The New Jersey Department of Labor and Workforce Development (DOL) has issued the final regulations concerning the state's Earned Sick Leave Law (ESLL). These regulations, along with 118 comments and responses, provide guidance on how employers should administer their sick leave policies under the ESLL. Outlined below are the substantive changes, major clarifications and confirmations, areas for additional guidance and issues slated for future rulemaking.
New Jersey employers should ensure that their sick leave policies, documentation procedures and notice practices comply with the state’s ESLL regulations as well as make preparations to incorporate further adjustments to their programs as impending guidance and rules unfold.
Substantive Changes
Changes to the Benefit Year
The main substantive change to the final regulations concerns the setting of a benefit year. Under the proposed regulations, an employer was required to use “a single benefit year for all employees” (formerly N.J.A.C. 12:69-3.1(a)). The DOL has since removed this language so that an employer may establish separate benefit years. Now, for example, an employer may have multiple benefit years according to employees’ anniversary dates.
An employer is still required to provide 30 days’ notice to the Commissioner of any proposed change to an employee’s benefit year (N.J.A.C. 12:69-3.1(b)).
Key Clarifications
Use of General or Pre-Existing Paid Time Off (PTO) Policy for ESLL Compliance
In its responses to several comments concerning the use of pre-existing or general PTO policies for ESLL compliance, the DOL made clear that employers must administer all time under those policies in accordance with ESLL rules (even though only 40 hours maximum are required to be provided under the ESLL).
Specifically, the entire bank of PTO must meet or exceed the following ESLL requirements:
- Accrual (N.J.A.C. 12:69-3.4)
- Permitted purposes for use (N.J.A.C. 12:69-3.5)
- Payment (N.J.A.C. 12:69-3.6)
- Pay-out and carry over (N.J.A.C. 12:69-3.7)
Employers should re-examine whether a general PTO policy remains in their best interest. Key requirements that employers may not want to apply to all PTO include the ESLL’s notice requirements, limits on leave forfeiture, carryover provisions and restrictions on requests for documentation. In addition, employers should also consider that the retaliation protections under the ESLL could apply to the entire PTO bank (should an employee use them for that purpose).
Interaction Between ESLL, FMLA and FLA
One comment raised concern over the interaction between the ESLL and the Family and Medical Leave Act (FMLA) and the New Jersey Family Leave Act (FLA). Specifically, under the ESLL, an employer is prohibited from requiring an employee to use ESLL leave for a covered purpose. However, under the FMLA and the FLA, an employer can require an employee to use available PTO before using FMLA or FLA leave.
The DOL does not see this as a conflict. Rather, its position is that the FMLA and FLA did not contemplate state required paid leave, but instead only considered an employer’s independent policies. As a result, it remains a violation of the ESLL for an employer to require an employee to use ESLL as part of taking FMLA or FLA leave.
Applicability of Wage Payment Law
Under N.J.A.C. 12:69-3.7, an employer may offer to “payout” unused but accrued sick leave to an employee in the final month of a benefit year. While the timing of this payout is not explicitly addressed in the ESLL or final regulations, N.J.S.A. 34:11D-5 and the DOL’s Response to Comment 117 clarify that the timing would be governed by the New Jersey Wage Payment Law, N.J.S.A. 34:11-4.2. This means that the employer is required to “pay the full amount of wages due to his employees at least twice during each calendar month, on regular paydays designated in advance.”
Employer “Black Out” Dates
The DOL denied requests to add rules concerning employer set “black out” dates. Under N.J.A.C. 12:69-3.5(h) an employer “may prohibit the employee from using earned sick leave on certain dates.” The employer can only limit employee leave that is foreseeable, and can only designate days that are “verifiable high volume periods or special events where foreseeable sick leave would unduly disrupt the operations of the employer.”
In response to the comments, the DOL refused to institute a maximum number of days that an employer can designate under this rule, and to impose specific notice requirements on employers regarding what dates are designated, instead indicating that notice to employees must only be reasonable.
Proscribed Uses of Earned Sick Leave
Commenters questioned whether two circumstances would be eligible for use of earned sick leave: (1) a child’s extra-curricular activities and (2) inclement weather. The DOL weighed in on both.
As to extra-curricular activities (such as school sporting events, plays, recitals, parties, or other non-educational events), the DOL responded that they could be covered functions under N.J.S.A. 34:11D-3.a(5) and N.J.A.C. 12:69-3.5(a)5 only if parental attendance at the event had been "requested or required by a school administrator, teacher, or other professional staff member responsible for the child's education."
As to inclement weather, the DOL relied upon the definition of "public health emergency" in the New Jersey Emergency Health Powers Act, N.J.S.A. 26:13-1 et seq., and implied that weather would not be a legitimate basis for leave if it did not rise to the level of a natural disaster. Moreover, both the ESLL and the final rule require a public health emergency to be accompanied by an order of a public official to close an employee's workplace, or the school or place of care of a child of the employee. The DOL indicated that closure of roads would not be sufficient to meet that standard.
Application of ESLL to Collective Bargaining Agreements (CBA) and Sick Leave Negotiations With Unions
The DOL confirmed that the ESLL would apply to union members covered by a CBA at the time of the ESLL’s enactment upon expiration of that CBA. Expiration has been strictly interpreted to mean as soon as the CBA expires. The automatic or agreed upon renewal of a CBA under its old terms would not be sufficient to extend the CBA for this purpose. Only replacement by a new CBA, which addresses the rights under the ESLL, would void its applicability. To that end, the DOL also clarified that unions may bargain away a workers’ rights under the ESLL so that they are less than statutorily required or even waived entirely.
Areas for Additional Guidance
How to Calculate Non-Discretionary Bonuses Into Rate of Pay
While the DOL’s responses to various comments confirmed that non-discretionary bonuses should be calculated into an employee’s rate of pay, the DOL provided no guidance on how to do this. Employers have been left in the dark to determine how, for example, quarterly or annual bonuses that have not been earned or calculated at the time of leave should be incorporated into an employee’s rate of pay.
Tipped Employee Rate of Pay
The DOL confirmed that employers should use the seven day look back under N.J.A.C. 12:69-3.6(h) to determine the wages of tipped employees (including gratuities), unless that is not feasible. In those circumstances, the employer is permitted to apply an agreed upon wage, no less than the state minimum wage, as the rate of play. The DOL provided no guidance as to when or under what circumstances it is not feasible to calculate the rate of pay including gratuities. Like in the case of non-discretionary bonuses, employers are left to apply their best judgment to comply with this rule.
Impending Rules
Out of State Employees
The final regulations will not address how/when out-of-state employees are covered under the ESLL. However, the DOL indicated that it would promulgate additional rules concerning this issue, and it expects those rules to follow the rules promulgated by the Division on Civil Rights for application to the FLA. That standard is “where the employee routinely performs some work in New Jersey and the employee's base of operations or the place from which such work is directed and controlled is in New Jersey, then the employee is entitled to the rights and protections afforded by the law.”
Prorating Advanced Earned Sick Leave
Similarly, while not discussed in the final rule, the DOL hopes, through amendment to N.J.A.C. 12:69-3.4(a), to address prorating advanced sick leave. A commenter raised two circumstances that the DOL agreed should be covered by subsequent amendment: (1) advancing sick leave to part-time employees based on anticipated hours worked, and (2) prorating advanced sick leave when an employee starts during a benefit year.
While it is unclear when this amendment would take place, the DOL promises to propose that an employer will be permitted to advance a part-time employee (at the start of the benefit year) and mid-year hires (at the time of hire) the amount of earned sick leave he or she would accrue at the rate of one hour of earned sick leave for every 30 hours worked based on the hours the employer anticipates the employee will work during the upcoming/remaining benefit year. Where the employee does, in fact, work more hours than anticipated, the employer would be required to permit the employee to accrue earned sick leave at the rate of one hour for every 30 hours worked until the total amount of accrued earned sick leave reaches the maximum 40 hours for the benefit year. Thus, under both circumstances, to avoid tracking accruals, the employer would still need to advance the full 40 hours of earned sick leave.
Until this amendment, the employer must continue to track the employee's hours worked and the employee’s accrual of earned sick leave during the benefit year, because a part-time employee may work more hours than anticipated.
[View source.]
