Seattle, Washington’s Office of Labor Standards (OLS) revised its rules concerning the Paid Sick and Safe Time (PSST) Ordinance. The rules were published after amendments to the Ordinance to better align with the state PSST law took effect. Unsurprisingly, in many instances the revised rules incorporate state law standards. Although many revisions are merely linguistic changes that do not substantively alter existing rules, there are notable changes and deletions we will highlight, along with a new non-PSST rule that will affect leave management.

The final rules are not entirely “final-final,” however, because OLS has proposed further revisions. Specifically, OLS has proposed a rule concerning what constitutes “normal hourly compensation” to be used to calculate pay when an employee takes PSST leave. That additional final rule is expected shortly.

The PSST rules were adopted on June 4, 2018, giving employers less than one month to review and revise policies and practices, if necessary, by the time the revisions take effect on July 1, 2018.

Covered Employers & Employees

Expansion of Joint Employer Standard: Under existing rules, when employees are supplied by a staffing agency, generally the compliance obligation rested with the agency – not the client-employer – absent an agreement stating otherwise. However, none of the staffing-agency-related provisions are carried over into the new regulations. Instead, the new rule effective July 1st provides that joint employers are responsible for compliance with the law’s requirements. 

Occasional Employees: An existing rule provides that employees performing work in Seattle on an occasional basis are covered if they perform more than 240 hours of work in the city (“240-hour requirement”) in a calendar year. Many expected the standard to change because the 240-hour requirement was removed from the Ordinance in the most recent amendments, which provided that coverage for occasional basis employees would be dictated “pursuant to rules issued by [OLS].” Nonetheless, the 240-hour requirement is included in the revised rules. Moreover, the revised rules detail what it means to be “typically based outside” Seattle: an employee must work outside Seattle more than 50% of work hours in a year (or the course of employment, if less than a year). The revised rules also codify standards OLS has traditionally used, such as finding that employees are covered for every hour worked in Seattle if they are regularly scheduled to work in Seattle even if infrequently scheduled (e.g., works every Monday in Seattle) or if scheduled on a limited, but consistent basis (e.g., every day for a three-month project).

Using, Verifying, and Documenting Leave

Increment of Leave Variance Unavailable: Both state law and Seattle’s Ordinance require that employees be able to use leave in one-hour increments or the smallest increment an employer uses to track work, whichever is smaller. Under Washington’s law, the state Department of Labor and Industries can grant an employer a variance from the incremental use requirement for good cause, i.e., compliance is infeasible and a variance will not significantly harm employees’ health, safety, and welfare. A new Seattle rule provides that OLS will not grant a variance and will not recognize a variance issued by the state labor department for work performed in Seattle.

Leave Use if Employee Voluntarily Agrees to Work Overtime: The existing rules provide that employers do not have to allow employees to use leave for voluntary overtime hours they elected or agreed to add to their schedule. And the rules state that, for employees scheduled for on-call shifts that are only paid if work is performed, employers may – but are not required to – permit leave use during the on-call shift. A new rule re-interprets the Ordinance’s requirement that employees be paid for hours they are “scheduled to have worked” and deviates from the prior understanding. For example, the term, in part, includes voluntary overtime and hours an on-call employee is required to work after being contacted by an employer.

Undue Burden or Expense of Verification or Documentation: Under the Ordinance, like state law, an employer’s verification or documentation requirements cannot unduly burden an employee, result in an employee incurring an unreasonable expense, or exceed privacy or verification requirements established by law. A new OLS rule provides a framework for employees to challenge an employer’s verification or documentation requirement, which generally follows state law. However, unlike state law, if the parties disagree that a requirement results in an unreasonable burden or expense, the new rule does not provide an option for the parties to consult with OLS about the requirement.

The Ordinance requires employers to split the cost of certain out-of-pocket medical expenses if employees are not provided health insurance by an employer. A new rule, however, reinforces the prohibition against verification causing the employee an unreasonable burden or expense.

Calculating Leave Pay Rate

The new, finalized pay calculation rules generally mimic state standards. The more pressing issue for employers is how a separate, newly-proposed rule defining “normal hourly compensation” will appear in final form. The rule, if adopted as proposed, would in part be welcomed by employers. The proposed rule walks back an OLS proposal to include holiday pay and premium rates in calculations as well as an FAQ stating that employees are entitled to compensation for lost commissions. Importantly, however, in the proposed rule, OLS only partially walks back the requirement with respect to pay for lost commissions by proposing that overtime-exempt employees are not entitled to lost commissions, meaning employers would need to calculate lost commissions for non-exempt employees. The comment period on the proposed rule closed on June 19, 2018, and a final rule is anticipated by July 1st.

Employer Notice & Posting Requirements

Advancing Leave: The Ordinance, like state law, allows employers to advance leave to employees prior to accrual, and a new rule generally adopts state law requirements for such advances. The new rule also requires employers to provide written or electronic notice, by the end of the period which the advance was intended to cover, that establishes the advanced amount at least equaled what the law required an employee to accrue. This notice is in addition to an employer’s obligation to notify employees of their available leave balance when wages are paid.

Mandatory Poster: Under the ordinance, employers must display the OLS-created poster. A new rule requires that employers must display a poster that meets OLS’s specific dimensions. It also mandates that the poster be displayed, or provided individually if display is infeasible, no later than when employment begins or within 30 days of an employee becoming covered during employment.

Interplay with Other State & Seattle Laws

Hotel Employees Health and Safety Initiative (HEHSI): Under the HEHSI, if a covered employee brings to a hotel employer’s attention the occurrence of an act of violence (including assault and sexual assault, or sexual harassment by a guest), the employer must immediately allow the employee sufficient paid time to contact the police and provide a police statement and to consult with a counselor or advisor of the employee's choosing. A new HEHSI rule, also effective July 1, 2018, provides that employers cannot subtract hours paid from any other paid leave to which the employee is entitled (by law or employer policy), including Seattle’s Paid Sick and Safe Time Ordinance.

Examples of Notable Deleted Rules

In the new rules, OLS purged various rules. Unless the standards set by these rules are eventually incorporated into an updated FAQ, it is unclear whether OLS will be guided by to-be-rescinded precedent when investigating complaints filed after the new rules take effect. For example, an existing rule allows employers to seek documentation or verification from an employee, even if leave is used for fewer than four consecutive days, when there is a clear instance or pattern of abuse. A separate existing rule explains that the Ordinance’s antiretaliation protections do not prevent an employer from disciplining an employee when there is a clear instance or pattern of abuse. Another soon-to-be-eliminated rule provides that work performed outside Seattle is not covered under the law for accrual and use purposes.

Next Steps

Employers have limited time to determine whether and how the revised rules impact policies and procedures. Given that so many state requirements were incorporated into the rules, and many rules did not substantively change, the short timeframe likely is not as problematic as it may appear at first glance. But the narrow window to comply presents one potentially daunting challenge: adjusting payroll rules to calculate the PSST pay rate. At most, employers may have only several days to review, and incorporate into pay rate calculations, the forthcoming “normal hourly compensation” rule anticipated by July 1st. Accordingly, the OLS PSST webpage should be actively monitored to determine when this rule is finalized, so employers have as much time as possible to resolve what may prove to be one of the trickier PSST compliance issues.