that includes sick
time is difficult
• Tension between state law on vacation/PTO and the
various paid sick leave rules
– Different rules on pay out upon termination
– Different rules on use-it-or-lose-it
– Different rules on carry-over
– Rules regarding reinstatement upon rehire
Another Consideration: PTO vs. Sick Only
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• California & Illinois: An amount not less than what would be accrued in a 6-month period
• Maryland: Can use earned paid leave to attend to the illness of a child, spouse, or parent
• Massachusetts: Paid leave can be used for a child’s or elder relative’s medical appointment or another appointment related to the elder’s care
• Minnesota: No less than 160* sick leave hours in a 12-month period can be used for relatives’ illness or injury, or for reasons connected to sexual assault, domestic abuse, or stalking
• Texas: If sick leave can be used for a biological or adoptive child, it can also be used for a foster child
• Washington: Sick or “other paid time off” may be used to care for family members
An Additional Ailment: Kin Care Laws
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• Georgia: Up to 5 sick days may be used to care for family members
• Maine: Up to 40 sick hours may be used to care for family members
• Vermont: Accrued paid leave can be used to accompany a covered relation to medical or professional services appointments and/or responding to a medical emergencies
An Additional Ailment: Kin Care Laws
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• While not all PSL laws are created equal, many have some common dominators:
– 1 for 30 accrual rate
– An accrual cap of 40 hours
– A carryover cap of 40 hours
– A use cap of 40 hours
– Limit use to one’s own illness,
– No payout at termination
One Size Fits Most?
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• Reporting
• Posting
• Notice requirements
• Tracking requirements
With Any Approach – the Devil Is in the Details
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• Many jurisdictions require employers to report on
paid sick leave to employees
– Most are each time wages are paid (some
monthly, quarterly, or on demand)
– Paystub (or some allow electronic portal 24/7)
– Most only require amount of paid leave
available for use
• Some amount accrued or reduced
Employer Reporting Requirements
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• Employer failed to provide notice to employees about their rights under the law
• Enforcement agency assessed a $60,000 penalty
Notice Violation
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• Why Important?
– If you don’t get it right, you now have paid
the employee incorrectly
– This is not just a PSL violation, but also a
wage & hour violation
– Failing to pay correct amount may trigger
late payment of wages penalties
Calculating the Rate of Pay
25
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• Methods for calculating differ across jurisdictions
– Base rate of pay (if base wage is minimum wage or higher)
– Rate in effect
– Blended rate of pay
• Calculations aren’t just different – they are difficult too!
– Especially if you have incentives as a pay component
– Puts a stress on your payroll systems and staff
Calculating the Rate of Pay:
It’s Not Just “The Regular Rate”
•
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• Employer said it was not aware of a detail in an ordinance dictating how
salespeople who worked on commission were to be paid when they took paid
sick & safe time
• Enforcement agency investigated and employer agreed to pay employees
the difference between how pay was – and should have been – calculated
when leave was used
Case Study: Commissioned Salespeople
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• Aggrieved employee claims that employer failed to provide required notice of
PSL
• Employee seeks compensatory, special, and general damages, & civil and
statutory penalties for paystub violations, under the PSL law, and under PAGA,
along with fees, costs and interest
• Employer files a motion to dismiss the PSL related claims, including PAGA
Case Study: Private Attorney Generals Act (PAGA)
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
Important Outcomes
• No private right of action for failure to provide employee with amount of PSL information on a wage statement or other writing (under the PSL law)
• No right to seek paystub violation penalties under Labor Code 226 because PSL prohibits this
• No PAGA action based on failure to provide notice in paystubs -- PAGA suit not permitted for violations of “notice” provisions, except for a narrow category of government-required reporting or filing
*But Note: Only 2 federal cases have come out this way. There are no state cases yet. It’s a matter of time before someone does a deeper dive and makes new arguments.
Case Study: Private Attorney Generals Act (PAGA)
Location Specific
Policies
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• Pros
– Provides the minimum required by each law so cost savings when compared to other
approaches
– Simple policies that track legal requirements
– Clear guidelines for managers
Standalone Sick Leave Policies
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• Cons
– Administrative nightmare
• Not all timekeeping and payroll systems allow for 40+ variations to account for
different sick leave requirements
• Need to create 40+ policies
– Difficult to track employees who relocate to another location
– More and more laws are being enacted
Standalone Sick Leave Policies
Trending Topics
Proposed Federal
Preemption via
ERISA
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
• ERISA preemption
• Minimum paid days = 12 days (up to 20 days)
• Qualified Flexible Workplace Arrangement Plan
– Time off
– One flexible work arrangement
• Teleworking
• Compressed schedules
• Biweekly work programs
• Job-sharing
• Predictable scheduling
Workflex in the 21st Century Act (H.R. 4219)
Paid Sick & Safe
Time Resources
© 2018 Littler Mendelson P.C.
GPS– 2 full surveys and 10 “quick charts”
HR PolicySmart– Policy templates covering all
paid sick leave jurisdictions
Littler On– Employment Policies and
the Employee Handbook
– Government Contractors & EEO Obligations
– Leaves of Absence: Family, Medical & Pregnancy Leaves
Paid Sick & Safe
Time Resources
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
Compliance HR’s PSL Rapid Reference
Navigator Leave includes an intuitive reference to keep you informed of the varying state and local Paid Sick Leave regulations.
© Littler Mendelson, P.C. | 2018 Proprietary and Confidential
Compliance HR’s PSL Rapid Reference
The application includes guidance on many PSL topics including:
• Coverage
• Permitted Use
• Accrual
• Cash Out
• Carry Over
• Recordkeeping
Questions
This information provided by Littler is not a substitute for experienced legal counsel and does not provide legal advice or attempt to address the numerous factual issues that inevitably arise in any employment-related dispute.
Although this information attempts to cover some major recent developments, it is not all-inclusive, and the current status of any decision or principle of law should be verified by counsel.
Thank You!