New York City Amends Rules Under New Earned Sick Time Act

New York City’s Department of Consumer Affairs[1] recently adopted substantial amendments to the regulations under New York City’s Earned Sick Time Act (the “Act”), which generally requires New York City businesses employing five or more employees (or one or more domestic worker) to annually provide 40 hours of paid sick leave to its employees.

The amendments, which go into effect on March 4, 2016, provide clarity on a number of interpretive issues that remained following the 2014 implementation of the Act.

Among other items, the new amendments:

• clarify the appropriate method for calculating the number of employees (for purposes of determining whether the Act applies) when the number of employees fluctuates between less than five and more than five employees.

• provide additional guidance on the circumstances under which two or more employers may be treated as “joint employers” of a single employee, and may both be held liable for violations of the Act. The new amendments make clear, however, that a “temporary help firm” (which is also defined in the new amended regulations), is solely responsible for complying with the paid sick leave requirements when it places an employee in an organization (regardless of the size of the organization where the temporary employee is placed).

• expand upon the rule providing that employers may set minimum increments of time for the use of paid sick leave, so long as the minimum increment does not exceed four hours and is “reasonable under the circumstances.” Specifically, the amendments establish that employers may set fixed intervals of 30 minutes (or any smaller amount of time), and may require fixed start times (e.g., 30 minutes, starting at 8:00 a.m., 8:30 a.m., 9:00 a.m., 9:30 a.m. and so forth).

• clarify that, although employers may require notice of the need to use sick time when the need is not foreseeable, employers may not require employees in such circumstances to appear in person at a worksite, or deliver a document to an employer prior to using sick time.

• establish that, when calculating the rate of pay for sick time used, an employer is not required to pay cash in lieu of any supplements (i.e., non-cash remuneration such as health, welfare, disability and retirement benefits) that are a part of the employee’s remuneration. (And further noting that payment of cash in lieu of such supplements does not relieve the employer of any requirements of the Act).

• establish that a successor employer must provide its new employees with its (compliant) written sick time policies at the time of sale or acquisition (or as soon as practicable thereafter).

• provide additional detail on the required elements for employers’ written sick time policies, which must include, among other things: (i) the employer’s method of calculating sick time (including the amount of any “frontloaded” sick time to be provided and, if the employer does not apply frontloaded sick time, a specification of when the accrual of sick time starts, the rate at which sick time accrues, and the maximum number of hours that an employee may accrue in a year); (ii) any policies or limitations or conditions on the use of sick time (including any requirement of the notice of the need for sick time, or the documentation of the use of sick time, any reasonable minimum increments or fixed periods, and any policy on discipline for misuse of sick time); and (iii) the employer’s policy regarding carry-over of unused sick time.

• specify additional records that employers must maintain under the Act for a period of at least three years, including records for each employee: (i) showing name, address, phone number, dates of employment, rate of pay, and exempt or non-exempt status; (ii) hours worked for each non-exempt employee (and exempt employees working fewer than 40 hours per week); (iii) date and time of each instance of sick time used and the amount paid for such instance; (iv) any material change in the employee’s terms of employment; and (v) the date that the notice of rights required by the Act was provided to the employee, and proof of receipt of that notice by the employee.  The newly revised regulations also indicate that failure to maintain these records could result in an adverse inference against the employer.

• clarify that the penalties payable to the city for failure to comply with the Act’s requirements ($500 per violation for a first violation, $750 for a second violation, and $1,000 for subsequent violations) are to be imposed on a per employee basis; provide an additional $500 penalty for employers who fail to respond to a notice of violation; and further quantify the relief to be provided to an employee if it is established that the employer fails to permit an employee to accrue or use sick time.

• establish new rules for determining hours worked (for purposes of accrual of sick time) in a variety of non-standard scenarios (e.g., for employees scheduled and available for an on-call shift, for employees paid on a piecework or commission basis, for employees with indeterminate shift lengths, and for employees rehired within six months of separation).

• provide additional guidance on the Act’s requirements relating to carrying over unused sick time from one year to the next. Specifically, an employee may be permitted to carry over up to 40 hours of unused sick time, unless the employee pays out unused sick leave at the end of each year and frontloads sufficient sick leave time at the beginning of the following year to meet the requirements of the Act. However, employers are not required to permit employees to accrue or use more than 40 hours of sick leave in a year.

• clarify that employers may take disciplinary action, up to and including termination, for abuse of sick time, and provides examples of factors indicating abuse of sick leave, including use of unscheduled sick time adjacent to holidays and weekends, taking scheduled sick leave on days when other leave has been denied, or taking sick time when the employee is faced with an undesirable task or shift.

• clarify that an “adverse employment action” under the Act means any act that is reasonably likely to deter an employee from exercising rights guaranteed under the Act, and warning that regulators may use indirect evidence of the causal connection between the employee’s exercise of rights under the Act and the employer’s adverse employment action, including evidence that the protected activity was followed closely by the adverse employment action, or with evidence of retaliatory animus (i.e., where it is shown that a protected activity was a motivating factor for the adverse employment action, even when other factors also motivated the adverse employment action).

Employers with five or more employees in New York City (or who may have five or more employees in New York City) should review their policies to make sure they remain in compliance with New York City’s Earned Sick Time Act.