New York City Paid Sick Leave – What Staffing Firms Need to Know | Counsel's Corner
On March 20, 2014, New York City Mayor Bill de Blasio signed into law legislation that significantly expands the coverage and employee protections of the New York City Earned Sick Time Act (the Act), which becomes effective April 1, 2014. This expansion caps a nine month period of furious legislative activity from the City Council, which originally passed the Act in June 2013 – over the veto of then-Mayor Bloomberg – and which subsequently amended and broadened the Act in February 2014.
The Act generally requires employers to provide up to 40 hours of paid sick leave in a calendar year to New York City employees. This note is intended to provide employers with guidance and information about the Act in order to assist staffing firms in complying with these new obligations.
Which businesses are covered by the Act?
Most staffing firms with a New York City footprint will be covered. Every private business and non-profit organization that employs workers within New York City (i.e., the five boroughs) is covered. However, employers with fewer than five covered employees need only provide unpaid leave. On the other hand, unsurprisingly, governmental entities are generally exempt.i
Which employees are covered by the Act?
Subject to certain limited exceptionsii, all employees who work more than 80 hours in a calendaryeariii within New York City are covered by the Act, whether full-time, part-time or temporary. For instance, even employees who are exempt from overtime compensation are covered. Bona fide independent contractors are not covered by the Act.
In the case of employees currently covered by a valid collective bargaining agreement, the Act takes effect on the date the agreement ends.iv
How does time accrue?
Sick time begins to accrue on April 1, 2014, for existing employees based on their hours of work. For an employee hired after April 1, sick time begins to accrue when he or she first performs services for the staffing firm or its client.
Sick time accrues at the rate of 1 hour for every 30 hours actually worked within New York City.v Employers are permitted to assume that employees classified as exempt from overtime work 40 hours per week, unless their regular work schedule is less than 40 hours.
When and for what purposes may accrued sick time be used?
Although sick time begins to accrue immediately, accrued time may only be used starting July 30, 2014, or 120 calendar days after the employee’s start date, which is later.
Employees may use up to 40 hours of accrued sick time in a calendar year to be absent from work scheduled within New York City for any of the following reasons:
- the employee’s mental or physical illness, injury or health condition or need for medical diagnosis, care or treatment of a mental or physical illness, injury or health condition or need for preventative medical care; or
- the care of a family member who needs medical diagnosis, care or treatment of a mental or physical illness, injury or health condition or who needs preventative medical care; or
- for the closure of the employee’s place of business by order of a public official due to a public health emergency or such employee’s need to care for a child whose school or childcare provider has been closed by order of a public official due to a public health emergency.
Employers may set a minimum increment for the use of sick time not to exceed four hours. For instance, a temporary employee who utilizes sick time for only ½ of a daily shift must generally be immediately returned to his or her assignment so long as he or she is ready, able and willing to work – otherwise the staffing firm and its client may face a retaliation claim. Additionally, depending on the circumstances and the client’s request, a staffing firm might need to provide a replacement temporary employee for half of a shift.
How is family member defined?
“Family member” means the employee’s child, spouse, domestic partner, parent, sibling, grandchild, or grandparent, or the child or parent of an employee’s spouse or domestic partner. “Siblings” includes half-siblings, step-siblings, and siblings related through adoption. “Parent” includes one who has a biological, foster, step, or adoptive parental relationship, has legal guardianship of an employee or who stood in loco parentis when the employee was a minor.
At what rate is sick leave paid?
Sick leave should be paid at the employee’s regular base rate of pay at the time the leave is used, which, of course, must equal or exceed the New York State minimum wage ($8.00 per hour for 2014).
What if the employer already provides vacation or PTO days?
Firms that already provide vacation or PTO days sufficient to meet the requirements of the Act are not required to provide additional paid sick time, provided that the employees are able to use such vacation or PTO days for the same purposes and under the same conditions as sick time under the Act. Notably, under these circumstances if an employee elects to utilize available PTO for other purposes (such as vacation or personal time), the employer is not required to provide additional paid sick time.
Do employees forfeit accrued sick leave at the end of the calendar year or upon termination?
Employers must permit employees to roll-over from one calendar year to the next up to 40 hours of accrued but unused sick time.vi
On the other hand, employers are not required to payout for accrued but unused sick time upon the termination of an employee’s employment. Note that under the Act staffing firms may treat a gap in assignments of more than six months as a separation from employment, meaning that any previously accrued sick time will be lost and a new 120-day waiting period will apply. However, an employee’s mere transfer to a firm’s separate division or entity, or another client worksite, is not itself considered to be a termination of employment.
What advance notice may employers require for employees’ need to use sick time?
An employer may require up to seven days advance notice if the employee’s need to take leave is foreseeable. The employer may require notice as soon as “practicable” when the need to take leave is unforeseeable.
Employers may not require an employee who wants to use sick leave to find a replacement employee for the missed hours.
What proof may employers require that employees used leave for a legitimate purpose?
For absences of more than three consecutive work days, the employer may require documentation signed by a licensed healthcare provider indicating that the sick time was taken for a purpose permitted under the Act. However, this documentation should not specify the nature of the employee’s or family member’s injury, illness or condition, subject to any requirements under state or federal law (such as the Family and Medical Leave Act).
Employers may also require employees to provide their own written statement that the employee used sick time pursuant to the Act. Nothing in the Act prohibits employers from taking disciplinary action against an employee who uses sick time for an improper purpose.
What are employers’ recordkeeping obligations?
The Act requires employers to maintain records evidencing their compliance with the Act for at least three years. The City has the right to engage in workplace audits and inspect such records.
What employee notices are required?
The City’s Department of Consumer Affairs (DCA), which is currently responsible to enforce the Act, has published a mandatory Notice of Employee Rights on its website, available here: http://www.nyc.gov/html/dca/html/law/PaidSickLeave.shtml. The notice must be given to all existing employees by May 1, 2014, and to any new employee upon the commencement of his or her employment on or after April 1, 2014. The notice must be provided in English and, if available on DCA’s website, the employee’s primary language. The failure to distribute the notices may result in fines of up to $50 per employee. Employers are not required to post the notice in the workplace.
What are the potential consequences of violating the Act?
An aggrieved employee (such as an employee who was unlawfully denied leave or retaliatedvii against for using sick time) may file, within two years of an alleged violation, an administrative complaint with DCA, which will conduct an investigation. Potential remedies for the employee include up to three times the sick pay that should have been paid, lost wages and benefits, reinstatement, and liquidated damages of up to $2,500. In addition, the City may assess fines of up to $1,000 per violation. The Act does not provide for a private court right of action.
What methods may staffing firms utilize to reduce and recapture costs?
Staffing firms have an array of options to reduce the potential costs associated with the Act. First, a firm could consider treating the additional costs as it would a “sales” tax and pass it on to clients by way of increased hourly bill rates and/or by adding a separate invoice line item. Second, as discussed above, employers may consider revising their existing PTO and vacation policies to dovetail with the requirements of the Act. For instance, businesses could consider reducing employees’ credit toward earning paid vacation whenever paid sick time is taken.viii Finally, especially for temporary employees on long-term assignments, staffing firms could consider asking its client to treat a temporary employee’s paid sick day as the client would for its own staff (i.e., to pay for the day even though no time was actually worked, in which case there may be no need to increase bill rates).
Of course, it behooves staffing firms to proactively educate their clients and other stakeholders on the requirements of the Act and work cooperatively to find an equitable solution.
DCA is expected to issue regulations to clarify certain aspects of the Act. In the interim, employers should visit DCA’s website and review the materials there, including a useful frequently asked questions guide: http://www.nyc.gov/html/dca/html/law/PaidSickLeave.shtml.
New York City staffing employers should also carefully review their current handbooks, PTO policies, and other employment practices and procedures to ensure full compliance as of the Act’s April 1 effective date.
i Although outside the scope of this note, New York City employers with one or more domestic workers are also covered by the Act. The Act generally requires household employers to provide domestic workers, after one year of service, with two paid sick days – in addition to the three days already mandated by Section 161(1) of the New York State Labor Law.
ii Certain physical therapists, occupational therapists, speech language pathologists, and audiologists licensed by the New York State Department of Education are not subject to coverage. Specifically, these Education Department exemptions apply to such categories of workers who: (a) call in for work assignments at-will; (b) determine their own work schedule; (c) have the ability to reject or accept any assignment referred to them; and (d) are paid an average hourly wage that is at least four times the minimum wage. Other narrow exemptions include workers participating in a federal work study program, employees compensated through a qualified scholarship program, and certain participants in Work Experience programs.
iii “Calendar year” is defined as a regular and consecutive 12-month period, as determined by the employer.
iv Any new collective bargaining agreement (CBA) effective on or after April 1, 2014, will be considered compliant with the Act if: (a) the provisions of the Act are expressly waived; and (b) the CBA provides comparable benefits to employees with respect to paid time off. However, for employees in the construction or grocery industry the CBA need only expressly waive the Act’s provisions.
v While the Act itself does not explicitly limit accrual to time worked within New York City, we are in possession of guidance from the City Council indicating as much.
vi Employers may alternatively elect to payout accrued but unused sick time at the end of the calendar year. However, in order to do so employers must also provide the employee with an amount of paid sick time that meets or exceeds the requirements of the Act on the first day of the new calendar year.
vii Retaliation generally means subjecting an employee to any adverse employment action because he or she requested or used sick leave. Examples may include, without limitation, subjecting an employee to discipline or failing to return an employee to an assignment or to his or her position as a result of exercising rights under the Act.
viii On the other hand, employers may generally not avoid their obligation to provide paid sick leave, or otherwise reduce the employee’s available sick leave hours, by issuing a vacation check or making another similar payment.
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