Co-authored by Kaitlyn Ferguson
On May 8, 2013, the New York City Council, with a margin of 45 to 3, passed the Earned Sick Time Act (the “ESTA”), which obligates most private employers in the City to provide paid sick time to their employees.  In passing the legislation, the Council justified the Act by citing to its potential “positive effect on the public health … [and ability to] lessen the spread of and exposure to diseases.” The Council also claimed that the Act would help “foster greater employee retention and productivity.” Mayor Bloomberg subsequently vetoed the act on June 7, 2013, but was overridden by the Council on June 27, 2013, making the bill law. Because the ESTA is now law and is expected to impact more than a million workers, employers are urged to review their policies and procedures to ensure that they comply with the new legislation by the deadlines imposed therein.
What Are the Requirements Imposed By the ESTA?
Under the ESTA, employers will be required to provide sick time to employees covered by the Act (see below for definition of “employee”). Specifically, beginning April 1, 2014, employers with 20 or more employees will be required to provide paid sick time to their employees; then on October 1, 2015, this requirement will be extended to those employers with 15 or more employees. Additionally, although businesses that employ fewer than 15 employees will not be required to provide paid sick time, beginning on April 1, 2014, they will be required to provide unpaid sick time.
Employees may use their earned sick time for three stated purposes under the Act:
(1) To care for themselves due to an illness, mental or physical, or for treatment of a health condition that necessitates medical or preventive care;
(2) To provide care for comparable issues to a family member; or
(3) Where the business has been shut down temporarily due to a public health emergency or where their child’s school or childcare provider has been closed “by order of a public official due to a public health emergency.”
In general, employers may impose a reasonable notice requirement (not to exceed seven days) on employees taking sick leave under the Act, where the time off is planned or foreseeable. For unplanned time off, notice “as soon as is practicable” may be required.
Additionally, where an employee takes three or more consecutive days of sick leave, medical documentation substantiating the leave may be mandated by an employer, and in general, employers may require employees to sign off that they are using the sick leave for the purposes enumerated by the statute.
Who Is an “Employee” Under the ESTA?
The ESTA utilizes a rather broad definition of “employee,” encompassing full-time, part-time, and temporary employees, and requires only that the individual worker be employed for at least 80 hours in a calendar year to receive coverage under the Act.
Who Is Not an “Employee” Under the ESTA?
Excluded from the requirements of the Act are:
- government employees, defined as those employed by the federal government, the State of New York (“including any office, department, independent agency, authority, institution, association, society or other body of the state including the legislature and the judiciary), or the City of New York or local government, municipality, or county;
- those engaged in “work experience program[s],” as defined under “section 336-c of the social services law;”
- those engaged in manufacturing, meaning those businesses fitting within sections 31, 32, or 33 of the North American Industry Classification System;
- true independent contractors;
- work-study program participants; and
- “hourly professionals,” defined as “any individual (i) who is professionally licensed by the New York state education department, office of professions, under the direction of the New York state board of regents under education law sections 6732, 7902 or 8202; (ii) who calls in for work assignments at will determining his or her own work schedule with the ability to reject or accept any assignment referred to them; and (iii) who is paid an average hourly wage which is at least four times the federal minimum wage for hours worked during the calendar year.”
Additionally, individuals covered by a collective bargaining agreement (CBA) may be exempted from the ESTA where the coverage is both expressly waived by the CBA and comparable benefits are provided to the workers.
How Does the ESTA Work?
Employees will begin accruing sick time on either their first day of employment or when the law goes into effect, whichever is later, and are eligible to first begin using that sick time 120 days later. The law sets the rate by which sick time is accrued at 1 hour of sick time for every 30 hours on the job, but no employer shall be required to provide more than 40 hours of sick time to a given employee in 1 calendar year. This means that, for example, an employee working 40 hours per week would be due 1.3 hours of accrued sick time per week. Employees must receive the same or higher rate of compensation for their earned sick time as they would during their regular on-the-job employment. And although accrued sick time does carry over between calendar years, employers may limit the amount an employee uses in a given year to 40 hours and are not required to compensate the employee for unused sick time upon the employee’s resignation, retirement, termination, or separation.
Employer Notice and Recordkeeping Requirements
Employers are required to provide written notification to employees, upon commencement of their employment, detailing their rights under the ESTA and about the prohibitions against retaliation contained in the Act. The notice should be in both English and the employee’s primary language, and model notices will be available for employers from the Department of Consumer Affairs.
In addition to providing notice to employees, employers are also required to maintain “records documenting such employer’s compliance with the requirements of this chapter for a period of two years.” Beyond being required under the Act, employers are also urged to maintain detailed records to help defend against the risk of unjustified claims by employees that they received insufficient, or were altogether denied, sick time. Because employees have the right to file grievances against employers for violations of the Act and employers can be forced to pay stiff penalties for such violations, detailed recordkeeping is essential.
What Are the Penalties for Noncompliance?
The ESTA contains a range of penalties for employers who violate its terms. Consequences range from civil penalties and payment to employees wrongfully denied paid sick leave or time off to “full compensation including wages and benefits lost” for employees discharged in contravention to the Act. In short, noncompliance is a very costly proposition. Penalties under the Act include:
- Where an employee takes sick time but is unlawfully denied compensation, the employee is entitled to $250 or 3 times the wages that should have been paid, whichever is greater;
- Where sick time is unlawfully denied to an employee and that employee works, or where the availability of sick time is conditioned upon the employee’s ability to find a replacement or work other hours, employers face a $500 fine;
- Where the employer unlawfully retaliates against an employee for exercising their rights under the law, the employee is due “full compensation including wages and benefits lost, five hundred dollars and equitable relief as appropriate;”
- Where an employee is unlawfully discharged in violation of the statute, the employer may be liable for “full compensation including wages and benefits lost, two thousand five hundred dollars and equitable relief, including reinstatement, as appropriate.”
The ESTA has only just been enacted, but its effective date is less than a year away. Employers are urged to begin taking steps to ensure their compliance with the Act.
- Employers need to begin revising their policies and procedures to comply with the requirements of the ESTA to avoid costly fines, penalties, and litigation. Employers must remember to prepare to accommodate not only medical sick leave, but also sick leave to care for a family member or leave where the employee’s business or their child’s day care has been shut down due to a public health emergency.
- Whether an employer meets the threshold requirements of the Act is determined based on the “average number of employees who worked for compensation per week the preceding calendar year.” Accordingly, current staffing levels will determine an employer’s required compliance with the Act.
- Employers are advised to begin formulating draft notices for new employees informing them of the Act.
- Employers should begin implementing recording systems to track (1) earned sick time, (2) requests and explanations for the use of such sick time, (3) employee requests to change shifts in lieu of using sick time, and (4) and issues encountered with requests or denials of sick time.
- Policies which exceed the floor established by the Act do not need to be altered.