PROPOSED REGULATIONS: New Jersey Department of Labor Publishes Proposed Paid Sick Leave Regulations

The New Jersey paid sick leave law goes into effect on October 29, 2018.  In anticipation of the new law, the New Jersey Department of Labor recently released proposed regulations relating to the new paid sick leave law.

These regulations are subject to revision, but they do attempt to answer the following questions relating to the new law.

  • Accounting for exempt employees paid sick leave accrual. The regulations clarify that employers may count exempt paid sick leave accrual in one of the following ways:
    • Record the hours actually worked by an exempt employee; or
    • Presume that the exempt employee works 40 hours in a workweek for purposes of paid sick leave accrual.
  • New employee waiting period for “up front” paid sick leave. While the paid sick leave law did not address whether there was a waiting period for newly hired employees to use “up front” or “advanced” paid sick leave, the new regulations clarify that the 120-calendar day waiting period applies to both accrued and “up front” or “advanced” paid sick leave.
  • Calculating the paid sick leave rate of pay for non-exempt employees. The law simply states that “the employer shall pay the employee for earned sick leave at the same rate of pay with the same benefits as the employee normally earns” but provides no explanation regarding how that rate of pay is calculated.  The regulations explain that wages are calculated as follows:
    • The employer is not required to compensate an employee at an overtime rate if the paid sick leave is used for hours which would have otherwise qualified for compensation at an overtime premium rate.
    • If an employee works at 2 or more different rates, receives compensation on a piece-rate basis, the pay fluctuates or the compensation includes the value of gratuities, food or lodging, the employer must analyze the total earnings over the last 7 workdays for which leave was not taken — exclusive of overtime earnings — and divide by the total hours worked over those 7 workdays to determine the proper rate of pay for the sick leave benefit.
    • If, however, it is not feasible for the employer to determine the exact hourly wage for an employee whose pay includes the value of gratuities, food or lodging, the paid sick leave may be based upon an agreed hourly wage that must be at least the minimum wage (currently, $8.60).
    • If an employee is compensated on a commission basis, whether base wage plus commission or commission only, the employer must pay either the hourly base wage rate or the State minimum wage, whichever is higher.
  • Effect of paid sick leave use on employee benefit eligibility. The regulations clarify that an employee’s use of paid sick leave, for purposes of employee benefits, “shall be as if the employee worked those hours.”
  • Explanation of employer’s record keeping requirements. The regulations explain the employer’s record keeping obligations as follows:
    • Employers must keep all records documenting hours worked by employees and earned sick leave accrued/advanced, used, paid, and paid out and carried over by/to employees.
    • Employers are not required to keep records for exempt employees to whom the employer advances the full complement of paid sick leave or for whom the employer assumes forty (40) hour workweeks for the purposes of accrual of paid sick leave hours.
    • The records must be kept at the place of employment or in a central office in New Jersey
  • Providing notice of paid sick leave to employees. The law requires employers provide employees notice of their rights under the paid sick leave.  The regulations clarify that the notice requirement can be met by making the notice available to employees on a company internet or intranet site that all employees are able to access or by emailing the notice to the employees.
  • Revising the benefit year. The regulations set forth the following process, which employers must follow to obtain the New Jersey Department of Labor’s approval to change the benefit year:
    • The employer must provide 30 calendar days’ notice to the Commissioner of the proposed change to the benefit year.
    • The notice must:
      • be in writing;
      • identify the existing benefit year;
      • specify the proposed new benefit year;
      • advise of the proposed effective date of the new benefit year;
      • explain the reason for the change in the benefit year; and
      • provide a list of employees (with contact information and paid sick leave history over the past 2 benefit years).

If it is determined that the proposed change would prevent an employee from accruing or using paid sick leave, the New Jersey Department of Labor will impose a benefit year on the employer and the employer may not propose a change for at least another full year. This decision can be appealed by the employer within 15 business days.

  • Defining “foreseeable leave”. The regulations define “foreseeable sick leave” to include any paid sick leave the employee is able to predict in advance, including a scheduled doctor’s appointment, regularly occurring medical treatment, or a regularly scheduled therapy appointment, among other situations.
  • “Blackout Dates” for Foreseeable Sick Leave. The law allows employers to impose “blackout dates” to prohibit employees from using “foreseeable earned sick leave on certain dates, and require reasonable documentation if sick leave that is not foreseeable is used during those dates.”   The regulations limit “blackout dates” to “verifiable high-volume periods or special events, during which permitting the use of foreseeable earned sick leave would unduly disrupt the operations of the employer” (e.g. a new product launch or a predictable increase in customer activity, such as around a holiday. )
  • Notice requirements for unforeseeable paid sick leave use. The regulations clarify that employers must advise their employees of any requirement that an employee provide notice “as soon as possible” for unforeseeable use of paid sick leave.  If employers do not provide that notice, the employee cannot be required to provide any notice before using paid sick leave for an unforeseeable purpose.
  • Documentation for School-Related Sick Leave. The law allows employers to request reasonable documentation when an employee uses paid sick leave for school-related functions or events. The Regulations define “reasonable documentation” under such circumstances to include “tangible proof” of the school-related conference, function, event, or meeting.
  • Determining independent contractor for purposes of paid sick leave. The regulations clarify that the “ABC Test” will be used to determine employment status, since employers are not required to provide paid sick leave to independent contractors.
  • Determining a compliant PTO policy. The regulations clarify that a complaint PTO policy must, at a minimum:
    • provide for accrual or advancement of PTO at an equal or greater rate than that provided for under the Act;
    • permit PTO to be used for the same reasons as in the paid sick leave law;
    • calculate the rate of pay of the PTO in accordance with the Regulations; and
    • provide for payment or carryover of unused PTO as in the paid sick leave law.
  • Existing sick leave policy. The regulations clarify that if an employee already has accrued or advanced sick leave under an existing policy, the employee is “eligible to use that earned sick leave prior to February 26, 2019,” which is the first day an employee is eligible to utilize paid sick leave under the Act.  Therefore, any policy transition must include an employee’s right to use previously accrued or advanced paid sick leave immediately.

It is recommended that all New Jersey employers review the proposed regulations as part of their preparation for the new paid sick leave law.