By late-Spring, employers within the city of Philadelphia will be required to offer sick leave to employees. On February 12, 2015, Philadelphia City Council passed Bill No. 141026 (as amended), and Mayor Michael Nutter signed it into law shortly thereafter. The ordinance requires employers with 10 or more employees in Philadelphia to provide paid sick leave, while those with less than 10 employees (for at least 40 weeks in a calendar year) will be required to provide unpaid sick leave. This Alert offers an overview of the ordinance, warns of hidden traps to avoid, and provides information on steps employers should take now to ensure compliance.

Paid v. Unpaid Sick Leave

All employers in Philadelphia will be affected by the ordinance, because it requires all employers to provide sick leave (with the exception of those only employing individuals who are excluded from the ordinance’s definition of “employee,” as discussed below). The question is whether that leave must be paid. In determining whether the 10-employee threshold is met — thereby requiring paid sick leave — the ordinance provides that “all persons performing work for compensation on a full-time, part-time, or temporary basis” are counted. In other words, if someone is being paid to work, they count toward the threshold.

Additionally, chain establishments must provide paid sick leave, regardless of the number of employees at the establishment. The ordinance defines “chain establishment” as “an establishment doing business under the same trade name used by fifteen (15) or more establishments whether such other establishments are located in the City or elsewhere and regardless of the type of ownership of each individual establishment.”

What the Ordinance Requires of Employers

With the obvious monetary exception, the obligations the ordinance imposes on employers are the same regardless of whether they must offer paid or unpaid sick leave. Specifically:

• Employers must provide for the accrual of at least one hour of sick time for every 40 hours an employee works in Philadelphia. The ordinance caps sick time at 40 hours per calendar year, “unless the employer selects a higher limit.”
• Sick time will begin to accrue immediately upon commencement of employment (or, for current employees, when the ordinance takes effect). Employees will be entitled to begin using accrued sick time after 90 days of employment, and thereafter may use sick time as it is accrued.
• Employers must allow covered employees to use sick time to attend to their own mental or physical illness, injury or health condition (including both acute and preventive care), or that of a family member. “Family member” is defined broadly to include children (including foster children and stepchildren), parents (including foster parents and stepparents), spouses, grandparents, grandchildren, siblings (including foster siblings and spouses of siblings), and life partners. Additionally, sick leave may be used for absences necessitated by domestic abuse, sexual assault or stalking suffered by the employee or his/her family member if the time is used to obtain medical attention, services from a victim services organization, counseling, relocation, or legal services.
• Employers must carry unused sick time over from one year to the next (unless the employer provides at least 40 hours of sick time at the beginning of each calendar year), but accrued sick time shall not exceed 40 hours (unless the employer chooses to set a higher limit). The ordinance does not require employers to pay an employee the value of any accrued but unused sick time upon the employee’s termination.
• Employers may not require employees using sick time to search for or find someone to cover his/her hours.
• Employers may not retaliate against employees who take sick time or who complain of, or participate in the investigation of a complaint of, an alleged violation of the ordinance.
• Finally, employers may not count properly used sick time as an absence that may lead to any adverse action.

What If We Already Have a Paid Leave Policy?

An employer currently offering at least 40 hours of leave annually under a paid leave policy is not required to provide additional sick time, so long as the leave used under its existing policy may be used for the same purposes and under the same conditions as sick time may be used under the ordinance.

What the Ordinance Requires of Covered Employees

Employees must request sick time orally or in writing, and “when possible,” must tell the employer how long they expect to be out of work. When an employee knows of the need for sick time in advance, he/she must provide the employer with advance notice “and shall make a reasonable effort to schedule the use of sick time in a manner that does not unduly disrupt the operations of the employer.” When an employee does not know of the need for sick time in advance, he/she must notify the employer before the start of his/her scheduled work hours, or as soon as is practicable. If an employee takes more than two consecutive days of sick time, the employer may require documentation showing that the time is being used for a covered purpose.

Who Is a Covered Employee?

Significantly, the following workers are not included in the definition of “employee,” and therefore are not entitled to sick leave under the ordinance: independent contractors, seasonal workers, adjunct professors, employees hired for a term of less than six months, interns, pool employees, state and federal employees, and employees covered by a collective bargaining agreement. While these individuals are not entitled to sick leave under the ordinance, they do count toward the 10-employee threshold.

Avoid These Traps

Because independent contractors are not entitled to sick leave under the ordinance, some employers might be tempted to classify workers as independent contractors rather than employees to avoid the sick leave requirement. However, simply calling a worker an independent contractor does not make it so in the eyes of the law. Careful analysis, which is beyond the scope of this Alert, is required to determine whether an individual is an independent contractor as opposed to an employee.

Similarly, most workers considered to be interns, as that term is typically used, will not meet the ordinance’s definition of “intern,” and therefore will be considered employees entitled to sick leave. Intern is defined narrowly in the ordinance as “a student who is enrolled in an educational institution and who is performing work for that institution” — a college student working outside his/her school will not be considered an intern, even if the work is performed as part of an internship program.

Action Items

The ordinance requires employers to notify employees of their rights under the ordinance either by providing each employee with a notice in English and in any language that is the first language spoken by at least 5 percent of the employer’s workforce, or by displaying a poster, which will be made available by the city, in a conspicuous and accessible place. Additionally, employers must:

• update employee handbooks and personnel policies to reflect compliance with the ordinance;
• record hours worked by employees, sick time taken, and payments made for that sick time; and
• maintain those records for a period of two years.

Issue to Watch

The ordinance bases sick time accrual on hours an employee works “in Philadelphia.” This raises a question in the case of an employee who sometimes works outside of the geographic boundaries of the city of Philadelphia. From the face of the statute, it appears that sick time will not accrue on hours worked outside city limits. On the other hand, the fact that the ordinance requires employers to keep records “documenting hours worked by employees” (with no qualification that the hours were worked “in Philadelphia”) could be read as indicating that sick time is meant to accrue on all hours worked. This will likely be an area of disagreement as the ordinance is put into practice.

The ordinance will take effect in 90 days.