Wave of Leave Laws Jeopardizes Compliance, Requires Policy Review

The growing wave of paid leave mandates at the state and local levels poses new challenges for employers, especially those with employees spread across several jurisdictions. When companies become subject to these laws, they typically rely on their HR professionals and in-house counsel to sort out compliance requirements and make needed policy changes.

In the policy revision process, employers are more prone to stumble on subtleties in the laws than on basic requirements, such as making sure employees receive the mandated amount of leave. At large multistate companies, it’s likely that employees already receive more time off than the laws require, since paid leave has long been viewed as a key piece of a competitive compensation and benefits package that helps employers attract and retain top talent. 

Let’s say you provide about two weeks or 10 days of paid sick leave per year. The only jurisdiction in which you’d fall below the annual minimum requirement is Puerto Rico, where employers must provide one day of paid sick leave per month, or 12 days per year. This even surpasses the various city ordinances in California, which commonly set minimum paid sick leave amounts at 72 hours per year (except that San Diego requires a minimum of 80 hours per year). 

When you drill down further, you’ll find more nuanced requirements. Take accrual rates, for example, which dictate how fast employees must be credited with paid sick leave. If your policy already gives employees at least one hour of leave for every 30 hours worked, then you’re meeting the tightest standard called for under the various paid sick leave laws. 

You might ask yourself, however, if you want that to be the unvarying formula you put in place for your entire organization. Are you striving for uniformity or continuity in leave policies across all the locations where you operate, or do you want to reduce costs by adopting less generous policies in jurisdictions where paid sick leave laws are less stringent or nonexistent? 

These same questions would apply to any number of provisions that appear in the paid leave laws of various state and local jurisdictions. For instance, do you want to adopt the broadest definition for covered uses of leave, based on requirements contained in the most expansive or comprehensive laws? What about leave carryovers, cashouts, waiting periods, or even the reinstatement of accrued leave for rehired workers?

Making sure your leave policies reflect the requirements of each jurisdiction where you operate is challenging enough. Taking into account all the subtle differences in the laws and coming up with ways to harmonize policies for widespread employee populations is a more daunting task by far.

Ocean State Joins the Wave

Rhode Island is the latest jurisdiction to adopt paid leave legislation (H5413Baa, S0290B). This particular measure may not affect a large number of corporations, given the Ocean State’s small size, but it includes several provisions that illustrate how complex these laws can be. 

The Healthy and Safe Families and Workplaces Act received final legislative approval on Sept. 19, and Gov. Gina Raimondo (D) signed the measure Sept. 28. It carries an effective date of July 1, 2018, and calls for just three days of paid leave the first year. The minimum leave amount climbs to four days in 2019 and maxes out at five days per year starting in 2020. 

If you already grant employees more than five days of paid sick leave, you might be thinking you’re all set. However, it’s not that simple. 

For one thing, traditional sick leave isn’t the only type of paid time off mandated under the Healthy and Safe Families and Workplaces Act. Moreover, the law includes several requirements that may conflict with your existing policies and administrative practices. Here are some details: 

• Covered uses of leaveThe Rhode Island measure is expansive, allowing employees to use "paid sick and safe leave time" for their own or a family member’s mental and physical illnesses, injuries, and health conditions; diagnosis, care, or treatment of health conditions; and preventive medical care. In addition, the measure covers time off needed when employees or their family members have become the victim of domestic violence, sexual assault, or stalking. It even allows paid leave in connection with public health emergencies that cause a workplace shutdown or the closure of schools or childcare facilities for employees’ kids. 

• Leave accrualAt a minimum, covered employees must accrue one hour of paid sick and safe leave time for every 35 hours they work. This must begin on July 1, 2018, or at the commencement of employment for those hired after the law’s effective date. As an alternative to the standard accrual method, employers can grant leave as an annual lump sum; the required minimum would be 24 hours in 2018, 32 hours in 2019, and 40 hours in 2020 and thereafter. For employers that want to avoid precise tracking of leave accruals, the law also provides an optional schedule they can use to grant employees leave in monthly installments based on the average number of hours worked per week. 

• Leave carryoverEmployees are entitled to carry over their unused accrued leave from one year to the next, even though annual usage caps remain in place. In other words, the law doesn’t entitle employees to use more than five days of paid leave per year, regardless of any amounts they’ve carried over. The advantage for employees would be having that unused leave available from day one, rather than waiting for hours to accrue at the start of a new benefits year. If employers don’t want to allow leave carryovers, the law gives them an option of cashing out unused leave at the end of the year. The law doesn’t require payouts of unused leave at employment separation or retirement. 

• Notice and policy requirementsFor employees to use paid sick and safe leave time, the law requires a leave request, which should include the expected duration of the absence when possible. If employers want employees to follow any specific notice procedures, they must spell them out in a written policy and provide employees a copy of the policy. When the need for leave is foreseeable, employees are supposed to provide advance notice, and the law states that employees "shall make a reasonable effort to schedule the use of sick and safe leave time in a manner that does not unduly disrupt the operations of the employer." 

• Documentation in support of leaveIn some circumstances, employers can require documentation showing that leave has been used for covered reasons, but they can’t ask for detailed medical information or require details about domestic violence, sexual assault, or stalking. 

• Discipline for leave abuseThe law permits employers to discipline or fire employees for leave abuse. For example, a pattern of using leave just before or after weekends or holidays would be grounds for discipline, unless the employee provides reasonable documentation to show that the leave was used for covered purposes. 

• Waiting periodsEven though leave accrual begins at the commencement of employment, employers can impose a waiting period of up to 90 days for leave usage by new hires. Longer waiting periods can be applied to seasonal workers (150 days) and temporary employees (180 days). 

• Credit for leave upon transfer or rehireInternal transfers don’t affect accrued hours or leave rights of employees, provided they are moving to another division, entity, or location that the same employer owns or operates in Rhode Island. If employees experience a separation of employment but are then rehired within 135 days, the employer must reinstate any paid sick and safe leave time they had accrued and not yet used. In addition, employees retain all unused accrued leave in successorship situations if they remain employed by the company that succeeds the original employer. 

Policy Considerations

Rhode Island lawmakers tried to give employers some flexibility in meeting the requirements of the Healthy and Safe Families and Workplaces Act. 

For example, the legislation allows for the possibility that employers will have different policies covering different groups of employees. In addition, it acknowledges that some organizations favor paid time off plans that roll different types of leave together into a single bank of hours that employees can use for various purposes. 

No matter how employers approach their policies, the bottom line is that they’ll have to provide leave consistent with the law’s requirements and allow employees to use it for any of the reasons covered by the law. 

But this is only part of the challenge for multistate employers affected by the growing wave of leave mandates across the country. What’s really needed at these organizations is a process of policy review and revision that will satisfy all compliance obligations while also achieving broader corporate goals related to paid leave benefits.

And that’s why the expertise of HR professionals and in-house counsel is so vital!

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