On May 11, 2018, the Rhode Island Department of Labor and Training finalized regulations concerning the state’s mandatory paid sick and safe time law,¹ the Healthy and Safe Families and Workplaces Act (HSFWA). The regulations clarify some issues like business size and pay rate calculations and fill some gaps left by the enacting statutes. Yet the regulations fail to provide sufficient clarification on certain issues and interpret some more common provisions in a novel way that may leave employers scratching their heads.

Covered Employers and Employees, and Leave to Care for Family Members

The law requires employers with 18 or more employees in Rhode Island to provide paid sick and safe time. Although employers with fewer than 18 employees are required to provide unpaid leave, others must determine whether they have the requisite number of employees to be subject to the law’s paid leave requirements. How this calculation must be made is detailed in the rules. Employers must annually calculate the number of employees based on the prior year’s headcount. If in the previous year’s highest two quarters an employer maintained an average of 18 or more employees in Rhode Island, paid leave must be provided. This figure, once determined, will apply for the following 12 months, regardless of whether employee numbers decrease.

The statute defines an employee as a person suffered or permitted to work by an employer. The rules contend employees are employed “in Rhode Island” if the state is their primary place of employment. Working 50% or more of the time in Rhode Island is not required to establish that an employee is working “in Rhode Island”; rather, if an employee spends more time working in Rhode Island than in any other state, that employee must be counted toward the 18-employee threshold.

In addition to traditional family members like children, parents, and spouses, the law allows leave to be used for members of an employee’s household. The term is undefined in the statutes, but the regulations define a member of an employee’s household as a person residing at the same physical address as the employee or a person the employee claims as a dependent for federal tax purposes.

Accrual, Caps, and Carry-Over

Given that eligible employees are not required to work solely in the state, it is not surprising that the rules do not limit accrual or use of leave to work performed in Rhode Island. Employees working outside of Rhode Island part of the time must still accrue Rhode Island paid sick leave for those hours worked outside the state. What may surprise employers, however, is a requirement that employees accrue leave for all hours paid – not just worked – so employees must accrue paid sick and safe leave while they are using paid time off for paid sick and safe leave, vacation, personal days, and when they are paid but not working on a holiday.

Requesting, Verifying, and Documenting Leave

Under the HSFWA, employees must provide advance notice for a foreseeable absence. The rules state that foreseeable absences are those planned at least 24 hours in advance. The rules further provide that notice must be provided within a “reasonable timeframe,” without elaborating on what that would be. 

Under certain circumstances, employers can require employees to provide documentation to show leave was used for a covered purpose. The rules indicate that employers must accept documentation within a “reasonable timeframe”—again, without clarifying what constitutes reasonableness.

The law specifies that verification and documentation requirements cannot unreasonably burden employees or cause them to incur an unreasonable expense. Per the rules, if the total cost to obtain certification—including administrative, governmental, medical, and transportation costs and fees—is more than twice an employee’s hourly pay rate, the requirement is unreasonable. In situations involving unreasonable expense burdens for obtaining certification, the regulations allow employers to require  “notes” from employees in the form of a signed statement that leave was taken for a covered purpose.   

Calculating Leave Pay Rate

HSFWA leave is paid at the same hourly rate, and with the same benefits, an employee normally earns, which cannot be less than the minimum wage. The rules provide calculation scenarios for an employee’s pay rate.  Importantly, employers cannot change the calculation method used during a year; once selected, a method must be used throughout the year.

• For salaried employees, total earnings are divided by total hours worked in the previous pay period. For FLSA-exempt executive, administrative, professional, and outside sales employees, 40 hours, or the employee’s normal workweek if fewer than 40 hours, is used.
• If employees earn commissions, they must be paid their base rate or the state minimum wage, whichever is greater.
• For piece-rate employees, employers may use a reasonable calculation to determine what the employee would have earned for the work if it had been performed, but no examples of reasonable calculations are provided.
• If employees receive different rates for hourly work, the hourly rate is either the rate-in-effect or the weighted average for the previous pay period, month, quarter or other established period of time an employer customarily uses to calculate the weighted average for similar purposes. Employers may use only one method consistently in a year.
• When employees are paid the lower “tipped” minimum wage, they must be paid the full minimum wage—not the lower “tipped” hourly rate—when leave is used.

The rules also identify various compensation items that are excluded when calculating an employee’s leave pay rate—e.g., commissions, bonuses, overtime, holiday pay and other premium rates—but require that shift differentials be included.

Deductions from Final Wages for Negative Leave Balances

The HSFWA allows employers to advance or loan leave before it is accrued. The rules explain that, with an employee’s written permission, these amounts can be deducted from final wages. This position represents a small change from the proposed regulations, which required employers to obtain written permission at the time leave was taken. The department seemingly “rolled back” that impractical requirement to allow written permission to be obtained before the leave is used (e.g., at the outset of employment).

Mandatory Policy Provisions

The HSFWA requires that several provisions be documented in employer policies. Below are the provisions that must be included, in writing, should an employer wish to impose those obligations on employees:

• call in/notification policies or requirements for unforeseeable leave;
• documentation requirements to support the need for absences;
• where an employer provides paid time off that can be used for a variety of purposes, a statement that additional leave will not be provided if an employee exhausts paid time off for vacation or other non-paid sick and safe leave purposes;
• notice of waiting periods before sick and safe leave can be used; and
• notice and “agreement” that loaned/borrowed time can be deducted from final pay.

The rules allow “written” or “in writing” requirements to be met electronically—via email, a computer system, or a communication otherwise electronically sent and stored. A hard copy must be provided upon request.

Prohibitions, Penalties, Damages and Enforcement

A rule prohibits adverse action against employees exercising their paid sick and safe leave rights. Adverse action is broadly defined as denying any right guaranteed under the law, and any threat, discharge, suspension, demotion, reduction of hours, reporting or threatening to report the citizenship or immigration status of the employee or a family member to a federal, state or local agency, or any other action that would cause harm to the employee in any way.

The HSFWA provides for a civil penalty up to $100 for a first violation and references state wage law penalties as additional remedies for failure to comply with the law. The rules clarify that subsequent violations can result in a penalty of $100 to $500 per offense, with each day a violation occurs counting as a separate offense.  There is no maximum penalty in the final regulations. 

Employees also have the same protections under the HSFWA as those that are available under the wage payment act. The HSFWA rules provide no additional guidance regarding specific elements of damages, so employers must assume damages for violations of the law could include unpaid wages and benefits, and liquidated damages up to twice that amount, among other potential relief.

Unresolved or Uncertain Issues

Even with the final regulations in place, there is lingering confusion about what various statutory provisions mean. One significant concern that was not specifically addressed by the regulations relates to the exemptions permitted for employers that have a sick or paid time off (PTO) policy in place. Employers that provide at least the minimum amount of paid sick leave via policy—like a PTO policy—are exempt from tracking accrual of sick leave under the law, and from requiring carryover of unused, accrued sick leave to the following calendar year. This provision leaves unanswered questions, however, as the statutory language does not clarify whether an employer must provide this paid time “up front” at the beginning of employment (so-called “frontloading”).

The regulations do little to clarify the statute’s language in this regard, but merely separate into different paragraphs the possible exemptions: (1) a PTO policy that does not frontload time; and (2) a paid sick leave or other time off policy with frontload time. Based on this distinction, employers might assume that frontloading is not required, but the regulatory language does not provide any additional guidance on this point.

The regulations add some further detail on these exemptions. Specifically, the regulations state that the accrual methods used under these “exemption” policies must provide full-time employees, working an entire year, with the minimum number of paid time off hours. If the policy does so, the regulations provide that other employees may accrue “the requisite hours on a pro-rata basis, based upon their start date and the number of hours worked.” This language seems to suggest that an employer with an existing policy may provide fewer than the maximum capped number of paid sick leave hours to employees working fewer than full-time hours, or less than a full year, on a pro rata basis as long as the same accrual method is used for all employees. It remains unclear, however, how this provision affects employers that frontload PTO or paid sick time under existing policies.  

Food Code Interplay

For food service employers, HSFWA regulations address the intersection of paid sick and safe time with the Rhode Island Food Code (Code), in the context of employee notice and documentation requirements.

For employees working with unpackaged food, food equipment, utensils, or food-contact surfaces, employers may ask for additional information concerning the reason for the use of paid sick and safe time. An employer may ask if the reason the employee requires paid sick or safe leave triggers the employer’s obligations under the Code. If an employee answers "no," an employer cannot further ask about the nature of the illness. However, if an employee answers "yes," the employer may ask about the symptoms to determine what steps it must take to remain compliant with its obligations under the Code. If the employee is suffering from certain symptoms described in the Code, the employer must follow the Code’s requirements. The rules also provide that, if documentation requirements in the HSFWA conflict with the Code, those requirements will not apply to food employees.

Next Steps

With only a month and a half remaining until the law takes effect, there is limited time to digest the rules and revise policies and practices—if necessary—and even less time for the Department of Labor and Training to further clarify the law’s requirements via FAQ. For employers with multi-state or nationwide operations, the task is increasingly difficult because paid sick and safe time is a constantly moving target with multiple jurisdictions enacting some form of similar law. Paid sick and safe leave developments nationwide will not be slowing down; final revised rules are expected soon in Seattle, Washington and new laws in Austin, Texas and New Jersey will take effect later this year. Employers should gear up for more paid sick and safe time laws, nationwide and incorporate those obligations into their current paid leave practices.