24 July 2018

New Jersey state paid sick leave law preempts the numerous locality ordinances already in place

Recently enacted AB 1827 establishes a statewide requirement for employers of all sizes to provide paid sick leave to their employees and preempts the numerous local sick pay ordinances. The law is effective 180 days from Governor Phil Murphy's approval, projected to be October 29, 2018.

The labor commissioner will release a form that employers must use to inform employees of their rights under the paid sick leave law, including the amount of paid sick leave to which employees are entitled. Employers must also post a notification to all employees in a conspicuous place and provide a copy of the notice to employees. Employers must retain records documenting hours worked and paid sick leave taken by employees for five years. Penalties for failure to comply with the paid sick leave law shall be the same as provided for under the New Jersey State Wage and Hour Law.

Under AB 1827, New Jersey employers will be required to allow employees to accrue one hour of paid sick leave per 30 hours worked, up to a maximum of 40 hours per year. The employer must establish a 12-consecutive-month benefit year during which accrual occurs, and cannot alter that benefit year unless the state labor department is notified. Alternatively, the employer may provide employees at the beginning of each benefit year with the full 40 hours of paid sick leave (also known as front-loading). The employer will not be required to carry over more than 40 hours of paid sick leave per year.

Accrual of paid sick leave for current employees must begin as of the effective date of the law. For employees hired after the effective date of the law, paid sick leave must begin to accrue on the date employment commences and the employee must be eligible to use accrued sick leave beginning on the 120th calendar day after the employee commences employment, unless the employer agrees to an earlier date. The employee must subsequently be allowed to use paid sick leave as soon as it is accrued.

Sick leave must be paid at the same rate of pay as for normal wages and other benefits must continue at the level at which the employee normally earns. Upon mutual agreement, the employee may voluntarily choose to work additional hours during the same or following pay period in lieu of the missed hours, but must not be required to do so or to use accrued sick leave.

An employer cannot require that employees find a replacement worker to cover their missed hours of work as a condition to using accrued paid sick leave. Employees must be allowed to use their accrued sick leave for the medical, domestic violence, and personal reasons specified in the law.

Employees that transfer to another location of the same employer must be entitled to all previously accrued sick leave. Successor employers must allow transferred employees of the predecessor employer to retain their accrued sick leave and employees must be entitled to use the previously accrued sick leave immediately.

Unused accrued sick leave must be reinstated for any employee that leaves employment through termination, layoff, furlough, or any other separation from employment, but returns within six months of separation. Unless an employer policy or collective bargaining agreement provides for the payment of accrued sick leave upon termination, resignation, retirement or other separation from employment, an employee is not entitled to payment of unused accrued sick leave upon the separation from employment.

The labor commissioner must conduct a multilingual outreach program to inform employees, parents, and persons under the care of health care providers about the availability of employer paid sick leave. The program must include the distribution of written materials in English, Spanish and any language that is the primary language of 10% or more of the registered voters in the state to all child care and elder care providers, domestic violence shelters, schools, hospitals, community health centers and other healthcare providers.

Law provides for preemption of future and previously enacted paid sick leave ordinances

The law prohibits any governing body of a New Jersey county or municipality to adopt any ordinance, resolution, law, rule, or regulation regarding paid sick leave after the effective date of AB 1827. It also preempts any ordinance, resolution, law, rule, or regulation regarding paid sick leave previously adopted by the governing body of a New Jersey county or municipality. According to the governor's news release, 13 municipalities currently require employers to provide paid sick leave.

Ernst & Young LLP insights

New Jersey joins nine other states, the District of Columbia and several cities in requiring that employers provide paid sick days to their employees.

———————————————

Contact Information
For additional information concerning this Alert, please contact:
 
Workforce Advisory Services - Employment Tax Advisory Services
   • Kenneth Hausser (kenneth.hausser@ey.com)
   • Debera Salam (debera.salam@ey.com)
   • Debbie Spyker (deborah.spyker@ey.com)

———————————————
ATTACHMENT

EY Payroll News Flash

Document ID: 2018-1476