February 29, 2016

Employers Take Note: Amended New York City Earned Sick Time Law Takes Effect this Friday

5 min

Effective March 4, 2016, New York City's Earned Sick Time Act (ESTA) has been amended. Originally adopted in June 2013, the ESTA requires employers with five or more employees in New York City to provide eligible employees up to 40 hours of paid time off each year in order to address their personal health needs or those of certain family members, including domestic partners. The ESTA has now been amended in a range of important ways. Additionally, the Department of Consumer Affairs (DCA), the agency currently tasked with enforcing the ESTA, has updated its ESTA FAQ, clarifying certain items that have puzzled employers since the ESTA's inception. The following are highlights of some of the most notable changes and clarifications:

  • Written Policies Required; Notice of Rights Not Enough. From the outset, the ESTA required employers to maintain written sick leave policies, and to distribute those policies to their employees. The DCA has now clarified that merely distributing the ESTA "Notice of Employee Rights" does not satisfy an employer's obligation to maintain a written policy; both the Notice of Employee Rights and a written policy must be distributed. ESTA written policies must include, at a minimum: (i) the employer's method of calculating sick time (i.e., frontloading or accrual rate); (ii) the employer's policy on the use of sick time, including any limitations such as notice, written documentation or verification requirements, the consequences for failure to provide such documentation or verification, minimum sick-time use increments, and disciplinary policies regarding the misuse of sick time; and (iii) the employer's policy regarding carryover of unused sick time at the end of the year. Employers who have not provided a copy of the written policy to their employees cannot then deny sick time or payment of sick time based on claimed noncompliance with the policy.
  • Additional Minimum Increments. Originally under the ESTA, employers could set a minimum increment for the use of sick time that could not exceed four hours. Under the amended rules, an employer can also set fixed periods of up to 30 minutes beyond the minimum increment. For example, XYZ Co. maintains a 4-hour minimum sick-time increment and, under the new ESTA rule, requires that employees use sick time beyond the initial, minimum increment in 30-minute intervals starting on the hour or half-hour. If Employee A is scheduled to work from 8 a.m. to 4 p.m., but has a doctor's appointment at 9 a.m. for which she has requested sick leave time, and Employee A does not return to work until 12:17 p.m., XYZ Co. can require Employee A to use 4½ hours of sick time and begin work at 12:30 p.m.
  • Carryover of Hours. Previously, employers who frontloaded the statutory minimum 40 sick-time hours could avoid the obligation to allow employees to carry over their remaining unused hours at the end of the year only if they paid their employees for their unused sick leave time at the end of the year. As explained in the updated FAQs, employers now will not be required to carry over unused sick time at the end of the year if (i) they frontload 40 hours and pay their employees for unused sick leave at the end of the year; or (ii) they frontload 40 hours at the beginning of the calendar year and then frontload 40 hours again on the first day of the next calendar year.
  • Temporary Help Firms/Staffing Agencies. The amended rules now define the term "temporary help firm," and clarify that such firms are responsible for complying with the ESTA's requirements for the temporary employees they place with a client/organization, regardless of the size of the client/organization.
  • Joint Employer. The updated FAQs now state that the determination of whether an employer is considered a joint employer for purposes of enforcing paid sick leave obligations is based on "whether the employer exercises some control over the work or working conditions of an employee." This implies a broad standard in assessing joint employer status. The updated FAQs explain that if an employee is employed by joint employers, all of the work performed by the employee for such joint employers is considered a single employment. Therefore, the hours worked for both employers are aggregated for purposes of calculating sick time accruals.
  • Recordkeeping. Employers must maintain records documenting their ESTA compliance for a period of three years. These records must indicate (1) certain basic employee information, including rate of pay, whether the employee is exempt from receiving overtime compensation, and the employee's employment start/end date; (2) the employee's hours worked; (3) the date and time of each instance of sick leave used and the amount paid for such leave; (4) changes in the material terms of the employee's employment; and (5) the date the Notice of Rights was provided to the employees.
  • Reasons for Use of Sick Leave. Preventive medical care is among the listed reasons for which employees may use sick leave. Preventive medical care is now defined to include, among other things, checkups and patient counseling. Employees may also use sick leave for elective surgery, including organ donation, for themselves or a family member. Importantly, employers generally cannot require employees to specify the nature of the health condition purportedly necessitating paid sick leave, except as required by law.
  • Penalties. Employers who are found to have an official or unofficial (i.e., unspoken) policy of not providing, or refusing to allow, use of sick time will face penalties on a per employee basis.
  • Employee Abuse. Employers may take disciplinary action, up to and including termination, against an employee who abuses sick leave. Cited examples of "abuse" include (i) use of unscheduled sick time on or adjacent to weekends, regularly scheduled days off, holidays, vacation, or paydays, (ii) taking scheduled sick time on days when other types of leave have already been denied, and (iii) taking sick time on days when the employee is scheduled to work a shift or perform duties perceived as undesirable.

The amended ESTA and the updated FAQs lend clarity to certain issues, while adding important new requirements. Given the amendments' impending effective date, New York City employers must promptly take heed of these developments and the ways in which they impact existing paid sick leave policies.