N.J. Earned Sick Leave Law Regulations Finalized

In 2018, New Jersey passed the Earned Sick Leave Law (ESLL) that requires New Jersey employers of all sizes to provide workers with up to 40 hours of paid sick time per year to care for themselves or a family member. More than a year after publishing proposed regulations on the ESLL, the New Jersey Department of Workforce and Development (the Department) has issued final implementing regulations.

While there are only a few substantive changes from the proposed regulations issued in September 2018, the final N.J. earned sick leave regulations, which are binding, went into effect Jan. 6, 2020.

What is included in the N.J. Earned Sick Leave Law final regulations?

The N.J. Earned Sick Leave Law final regulations largely mirror information the Department published in its 2019 FAQ document (see “Additional Resources” below), which addresses covered employees, accrual of hours, use of earned sick leave hours, carry-over and payout of hours, interaction with other federal and state laws, retaliation, notice to employees, employer recordkeeping, and complaints.

A Notable Area of Change: Benefit Year

One area where the N.J. sick leave final regulations differ from the FAQ document published by the Department in 2018 and the proposed regulation is: the establishment of the benefit year. The FAQ document provides that an employer is not allowed to establish a different benefit year for individual employees based on their personal anniversary date with the employer, and similar language was included in the 2018 proposed regulations. However, in the final regulations, the Department eliminated the provision that an employer establishes a single benefit year for all employees and shared that it plans to propose rulemaking in the future that would allow for multiple benefit years.

Employers should remain mindful that once a benefit year is established for an employee, an employer may not change it without providing notice to the Department at least 30 days prior to making the intended change. The employer notice must include the proposed new benefit year, plus:

• The reason(s) for the requested change
• A list of employees impacted with contact information
• Each employee's two-year history of accrual, use, payment, payout and carry-over of earned sick leave.

Approvals of benefit year are not automatic and if the Department denies the request, it can impose a benefit year on the employer.

Non-binding comment and response section of the final regulations

While the final N.J. sick leave regulation has the force and effect of law, the information provided in the comment and response section published with the final regulation provides non-binding guidance and is illustrative only. While the Department uses this section to review situations presented to it based on the individual facts and circumstances, this section can provide only insight for employers regarding how the Department might generally handle topical areas.

Highlights of information in the comment and response section, which is not official, include, but are not limited to:

• Frontloading. If an employer advances (frontloads) the full amount of earned sick leave at the beginning of the benefit year, the Department has verified that the next year the employee may carry over earned sick leave that the employee would never be permitted to use. For example, an employer advances 40 hours of earned sick leave at the beginning of each benefit year. At the end of Benefit Year 1 the employee has not used any of the earned sick leave time. The employee would carry over 40 earned sick leave hours into Benefit Year 2. With the advancement of hours for Benefit Year 2, the employee will start the new benefit year with 80 hours of earned sick leave, only 40 of which the employee will be permitted by his or her employer to use during that benefit year.
• Snowstorms and weather events. Neither snowstorms nor weather events without an accompanying “public health emergency” constitute a reason to use earned sick leave time.
• School events. Earned sick leave time may be used by a parent to attend a sporting event, play, or similar activity where parental attendance has been “requested or required by a school administrator, teacher, or other professional staff member responsible for the child’s education.”

• Blackout Dates. Under the ESLL, employers may create “blackout dates” (dates when earned sick leave time cannot be used). However, the final regulations provide that the “certain dates” must be limited to verifiable high-volume periods or special events, during which permitting the use of foreseeable PSL would unduly disrupt the operations of the employer. For example, employers’ blackout dates could include holidays within the airline industry or the release of a new product for retailers. The Department declined to impose a request for a “blanket rule setting forth a maximum number of blackout dates that an employer may identify” and added “there will be no set period of notice (in days or otherwise) that the employer must provide to its employees of its identification of blackout dates.”
• Use of PTO Policies. The Department recognizes that some employers might have PTO policies that provide more than the required 40 hours under the ESLL. However, the response to a comment from the Department on this topic provides: “an employer who seeks to meet the requirements of the ESLL using a compliant PTO program must adhere to all requirements of the ESLL and the Department's implementing regulations, including the carry-over requirements, relative to all the PTO, even where the employee is provided more than 40 hours of PTO.”

Employers should be aware of how the Department has addressed situations in the comments section and consider reviewing its own compliance with the ESLL and may want to seek legal guidance regarding the responses provided.

Is further clarification needed in New Jersey Earned Sick Leave Law final regulations?

One area where uncertainty remains and was not addressed in the final regulations relates to whether the ESLL applies to an employee who works in and outside New Jersey. The non-binding FAQ documents advised that its analysis would depend on how much time the employee spends working in New Jersey, “If the employee routinely performs some work in New Jersey and the employee’s base of operations or the place from which such work is directed and controlled is in New Jersey, then the employee is entitled to receive earned sick leave under the ESLL. This is the test applied by the Division on Civil Rights in its enforcement of the New Jersey Family Leave Act.”

While rulemaking related to this approach was anticipated, the final regulations failed to provide clear direction for employers. In addition, and as noted above, it is anticipated the Department will propose rulemaking allowing employers to establish multiple benefit years.

Next steps

While the N.J. sick leave final regulations are binding and help to clarify employer obligations under the ESLL, it is anticipated that future rulemaking will be forthcoming. Paychex will continue to monitor developments related to ESLL. As the complexity of paid sick leave in New Jersey, as well as other states and localities, continues to grow, employers can reach out to Paychex to help make it simple and to address compliance obligations.

Additional resources

• Earned Sick Leave in New Jersey website, which includes information for employers, including the Notice of Employee Rights that must be provided to employees – existing and new hires – and posted in a conspicuous and accessible place at all work sites.
• Frequently Asked Questions (FAQ) document