New York City Council Amends and Expands Earned Sick Time Act

On February 26, 2014, the New York City Council amended the New York City Earned Sick Time Act (“ESTA”) to, among other things, expand its coverage to employers with five or more employees. The law, as amended, will take effect on April 1, 2014, and applies to employees who work more than 80 hours in New York City in a calendar year.

As previously reported here (see “NYC Council Approves Paid Sick Time Bill With Veto-Proof Margin”), the NYC Council approved the legislation with a veto-proof margin on May 8, 2013, and the law was formally enacted on June 26, 2013. Originally, the ESTA required employers with 20 or more employees to provide five paid sick days per calendar year to all full-time and part-time employees, required all employers with fewer than 20 employees to provide five days of unpaid sick leave per calendar year, and was set to expand in 2015 to require employers with 15 or more workers to provide five paid sick days.

As amended, the ESTA now requires that, by April 1, 2014, all employers with five or more employees working in New York City must provide five paid sick days per calendar year, and employers with fewer than five employees must provide five unpaid sick days per calendar year.

Additional changes made to ESTA include:

• Grace period: There is a six-month grace period (April 1, 2014 – October 1, 2014) during which no civil penalties will be issued to employers with between five and nineteen employees, or to employers in the manufacturing sector (who were previously not covered by ESTA). First-time violations during the grace period will not automatically lead to penalties for subsequent violations after the grace period has expired, but two or more violations during the grace period may lead to the imposition of penalties after the grace period ends. The grace period does not apply to employers of domestic workers.
• Agency Enforcement: Under the prior version of the ESTA the Department of Consumer Affairs was to enforce the law’s requirements. Under the amendment, the Mayor may designate a different agency to enforce the ESTA. The amended version also gives the enforcing agency additional powers, such as the authority to serve subpoenas, conduct investigations, hold hearings, render decisions, impose penalties, determine how money collected as a result of violations is to be distributed and amend and modify rules and regulations necessary to enforce the law.
• Notice and Posters: Employers must notify all current employees of their rights under the ESTA by May 1, 2014. In addition, posters notifying employees of their rights under the ESTA must be “conspicuously posted.” Previously, the law only required notice to be issued “upon commencement of employment” and indicated that posting of a rights notice was optional (“may also be posted”). While no official poster has yet been issued it is expected that a poster will be issued before April 1, 2014. The poster must be in English as well as the primary language spoken by the employee (provided that an official translation of the poster has been issued). The penalty for “willfully” failing to provide notice ($50 for each employee not given notice) remains the same.
• Record Keeping: The amendment increases employers’ record retention requirements from two to three years.
• Time to File a Complaint: The amendment increases the time for filing a complaint from 270 days to two years.

As with the previous version of the ESTA, employers who already provide employees with five paid days off per calendar year (whether in the form of paid sick days, personal days, or vacation time) will not be required to provide additional paid time off to comply with the ESTA, provided that: (1) the employer’s paid time off (PTO) policy must offer the same, or more generous, paid leave as that provided for in the ESTA; (2) the PTO policy must allow employees to use paid leave in the same manner and under the same conditions as the ESTA. For example:

• Employees must be able to use the existing paid days off both for their own health and to care for sick “family members,” as defined in the ESTA. If an employer’s existing PTO policy only allows employees to use PTO for the employee’s own health issues, the paid time off will not meet the requirements of the ESTA. 
• The definition of family members has been expanded under the amended version of the ESTA to include not only parents, spouses, domestic partners, and children, but also grandparents, grandchildren, and siblings (including half-siblings, step-siblings, and adopted siblings). If an employer’s existing PTO policy only allows use of PTO for the employee and his/her spouse or children, the PTO policy will not meet the requirements of the ESTA.
• Employees also must be able to use the PTO for the reasons allowed in the ESTA, which are: (1) medical diagnosis; (2) care or treatment of a mental or physical illness; (3) an injury or health condition; (4) preventative medical care, (5) when an employee’s place of business is closed by order of a public official due to a public health emergency or (6) when the employee must care for a child whose school or childcare provider has been closed by order of a public official due to a public health emergency.
• Under the ESTA, once hired, employees will begin to accrue one hour of sick time for every thirty hours worked, up to a maximum of forty hours (or five days) of sick time in a calendar year, and employees may begin to use the accrued sick time 120 calendar days after the commencement of their employment. Therefore, in order for an employer’s existing PTO policy to meet the requirements of the ESTA, employee must be able to begin accruing and using PTO within the same time periods as provided in the ESTA. If an employer’s existing PTO policy provides that an employee cannot begin to accrue PTO until after completing a probationary period, or that an employee cannot use PTO until the employee has been employed for more than 120 days (e.g., the policy says an employee must complete six months or one year of employment before taking PTO), the existing policy will not meet the requirements of the ESTA. 

Several key provisions of the ESTA remain unchanged, including the following:

• Employees can carry over unused, accrued sick time from one calendar year into the next, but employers are not required to provide more than 40 hours of sick leave in any calendar year.
• Employees can decide how much accrued sick time to use, but an employer may set a “reasonable” minimum increment of use of up to four hours.
• If an employee’s need to use accrued time is foreseeable, employers may require reasonable notice of up to seven days.
• Employers may require documentation to support the authorized reason for use of accrued time if the absence is for more than three consecutive work days.
• If an employee is terminated and then rehired within six months, the employee’s previously accrued sick days must be reinstated (unless the employee was paid for any accrued, unused sick days).
• Employers can chose to pay employees for unused sick time at the end of the calendar year (in which case no sick time will be carried over to the next year), but employers still are not required to pay employees for unused, accrued sick time upon termination of employment.
• If employees are covered by a valid collective bargaining agreement on April 1, 2014 (the effective date of ESTA), the law’s requirements will not apply until the termination of the collective bargaining agreement.
• Retaliation against employees who use paid or unpaid time off as provided by the law is prohibited.
• Employers covered by a collective bargaining agreement can negotiate for a waiver of the ESTA’s requirements, but the collective bargaining agreement must include an express waiver of the law and must provide a “comparable benefit” in the form of “leave, compensation, other employee benefits or some combination thereof.” The law defines “comparable benefits” to include vacation time, personal time, sick time, and holiday, and Sunday time pay at premium rates.

We will provide notice on this website when an official ESTA poster or notice is issued by the Department of Consumer affairs or another agency designated by the Mayor.

Please do not hesitate to contact any of our attorneys if you have any questions regarding your company’s obligations under this new law.