There has been an important development regarding the NYC Earned Sick Time Act (“ESTA”). This is the law that now requires most employers to provide up to 40 hours of annual paid sick time to their employees.
When the New York City Council enacted the ESTA, a variety of questions arose that simply had no answers because the law did not address them and no interpretive guidance was provided. When the law was amended, new questions and issues emerged. We worked with many of our clients to modify existing policies and employee handbooks and to answer questions that seemed more like logic problems than requests for legal advice.
Help has come from an unexpected place; an answer found in an “FAQ.”
The Department of Consumer Affairs is the City agency that implements and enforces the ESTA. They have issued, and have continued to revise, a series of Frequently Asked Questions that aid and at least try to make sense out of this confounding piece of legislation. A link to the FAQs is here. A new interpretation of the law by the Department of Consumer Affairs now offers employers an easy shortcut solution.
A sample FAQ is: “Can other time off policies satisfy the requirements of the law?”
The agency’s answer is: “Yes.” That is great news. It means that paid time off (“PTO”) policies do not have to separately track and allocate “sick time” so long as: (1) PTO can be used for sick time, and; (2) the amount of PTO meets or exceeds that which the employee would be entitled to under the ESTA. The ability to avoid tracking hours to comply with the ESTA greatly simplifies the burden on employers.
Here is why: The ESTA mandates that employers provide one hour of sick time to each employee for every thirty hours worked. For employees who work 40-hour weeks, this 30:1 ratio imposes a clumsy process to compute how much time has been earned and used. Similarly, many employers track sick time in “days” rather than hours. When an employee “works” 7.5 hours in a day and has a 30-minute meal period, how much earned sick time should be deducted from the employee’s banked time if she takes “a day off?”
These problems vanish if – as of the beginning of the “calendar year” – all employees are credited with at least 40 hours of “PTO” that can be used for purposes including sick leave. Sick leave no longer has to be tracked separately. (See below for an important point about the definition of the term “calendar year.”)
For a typical employee working five days a week, eight hours per day, a full day off for sick time would be earned under the ESTA after 240 hours (240 hours worked / 30 hours = eight hours of sick time). 240 hours is roughly six weeks. Thus, an employer who provides at least one day of PTO per month (roughly every four weeks) keeps ahead of the ESTA’s requirements, meaning there is no need to track working hours to comply with this law because you are providing a greater benefit.
There is one notable exception. Employees are permitted to carry over up to 40 hours of sick time from the prior “calendar year” unless the employee is provided with 40 hours of sick time as of the beginning of the following “calendar year.” To avoid having to permit carryovers, employers may wish to simply provide five days of PTO at the beginning of each “calendar year.” Note that the ESTA defines a “calendar year” as a “consecutive 12-month period of the employer’s choosing.” This means that PTO can be tied to an employee’s anniversary date, rather than January 1. This, too, makes the lives of employers easier. A policy that would reset the PTO bank as of the employee’s anniversary date means there would be no carry over requirement provided that the bank has at least 40 hours in it at the beginning of the new “calendar year.”
For new hires, the easiest solution is to grant one day of PTO at the time of hire. Then add at least one additional day each month up to the maximum number permitted under your policy until the end of the employee’s “calendar year,” at which time the regular policy for existing employees would apply.
Example: An employee is hired on July 17 and is entitled to earn up to five PTO days. The employee would earn those days on the 17th of July through November. As of July 16 of the following year (or January 1 if you prefer) the employee would receive five PTO days.
|Dougherty, Anthony D. Partner, CFE||Partner, CFE||212.216.8099|
|Drogin, Laurent S. Partner||Partner||212.216.8016|
|Feder, Hagit Senior Compliance Administrator, CFE||Senior Compliance Administrator, CFE||212.216.1109|
|Kleinmann, David N. Partner||Partner||212.216.1115|
|Steer, Richard L. Partner||Partner||212.216.8070|
|Toevs Carolan, Tara Counsel||Counsel||212.216.8007|
|Zagorsky, Arthur Partner||Partner||212.216.8030|