New sick leave laws create coordination headaches for small employers

In the midterm elections, a majority of Massachusetts voters checked “yes” for Question 4 on their ballot – a measure that calls for employers with 11 or more employees to earn and use up to 40 hours of paid sick time per calendar year. Companies with fewer than 11 employees will have to provide up to 40 hours of unpaid sick time.

Voters in Oakland, Calif., Trenton and Montclair, N.J. also approved sick time provisions for employees; they join municipalities like Newark, N.J. and New York, N.Y. that agreed earlier this year to either offer or expand paid time off.

But coordinating various state and municipal paid sick leave laws, along with the federal Family and Medical Leave Act, is likely to create an administrative headache for small employers, say compliance experts.

Under FMLA, employers with 50 or more employees are required to provide up to 12 weeks of unpaid leave in a 12-month period for family and medical reasons. The key provision here is that the leave is unpaid and depends on the size of the employer.

But, “the biggest headache [with state and municipal laws] is going to be the coordination with other leave rights, particularly FMLA,” says George Thompson, director of compliance and regulatory affairs for Marsh & McLennan Agency’s New England region. And “FMLA doesn’t reach down that low to an employer that size, so this is a new compliance day for truly small employers,” he says.

See also: Paid sick leave law administrative burden for employers, but benefits employees

Terri L. Rhodes, executive director of the Disability Management Employer Coalition, agrees "there are nuisances in each of the laws" cropping up in different cities and states, but says the nice thing about FMLA is that the eligibility is same for all 50 states.

The Massachusetts law, which applies to all full-time, temporary and part-time workers, is being seen as a big win for workers. The paid sick time provision will take effect July 1, 2015. Employees can use their time only if they miss work for the following reasons:

• To care for a physical or mental illness, injury or medical condition affecting the employee or the employee’s child, spouse, parent, or parent of a spouse;
• To attend routine medical appointments of the employee or the employee’s child, spouse, parent, or parent of a spouse; or
• To address the effects of domestic violence on the employee or the employee’s dependent child.   

See also: State domestic-violence laws increase employer responsibility

Employees can accrue one hour of sick time for every 30 hours worked. They begin to earn this time 90 days after hire, and according to law, would “have to make a good faith effort to notify the employer in advance if the need for earned sick time is foreseeable.”

Coincidentally, like the Massachusetts law, California will also begin enforcing paid time-off for all employers starting next July. California Gov. Jerry Brown signed the Healthy Workplaces, Healthy Families Act of 2014 into law in September. It calls for three paid sick days, or 24 hours, to employees without fear of retaliation from their employers. In 2012, Connecticut led the way for paid time-off benefits when it mandated that employers with 50 or more employees have to provide up to 40 hours of paid sick time to their workforce.

Some employers may view the law as being a burden if they’re not ready to either incorporate the new provisions or update their paid leave policies. These days will have to be accrued by employers, many of whom do not have expertise in tracking these kinds of benefits because of their small mom-and-pop structure.

“I think that there are a lot of employers who will not be ready for it,” says Bronwyn L. Roberts, partner in Duane Morris’ Boston office. “But those that are smaller have unpaid sick leave accruals, so smaller employers – who don’t have a human resources department – are going to have the burden of calculating accruals for this.”

See also: How to weave through the paid sick leave maze

According to Rhodes, employers will ultimately have to figure out how and where the “financial burden” for this fresh time-off requirement will come from, noting that it may impact balance sheets and budgets.

While many companies may maintain paid time-off policies, where the employer pools sick days, vacation days, and personal days that allow employees to use as needed, Roberts explains that these PTO policies may already comply with the new changes for leave and accruals. For those employers that do not have these policies, Roberts recommends that employers “consider addenda in their handbooks and review of their PTO policies to ensure compliance.”