New Jersey, presumably fueled by promises from the new governor, passed two bills affecting employers in the past two weeks. New Jersey now has a Paid Sick Leave Bill, which is headed to the governor for his signature, and an Equal Pay Act, which is now law, and which carries some of the most employee-friendly policies in the country.

Sick Leave Act

Although it is not signed by the governor yet, on April 12 the New Jersey Senate passed the New Jersey Paid Sick Leave Act. The governor has listed paid sick leave as one of his key initiatives, and he has pledged via Twitter to sign the bill May 2, 2018. Once signed, the Act will pre-empt any sick leave laws passed by cities and towns in New Jersey.

Employees, under the Act, will accrue one hour of paid sick leave for every 30 hours worked, up to a maximum of 40 hours of sick leave time during a consecutive 12-month period. The consecutive 12-month period must be established by employers and may not be changed without notifying the commissioner of Labor and Workforce Development. Employers that already provide sick leave are permitted to maintain their own policies, provided their policies provide benefits that are equal to or greater than the Act’s benefits. Employees are permitted to carry over accrued sick leave time, but an employer may limit an employee’s use of the leave to no more than 40 hours in a single benefit year. The Act does not require that accrued time be paid to employees upon separation of employment, unless an employer’s policy so dictates.

The Act applies to all employers, except public employers, that are already subject to other sick leave laws. The Act’s eligible employees are all employees EXCEPT: per diem healthcare employees, public employees who already benefit from sick leave requirements and union construction workers. Importantly, temporary employment agencies should take note that temporary employees are entitled to sick leave, and their sick leave will accrue based on the time worked with the temporary agency rather than with individual assigned employers. Likewise, the Act explicitly states that per diem healthcare employees shall not include homemaker-home health aides.

In order to comply with the recordkeeping requirements of the Act, employers must maintain documents reflecting the number of hours worked and number of sick leave hours accrued by employees. These records must be maintained for five years, and be made available for inspection upon request of the Department of Labor and Workforce Development. The Act expressly states that any accrued benefits transfer with employees to new positions and remain in place after acquisitions, and that if an employee separates from his or her employment and is then reinstated within six months, that employee’s accrued leave time is maintained.

An employee may use his or her leave time for any of the reasons listed in the Act:

  1. diagnosis, care, treatment or recovery for an employee’s own mental or physical condition, or a family member’s mental or physical condition;
  2. counseling, legal services, or participation in any civil or criminal proceedings related to an employee’s or family member’s status as a domestic or sexual violence victim;
  3. leave when the employee’s workplace or an employee’s child’s school or child care is closed by order of a public official due to a public health concern; or
  4. leave to attend a school-related conference or meeting.

Notably, and unlike in many other statutes, “family member” is defined very loosely as any person “whose close association with the employee is the equivalent of a family relationship.” This means that an employee may have an argument for leave related to a good friend, rather than being confined to what is traditionally considered “family member.”

Employers may dictate the increment in which an employee takes leave, provided that the largest increment required may not exceed the number of hours the employee was scheduled to work during the shift from which he or she requested leave. The Act also permits employers to require no more than seven calendar days’ advance notice for any foreseeable use of leave. Employers also may utilize blackout dates for use of leave based on foreseeable reasons (i.e., a doctor’s appointment), and may require proof that the leave was unforeseeable if leave is later requested on those blackout dates. Likewise, if an employee uses leave for three consecutive days, employers are permitted to request documentation to confirm that the employee’s use of leave was consistent with one of the enumerated leave reasons under the Act.

Employees may, upon mutual consent with the employer, voluntarily choose to make up the time missed for any of the enumerated leave reasons under the Act, rather than taking sick time. However, an employer may not require employees to work additional hours, nor may an employer require an employee to find a replacement employee to cover the hours for which leave is taken.

The Act provides employees with a private right of action, which allows the same damages as those permitted in violations of the New Jersey Wage and Hour Law, such as back pay, double the amount of wages lost as liquidated damages and attorneys’ fees. The Act also includes a rebuttable presumption of retaliation if any adverse action (i.e., termination, demotion, unfavorable reassignment) is taken by the employer within 90 days of certain protected activity (e.g., filing a complaint regarding retaliation or the refusal of leave, cooperating in an investigation).

The Act will go into effect 180 days after the governor signs the bill. Once in effect, the Act requires employers to notify employees about the benefits in the Act within 30 days from when the New Jersey Department of Labor (NJDOL) issues the notification. The notice must also be posted in the workplace. After the Act is in effect, and the notification has been issued by the NJDOL, employers are required to provide notice to each employee upon hire.

Employees will begin accruing sick leave upon the effective date, unless an employer’s policy already provided for accrual prior to that time. Any employee who was hired prior to the effective date of the Act shall be eligible to use the sick leave on the 120th calendar day after that employee’s hire date. This means that if an employee has been employed for 120 calendar days by the time the Act becomes effective, that employee is eligible to begin taking any accrued leave immediately. Employees hired after the effective date shall accrue time beginning on their hire date, and will be eligible to use the accrued time 120 calendar dates after their hire.

Given the likelihood that the governor will sign this bill in short order, employers should begin planning to provide sick leave and reviewing their policies to ensure they are compliant with the Act’s requirements.

Equal Pay Act

On April 24, 2018, the New Jersey governor signed the Equal Pay Act into law. This Act, which takes effect on July 1, 2018, amends the New Jersey Law Against Discrimination (NJLAD) to add an equal pay section. This Act, unlike the federal Equal Pay Act, and many other state equal pay acts, ensures equal pay and benefits not just for women, but for all protected classes listed in the NJLAD. The Act demands equal pay for “substantially similar work when viewed as a composite of skill, effort and responsibility.” This standard is more lenient than the standard set forth in the federal equal pay provisions, which requires equal pay for “equal skill, effort, and responsibility,” and it is unclear how broadly the courts will interpret this standard.

In order to pay a member of a protected class less than a nonmember for substantially similar work, an employer must prove that the differential is based upon seniority, merit, or one or more bona fide factors (not based on an employee’s membership in a protected class). These one or more bona fide factors must not perpetuate any differential in compensation based upon membership in a protected class, and must be applied reasonably, account for the entire wage differential, be related to the position in question and be based upon business necessity. The requirement that a bona fide factor may not perpetuate any wage differential even based on a protected class is a significant one. This essentially imposes a disparate impact claim for equal pay. It is also notable that a bona fide factor based upon business necessity will not be sufficient if it can be demonstrated that alternative business practices would serve the same purpose without resulting in a wage differential.

Perhaps the most surprising provision in the Act is its prohibition against employers reducing the pay of any employee in order to comply with the Act. This means that employers may not reduce the pay of higher-paid employees in an effort to even out salaries, but instead must raise any salaries for members of protected classes who are being paid less for substantially similar work, which could have an enormous financial impact upon employers. Another potentially huge financial impact is the Act’s requirement that the comparison of wages be based upon wage rates in all of an employer’s facilities.

The Act makes each occasion that an individual is affected by a discriminatory compensation decision an unlawful employment practice, and specifically states that this includes each payment of wages. This means every time an employee of a protected class is paid at a rate less than his or her counterpart who is not a member of a protected class, without a bona fide reason, an unlawful employment practice has occurred. This is important because it means the statute of limitations would start anew on each new discriminatory employment practice.

The Act prohibits employers from asking their employees to sign any waiver shortening the statute of limitations for any claim pursuant to the NJLAD, or retaliating against employees for, or requiring any agreement to waive, requests for information related to an employee’s or other employees’ compensation and benefits and their membership in a protected class.

The Act, which permits a private right of action, allows plaintiffs to recover lost wages for up to six years, which is triple the federal act’s recovery time. The Act also imposes triple the damages in liquidated damages for any violation of this equal pay section of the NJLAD.

Employers should immediately begin conducting privileged audits of salaries and related job duties to ensure that all employees who conduct substantially similar work are paid equal amounts.

UPDATE: On May 2, 2018, Governor Phil Murphy signed the New Jersey Paid Sick Leave Act into law, which means the laws provisions will become effective October 29, 2018.