As previously discussed here, on May 2, 2018, New Jersey’s Governor, Phil Murphy signed into law New Jersey’s Paid Sick Leave Act (the “Act”). The Act took effect on October 29, 2018. The New Jersey Department of Labor and Workforce Development (“NJDOL”) issued proposed regulations to further address the employees’ rights and employers’ obligations under the Act.
Below is a list of several areas where the proposed regulations provided additional guidance to the Act itself:
1. Exempt Employees under the Act.
Unlike other states, in New Jersey, exempt employees are within the scope of the Act. The proposed regulations set forth that for exempt employees, employers may (1) record the hours worked by the exempt employee; or (2) apply 40 hours per week for the exempt employee for paid sick leave accrual consideration.
2. Rate-of-Pay Calculation for Non-Hourly Employees.
For employees whose rates may change the employer is required to review the employee’s earnings over the last week of the employee’s earnings, without regard to overtime compensation, and divide the total earnings by the total hours of the past work week to determine the proper hourly rate of pay for sick leave. If an hourly rate of pay cannot be properly calculated, the employee and employer may agree to an hourly wage so long as it is at least the minimum wage rate.
3. Employers’ Recordkeeping Obligations.
The Act requires that the employer record employee hours and paid sick leave. The proposed regulations specify that within these records, they must include the sick leave time accrued, advanced, used, paid, paid out, and carried over for each employee. The exception is for exempt employees that assume a 40-hour work week for the purposes of accrued sick leave hours. Records must be kept in an office in New Jersey and available for inspection by the NJDOL.
4. Determination of Employment Status.
Under the proposed regulations, employment status under the Act will be determined based on the “ABC” test. This determination is important because, while employees are entitled to paid sick leave, independent contractors are not.
5. Employers’ PTO Policies.
To have a compliant PTO policy, the policy must: (1) allow the accrual of PTO time at equal to or greater than what is provided for under the Act; (2) allow for PTO time to be used for all reasons sick time is allowed to be used under the Act; (3) calculate rate of pay pursuant to the Act; and (4) provide for payment or carryover of unused time.
6. Violations and Penalties under the Act.
For a first offense, a fine of not less than $100 and no more than $1,000 and/or not less than 10 days and no more than 90 days of imprisonment. For a second offense, a fine of not less than $500 nor more than $1,000, and/or not less than 10 days and no more than 100 days of imprisonment. Administrative penalties of $250 for a first offense, and between $250 and $500 may be assessed for a second offense.
The proposed regulations help answer several questions that arose when the Act was first introduced and signed into law. However, the regulations also leave several questions unanswered on how the Act will be applied to employers including (1) the effect of employees of other states who may do temporary work in New Jersey; (2) the effect of bonuses to the paid leave benefit rate; and (3) when it is infeasible to calculate the hourly wage rate for an employee.
The NJDOL is currently accepting comments to these proposed regulations until December 14, 2018. The final regulations will be issued after the comment period has ended. Therefore, the regulations are still subject to change. However, it is expected that the final regulations will be substantially similar to the proposed regulations discussed above.
If you have an questions about how the Act and its regulations may affect your business or you as an employee, our employment law attorneys can help advise you. To set up an appointment to speak with one of our attorneys, please call (973) 890-0004 or e-mail us. We can help.