The intersection of leave entitlements and compensation has always been complicated to manage in New Jersey. With the coronavirus outbreak severely affecting businesses in the state, these issues have become even more difficult. Below, we address common issues that employers in New Jersey may be dealing with.

Paid Time Off

• Employers who have a general paid time off (PTO) policy that allows employees to take time off for vacation, sick and/or personal time can allow employees to use those days in accordance with their policy.
• Employers who have designated sick, vacation and/or personal time can allow employees to use sick and/or personal time if they are sick or caring for a sick family member.  In this instance, while it may not necessarily qualify as vacation time under a policy, it is recommended that employees be allowed to use vacation time as well.
• Time off for dealing with the coronavirus pandemic will also qualify for New Jersey’s Earned Sick Leave for a variety of reasons (i.e. school closures, public health emergency, etc.).  Employees must be allowed to use any accrued earned sick leave, or the full amount if the leave is frontloaded.
  • Note: Employers cannot require employees to use earned sick leave.
• Congress passed the Families First Coronavirus Response Act, which will take effect April 2, 2020, and provides 80 hours of paid sick leave for qualifying reasons related to the coronavirus. This applies to employers with fewer than 500 employees. The law states that it does not interfere with employees’ rights under any other federal, state or local law.

Unpaid Time Off

• If an employer is covered under the Family and Medical Leave Act (FMLA), then employees may take FMLA leave if they are sick or need to care for a sick family member (among other qualifying reasons). The Response Act also provides expanded FMLA benefits and broadens eligibility requirements (see Federal Law to Mandate Paid Sick Leave, Enhanced Unemployment for Workers Affected by Pandemic). 
  • Note: If the employee is sick, they may qualify for New Jersey Temporary Disability Benefits. Also, if the employee contracted the illness from work, they may be eligible for workers’ compensation benefits.
• If an employer is covered by the New Jersey Family Leave Act (NJFLA), then employees may take NJFLA leave to care for a sick family member (among other qualifying reasons).  In that case, they may qualify for New Jersey Family Leave Insurance.
• If an employer is not covered by FMLA or NJFLA, or if it is no longer available and the employee needs additional time off after exhausting all paid time off, then the employer may consider offering unpaid leave (if feasible).
  • Note: Any unpaid time off must be in full week increments for salaried exempt employees and any non-exempt employees (whether paid on a salary or hourly basis) must still be paid for any time actually worked.

If You Choose to Close or Are Ordered to Close

• If you voluntarily close your facility, but do not cease operations (i.e. work is being performed remotely), then all of the paid and unpaid scenarios referenced above will apply.
• If you voluntarily close your facility and cease operations, and employees are not terminated, then the employees may be entitled to earned sick leave (both federal and state) or other paid time off and/or may be eligible for unemployment benefits.
• If you are ordered to close your facility and cease operations, and employees are not terminated, then the employees may be entitled to earned sick leave (both federal and state) and/or may be eligible for unemployment benefits.

Layoff/Furlough vs. Reduction in Hours

• Layoff and furlough are interchangeable terms for lack of work. If you do not have work for employees for the foreseeable future, you can lay them off. A laid off employee may be eligible for unemployment benefits.
  • Note: For any layoff you have to pay final pay on the next regular payday. Unless your PTO policy explicitly states that unused time will be paid out at the time of a layoff, you are not required to pay for accrued, but unused PTO.
• You can also reduce hours based on business need. A reduction in hours may also make the employee eligible for partial unemployment benefits. For salaried, exempt employees, if the employer wants to reduce salary because of reduction in hours or availability of work, it may do so prospectively. If the salary is reduced below $684 a week, then they may lose their exempt status.