On the heels of signing equal pay legislation which will substantially expand pay equity protections for New Jersey employees,¹ Governor Phil Murphy tweeted that he will sign a statewide paid sick leave bill on Wednesday, May 2, 2018. Once he does so, New Jersey will become the 10th state with a paid sick leave law, furthering a nationwide trend that has been gathering steam for the past several years.  The new law explicitly preempts 13 existing local paid sick leave ordinances and creates a statewide obligation. While many provisions mirror existing local requirements, there are several key differences. The law will take effect 180 days after the governor signs the bill, which is projected to be October 29, 2018.

Covered Employers, Employees and Family Members

All private businesses that employ individuals in New Jersey are covered. Notably, there is no “small business” exception, nor are smaller business permitted to provide a lesser amount of leave. Temporary help service firms must provide leave to all employees on the basis of their total time worked on assignments for the firm instead of time worked for specific clients.

The law covers most private employees who work in the state, excluding per diem healthcare workers, and construction workers covered by a collective bargaining agreement (CBA). Unlike the local ordinances the law will supplant, there is no minimum number of hours an employee must work to be eligible for leave.

The law does not apply to non-construction employees covered by a CBA at the time the law goes into effect, but will apply once the agreement expires. Further, employees and their representatives may waive the rights available under the law and address paid leave in collective bargaining.

Employees may use leave for their own qualifying need or for that of a “family member,” which is broadly defined to include children, grandchildren, siblings, spouses, domestic partners, civil union partners, parents, and grandparents, as well as any individual “whose close association with the employee is the equivalent of a family relationship.”

Accrual, Caps, and Carryover Requirements

If an employer has a paid time off policy (including personal days, vacation days, sick days, etc.) that provides a sufficient amount of paid time off to comply with the law, and allows the time to be used in a manner consistent with the law, it need not provide additional earned sick leave. Otherwise, leave begins to accrue on the law’s effective date or when employment begins – whichever is later – at a rate of one hour for every 30 hours worked. Employers are not required to allow employees to accrue more than 40 leave hours in a benefit year (a consecutive 12-month period determined by the employer).² As an alternative to accruing leave, employers can front load 40 leave hours on the first day of a benefit year.

Employers must permit up to 40 leave hours to be carried over from one benefit year to the next. Alternatively, employers using an accrual-based system may give employees the option of receiving compensation for accrued, but unused leave at the end of the benefit year. If front loading, employers may either carry over accrued but unused leave or they must offer employees compensation for the same at the end of the year.

Permitted Uses

Regardless of whether an employee begins employment before, on, or after the law’s effective date, leave can be used on the 120th calendar day after employment begins unless an employer permits use earlier. Leave may be used for the following reasons:

• Diagnosis, care, treatment, recovery, or preventive care of a mental or physical illness;
• Time taken off if an employee or family member is a victim of domestic or sexual violence, including for counseling, relocation, legal services, or medical attention;
• Closure of the employee’s place of business or a child’s place of care due to public health emergency;
• If a public health authority determines the employee’s or a family member’s presence in public may jeopardize others’ health; and
• To attend a school-conference, meeting, or any event requested or required by a child’s educator, or to attend a meeting regarding a child’s health or disability.

Employers may choose the increment in which leave may be used. There is no minimum increment, but employers cannot require employees to use leave in any increment larger than the number of hours the employee was scheduled to work for that shift.

Employers are not required to allow employees to use more than 40 leave hours in a benefit year.

Employee Notice and Documentation Requirements

If the need to use leave is foreseeable, employers may require employees to provide up to seven calendar days’ advance notice and may prohibit foreseeable leave use on certain dates. If leave is unforeseeable, notice must be provided as soon as practicable. For absences of three or more consecutive days, employers may require documentation from a health care professional or the appropriate care giver or professional. 

Pay Rate Requirements

Leave must be paid at the same rate of pay, and with the same benefits, as an employee normally earns, which cannot be less than the state minimum wage. At the end of employment, absent an agreement or policy to the contrary, payout of accrued but unused leave is not required.

Prohibitions

Employers cannot require employees to search for or find a replacement worker to cover hours during which leave is used, or count leave as an absence that may result in discipline, discharge, demotion, suspension, a loss or reduction of pay, or any other adverse action. Additionally, employers cannot take retaliatory action or discriminate against employees who request or use leave, file a complaint alleging a violation of the law, or inform others of their rights under this law. There is a rebuttable presumption of retaliation when an employer takes adverse action against an employee within 90 days of the employee's engaging in protected conduct.

Employer Notice, Posting and Recordkeeping Requirements

Employers must display a state-created poster informing employees of their rights under the law, and provide individual notice to all employees within 30 days of the notice being issued by the N.J. Department of Labor and Workforce Development (“DOL”) and to all new employees at the time of hiring.

Employers must maintain records pertaining to hours worked and leave taken for a period of five years. If an employee complains to the DOL and the employer cannot or does not provide adequate records, DOL will presume that the employer failed to provide required leave.

Enforcement and Penalties

Employees can file a complaint with DOL or a civil lawsuit. In addition to other penalties or fines, employees who prevail may be entitled to actual damages plus liquidated damages in an equal amount.

Key Takeaways and Next Steps

For employers that have been subject to one or more local ordinances in New Jersey, the new law will eliminate the patchwork of requirements that existed for years. However, because the law will apply statewide, many more New Jersey employers will be impacted, along with employers with multi-state or nationwide operations that include the Garden State. In certain respects, the forthcoming state law will be notably different from previous in-state requirements, some of which may be welcomed by employers.  Other aspects of the law may present challenges when revising existing policies. For example:

• More employees may be covered because a minimum number of hours worked in a year will not be required.
• The reasons for which leave can be used exceed what the local laws in New Jersey require. For example, of the 13 local laws, only New Brunswick required leave to be used for reasons connected to domestic violence, sexual assault, or stalking, and none of the local laws contained a school-related absence requirement.
• For smaller employers, the amount of leave that must be provided annually will increase.
• Records must be kept for a longer period than most local laws required.
• A longer “waiting period” during which leave cannot be used can be instituted.
• Employers will have greater control over the minimum increment of leave that can be used.

Also, as can be expected, there are gaps that will need to be filled by the DOL via frequently asked questions (FAQ) or the rulemaking process. For example, questions remain regarding how exempt employees accrue leave, whether employers may ask employees to verify leave was taken for a covered purpose, how the rate of pay will be calculated for employees who earn commissions, and what can be excluded when calculating employees’ pay rates. Accordingly, employers should monitor the DOL’s webpage for developments, and keep in close contact with labor counsel as the implementation date approaches.