A new sick leave law is in effect in New Jersey. The law applies to all private sector employers with employees in NJ, regardless of size. It provides paid sick leave (PSL) to almost all private sector full-time and part-time employees who work in NJ (excluding construction employees covered by a collective bargaining agreement and per diem health care employees). The sick leave law took effect on October 29, 2018. In light of the law’s significant penalties (including the ability of employees to sue employers in court for violations and obtain liquidated damages), employers should ensure their NJ employees are accruing and using paid time off in compliance with the Earned Sick Leave Law.

Below are highlights of the new law’s key provisions based on proposed regulations issued by the NJ Department of Labor and Workforce Development (NJDOLWD). Note that information contained in this summary may change once the NJDOLWD issues its final regulations.

Amount, Accrual and Use of PSL

• Employees earn one hour of PSL for every 30 hours worked, up to 40 hours per benefit year
• Employers can use an accrual method or front-load method
• Employer must establish a single benefit year for all employees (12-month period) that cannot be changed without NJDOLWD approval
• Employees begin accruing PSL upon hire but employers may require up to 120-day waiting period before new hires can use accrued PSL
• PSL can be used for more than just the employee’s own sickness (e.g., family member’s sickness, domestic or sexual violence incidents, school needs, and school and work closures)
• Employers can establish increments in which PSL must be used
• Employees must make a reasonable effort to schedule foreseeable PSL so it does not unduly disrupt the employer’s operations
• Employers can establish, in advance, blackout dates for foreseeable PSL during high volume periods or special events

Payment of PSL

• PSL is paid at the same rate of pay with the same benefits as the employee normally earns
• Different formulas apply if the employee does not have a fixed rate of pay (i.e., multiple rates, commission, piecework, gratuities, food, or lodging)

Notice and Documentation

• If the leave is foreseeable, employers can require up to seven calendar days advance notice
• If the need for leave is not foreseeable, employers may require notice as soon as practicable
• Employers can request reasonable documentation that PSL is taken for a permitted purpose when the employee uses three or more consecutive days of PSL or takes unforeseeable PSL during a blackout date

Carry-Over and Payout

• Employees may carry over up to 40 hours of accrued unused PSL but may not use more than 40 hours in any given year (note: it is unclear at this point in time whether employers can avoid the carry over requirement by front-loading PSL at the beginning of each new benefit year)
• An employer that uses accrual method may offer employees the option of either being paid for their accrued unused PSL during the final month of the benefit year or carrying over the accrued unused PSL (additional procedures apply if the employee agrees to a full or partial payout)
• An employer that uses the front-load method may either unilaterally choose to pay employees for their accrued, unused PSL during the final month of the benefit year or carry over the accrued unused PSL into the next benefit year
• There is no requirement to pay out accrued unused PSL upon termination, although employers must address this matter in their written policies

Existing Paid Time Off Policies

• Employers’ existing paid time off policies may comply with the new law so long as the law’s requirements on accrual, use, payment, payout, and carry over are met

Notice Requirements

• An official state notice/poster was released on October 3, 2018 and can be found on the NJDOL website
• Employers must post the notice and can do so electronically on an internet or intranet site
• The notice must be distributed to all employees in English and any language that the employer believes is the first language of a majority of its workforce by November 29, 2018, upon hire, and whenever requested by the employee (employers can distribute the notice to employees electronically via e-mail)
• Employers are recommended to obtain written acknowledgment of receipt from employees

Record Keeping

• Employers must keep all records documenting hours worked by employees and earned sick leave accrued/advanced, used, paid, paid out, and carried over for five (5) years
• Employers are not required to maintain or retain records of hours worked by exempt employees if the employer uses the front-load method or, for the accrual method, presuming that the employee works 40 hours per week

For more information, contact: 

• Michael S. Katzen
• Caroline J. Berdzik
• Kristin Klein Wheaton
• Peter J. Woo
• Or another member of our Employment and Labor Practice Group