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NJ Earned Sick Leave Act: Unintended Consequences

When Gov. Murphy signed into law the Earned Sick Leave Act on May 2, 2018, N.J.S.A. 34:11D-1 to -11, New Jersey joined nine other states in providing the guarantee of paid sick time. The purpose of the law was to protect the most vulnerable of NJ employees, including single mothers in low paying jobs who lack union protection and other employment benefits.

The lawmakers might have thought the new law would be easy to implement. Far from being a "no-brainer" for NJ employers, many small to mid-size businesses and government employers are revisiting their practices and policies to make sure they comply with the new mandates.

In addition, unintended consequences have cropped up, two of which are addressed in this blog post:

1. Timekeeping: the law requires employers to track employee hours to determine how many sick leave hours they have accrued. For every 30 hours worked, employees earn one hour of accrued sick leave, up to 40 hours.

Many NJ employers were not keeping track of employee hours because the majority of their work staff was either salaried or part-time. The part-time employees seldom worked anything close to 40 hours per week, so these employers did not concern themselves much with overtime. Because overtime wasn't an issue, these employers did not bother to keep precise records of the hours worked by employees (of course, they should have done so anyway under NJ and Federal Wage and Hour laws - but that's a different subject for a different day).

These employers are now instituting time-tracking systems which could effect not only the part-time or per-diem employees, but the entire work staff. In some instances, employers are becoming concerned that if the time-tracking shows that per-diems or part-timers are working 25 or more hours in certain weeks, then perhaps they are eligible for healthcare benefits as well. Often this is not the case, but the fear can result in employers cutting back the hours of part-timers or per-diems to avoid the possible allegation that said employees have been unlawfully excluded from group benefits.

2. Cutback of More Advantageous Benefits: some employers were already offering their employees paid time off that exceeds the 40 hours max that employees can annually accrue under the new law. But, the employers did not have the mandatory 40 hours spelled out, nor did they have in place an accrual procedure.

Some of these employers will modify their policies to keep up the increased benefits while also complying with the new law. Others might actually cut back the benefit to the detriment of the employees.

Picture this not-so-hypothetical situation - an employer has a policy which lets employees have up to three paid days off for up to three incidents per year (with a doctor's note). This employer was pretty liberal in administering its "occurrence" policy, and seldom if ever rejected requests from part-timers for time off to care for themselves or a family member. The result was that employees had up to 9 paid days off per year when they were sick. Now, to comply with the new law, the employer is scrapping the "up to 9 day system" in favor of the accrual of up to 40 hours of sick time. The unintended consequence was a cutback of certain employees from up to nine paid days per year down to five (8 hour) days per year.

CONCLUSION: There is still much to parse out as to how the mandatory Earned Sick Leave Act will affect employers. In the short term, employers are encouraged to consult with labor counsel to determine how best to revise their practices and procedures to deal with the new law, and its unintended consequences.

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