Following in the footsteps of Connecticut and several cities, the New York City Council (the Council) on May 8, 2103 passed a controversial sick leave law. The Earned Sick Time Act (the Act) (N.Y. City Admin. Code §§ 20-911 to 20-924) grants many employees in New York City up to 40 hours of paid sick leave per year. For employees not eligible for paid leave, the Act provides for up to 40 hours of unpaid sick leave per year. Although Mayor Bloomberg recently vetoed the law, the Council overrode the Mayor's veto and adopted the Act into law on June 26, 2013.

In addition to the State of Connecticut and the District of Columbia, New York City joins San Francisco, California and Seattle, Washington, as cities that require employers to provide paid sick leave to their employees. Effective January 1, 2014, Portland, Oregon will join the ranks, and many other states and cities currently are contemplating similar legislation.

Key Provisions of the Act and What it Means for Employers

Employers with employees working at least 80 hours in New York City in a calendar year are eligible for up to forty hours of either paid or unpaid sick leave, depending on the number of employees employed by the employer. The earliest the Act will go into effect is April 1, 2014, although that date could be delayed depending on the economy's performance. The Council estimates that over a million workers will be eligible for some form of sick leave. As such, many employers will be impacted by the Act and all employers should evaluate whether they are covered by the Act. If they are covered, employers should also review their existing leave policy to ensure that the policy complies with the Act, and if not, revise the policy prior to the effective date of the Act.

Effective Date of the Act

The effective date of the Act depends upon the performance of the New York City economy. This rather unique provision provides a schedule and process for determining that date. If, as of December 16, 2013, the economy is performing at or better than it was as of January 2012 according to certain economic indicators, the Act will go into effect on April 1, 2014. If the economy is performing worse than it was in January 2012, the Act will not take effect on that date, but the city's Independent Budget Office will monitor the economy every six months. Once the economy performs at or better than its January 2012 level, the law will become effective on the following April 1 or October 1, whichever is sooner.

Employers Covered by the Act

For the first 18 months after it becomes effective, the Act applies to private employers with 20 or more employees. Thereafter, it will apply to employers with 15 or more employees, and to employers of one or more domestic workers. The Act does not apply to public employers, including employees of the United States, New York State or New York City governments.

Where the number of employees fluctuates above and below 20 persons per week over the course of a year, coverage is determined for the current calendar year based upon the average number of persons who worked for compensation per week during the preceding calendar year. All persons performing work for compensation, whether full-time, part-time, or temporary, are counted.

Employers with employees not entitled to paid sick leave must provide unpaid sick leave when the Act takes effect.

Eligibility for Sick Leave Benefits

Employee coverage under the Act is broad. The Act generally applies to any person employed for hire within New York City for more than 80 hours in a calendar year who performs work on a full-time or part-timebasis.

However, the following individuals are not covered by the Act: participants in certain work study programs; employees compensated by or through qualified scholarships; most independent contractors; and certain hourly professional employees (i.e., persons licensed by the New York State Department of Education and paid a premium rate).

Amount of Sick Leave Employers are Required to Provide

Once the law becomes effective, employers with 20 or more employees will be required to provide employees with one hour of paid sick leave for every 30 hours worked, with a maximum requirement of 40 hours of paid sick leave per calendar year (subject to the exceptions noted below). Eighteen months after the law becomes effective, employers with 15 or more employees will be required to provide these same paid sick leave benefits to their employees. Employers that do not employ the requisite number of employees (thus, not required to provide paid sick leave under the Act), must still provide their employees with up to 40 hours of unpaid sick leave once the law takes effect.

If employees do not use all of their accrued sick leave in a calendar year, they are entitled to carry over accrued but unused sick leave. However, even when an employee carries over sick leave, employers may limit the use of paid sick leave to a total of 40 hours per calendar year. Upon the employee's termination, resignation, retirement, or other separation from employment, an employer is not required to pay an employee for accrued but unused sick leave.

Permissible Sick Leave Uses

The Act sets forth permissible reasons for which an employee can utilize sick leave benefits. Under the Act, employees are entitled to take sick leave for the "employee's mental or physical illness, injury or health condition." Despite a lengthy definition section, the Act provides little guidance regarding what these terms mean.

In addition, employees are entitled to take sick leave if they or their eligible family members: (1) need a medical diagnosis; (2) require care or treatment of a mental or physical illness, injury or health condition; or (3) need preventative medical care. As defined in the Act, a "family member" includes an employee's spouse or registered domestic partner, parent, parent-in-law or parent of a domestic partner, and child or child of a domestic partner, including a biological, adopted or foster child, a stepchild, a legal ward, or a child of an employee standing in loco parentis.

Sick leave may also be used where businesses or schools are closed due to public health emergencies.

Employees who use sick leave for purposes not permitted by the Act may be disciplined by their employer, and discipline may include termination of employment.

Sick leave begins accruing at the time of hire or the effective date of the Act, whichever is later. However, employees are not entitled to use sick leave until after 120 days following the later of their date of hire or the effective date of the Act.

Although employees determine how much earned sick leave they need to use, employers are permitted set a reasonable minimum increment for use of sick leave, provided that the minimum is not greater than four hours per day.

Employee Obligations Regarding Notice and Medical Documentation

Employers may require employees to provide reasonable notice of the need for sick leave. Where the need for leave is foreseeable, an employer may require up to seven days' notice. Where the need for leave is not foreseeable, an employer may require an employee to provide notice as soon as practicable.

If an employee is absent for more than three consecutive work days, an employer may require reasonable documentation from a licensed health care provider establishing the need for and duration of any sick leave. However, the employer cannot require disclosure of the nature of the employee's or the employee's family member's injury, illness or condition, and any health information about an employee or an employee's family member must be treated as confidential.

Exemptions and Exceptions

The Act contains a number of exemptions, the most widely applicable include:

Employers with Less Than 15 Employees

After much debate, one of the significant compromises to secure passage of the Act was the change in coverage to protect small businesses. The Act exempts small businesses (i.e., those employing less than 15 employees) from providing paid sick leave, but they still must provide unpaid sick leave.

Employers with a Separate Leave Policy

Some employers may not be required to provide additional paid sick leave if: (1) they already have or implement a paid leave policy (including paid time off, paid vacation, and/or paid personal days); (2) their policy provides for paid leave in an amount sufficient to meet the requirements of the Act (i.e., one hour of paid sick leave for every 30 hours worked); and (3) they allow the leave to be used for the purposes and under the same conditions as required by the Act. For example, an employer has complied with the Act if it already provides at least five days of paid time off or paid vacation, and permits employees to use that time for the purposes specified in the Act. This is true whether or not the employee uses such leave for the employee's own illness or that of family members.

Likewise, employers required to provide unpaid sick leave comply with the Act if they already provide paid or unpaid time off, vacation, or personal days sufficient to meet the requirements of the Act, and allow employees to use that leave for the purposes specified in the Act.

Employees Covered by a Collective Bargaining Agreement

For those employees who are covered by a valid collective bargaining agreement as of the effective date of the Act, the Act will not apply until termination of the collective bargaining agreement. However, the provisions of the Act may be expressly waived by the parties to a bona fide collective bargaining agreement, as long as the agreement provides for comparable benefits in the form of paid time off, which may include vacation time, personal time, sick time and/or holiday pay.

Domestic Workers

New York State passed the Domestic Workers' Bill of Rights in 2010. This law entitles domestic workers to certain rights, including three paid days off from work after one full year of service. Eighteen months after the Act becomes effective, employers will be required to provide domestic workers with two days of paid sick leave per calendar year – in addition to the other three paid days off required by the Domestic Workers' Bill of Rights – provided the domestic worker has been employed for one full year of service.

Employer Obligations

Upon hiring a new employee, an employer must provide that employee with a notice of entitlement to sick leave, and must describe the amount and terms of sick leave, including any right to unpaid leave. The notice must also inform employees that the Act expressly prohibits retaliation for requesting or using sick leave, and that they have a right to file a complaint with the Department of Consumer Affairs. There is no requirement that employers notify current employees of the sick leave entitlement.

Employers may also, but are not required to, post a notice in a conspicuous place advising employees of their rights under the Act.

Employers are required to retain records for a period of two years that document the number of hours worked by each employee and the amount of sick leave accrued and taken by each employee. If an employer fails to maintain or retain these records, a presumption arises that the employer has violated the Act.

Enforcement

The Department of Consumer Affairs is tasked with enforcing the provisions of the Act. Employees have no independent private right of action in federal or state court. The sole recourse for an employee claiming to be aggrieved is to file a complaint with the Department of Consumer Affairs (Department) within 270 days of the date the person knew or should have known of the alleged violation.

Upon receipt of a complaint, the Department will attempt to resolve it through mediation. If mediation is unsuccessful and the Department determines that a violation occurred, it will issue a notice of violation and commence an adjudicatory hearing before an administrative tribunal. If the administrative tribunal finds a violation of the Act, the Department must issue a civil penalty payable to New York City not to exceed $500 for the first violation. If a second violation occurs within two years of a first violation, a civil penalty not to exceed $750 may be imposed, with subsequent violations subject to penalties not to exceed $1,000 per occurrence.

Employers that willfully violate the notice requirements will be subject to a civil fine not to exceed $50 for each employee who was not given appropriate notice.

In addition to civil penalties, where an employee's rights under the Act are violated, the Department has the power to order appropriate damages be paid to the employee, including:

  • For each instance of sick leave taken by an employee but not compensated by the employer: three times the wages that should have been paid under the Act or $250, whichever is greater.
  • For each instance of sick leave requested by an employee but unlawfully denied by the employer and not taken by the employee: $500.
  • For each instance of retaliation not including discharge from employment: full compensation including, but not limited to, wages and benefits lost, $500, and equitable relief as appropriate.
  • For each instance of discharge from employment in violation of the Act: full compensation including, but not limited to, wages and benefits lost, $2,500, and equitable relief as appropriate, including reinstatement.

Key Differences Between the 2009 Proposed Legislation and the Enacted Law

The Earned Sick Time Act was the subject of much compromise since the legislation was first introduced in 2009. As enacted, the cost to employers will be less than sponsors of the legislation originally proposed. For example, the initial version proposed that employers with less than 10 employees would be required to provide five paid sick days to qualified employees and employers with 10 or more employees would be required to provide nine paid sick days. The final version resulted in a decrease in number of covered employers and a reduction in the amount of leave entitlement. Proponents of the Act agreed to delete a provision that would have permitted employees to file a private right of action. The final version also reduced available damages and penalties.

Certain time limitations were also changed. For example, the initial waiting period for an employee to use sick leave was extended from 90 days to 120 days, and employer record retention requirements were decreased from five years to two years. The statute of limitations to file a claim was decreased from three years to 270 days from the date the employee knew or should have known of the violation.

The Act, as passed by the Council, ensures that employers with multiple locations with a total of 15 employees are covered.

The final version of the Act eliminated aunts, uncles, nieces, nephews, and cousins from the definition of "family member," but now includes domestic partners and family members of domestic partners in the same ways that they are included for married individuals.

The Act also now includes a "reverse" trigger where if the economy significantly erodes, as measured by a financial index kept by the Federal Reserve Bank of New York, the Act's effective date will be delayed.

Terri M. Solomon is a Shareholder at Littler Mendelson in the firm's New York office.

Jean L. Schmidt is a Shareholder at Littler Mendelson in the firm's New York office.

Jill M. Lowell is an Associate at Littler Mendelson in the firm's Rochester office.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.