1. Session 605 PTO, Paid Sick Leave, Unlimited Time Off – Use It Without Abusing It! October 18, 2016
Panelists:
Michael Booden, YMCA Chicago
Jody Riger, Sun Chemical
Cepideh Roufougar, Jackson Lewis P.C.

2. Paid Leave Programs* Sick Vacation Holidays
*From BLS July 22, 2016 News Release – “Employee Benefits in the United States – March 2016”
Sick
Vacation
Holidays
Management and Professional
82%
88%
89%
Service
42%
52%
50%
Construction
63%
66%
Full-Time Employee
76%
91%
90%
Part-Time Employee
30%
36%
40%
All workers
64%
77%

3. Benefits of Paid Leave Programs*
Improve recruitment and retention efforts
HR Managers reported that flexible schedules was the single most important factor in attracting and retaining employees
The cost of replacing an employee is 21% of the employee’s salary
Healthier work environment
Healthier children and families
*See The Economics of Paid and Unpaid Leave prepared by the President’s Council of Economic Advisors

4. Direct Costs of Paid Leave Programs
Connecticut Sick Leave Law survey results*
47% of employers reported no increase in cost
19% of employers reported an increase of less than 2 percent
2016 Financial Costs - 6.9% of total compensation**
Vacation - 3.4%
Holiday – 2.1%
Sick – 1.0%
Personal – 0.4%
*See The Economics of Paid and Unpaid Leave prepared by the President’s Council of Economic Advisors
** See BLS June 9, 2016 News Release – “Employer Costs for Employee Compensation – March 2016”

5. Indirect Costs of Paid Leave Programs*
Management spends an average of 4.2 hours weekly dealing with absences. (Approximately 210 hours or 5.3 weeks a year)
Replacement worker is almost 30% less productive
Other employees at work are less productive because they are multi-tasking;
Supervisor is 15% less productive with replacement employee.
*See Executive Summary Total Financial Impact of Employee Absences in the U.S Study by Society for Human Resource Management (SHRM) with Kronos Incorporated published August 2014.

6. Common Paid Leave Programs
Vacation Plans
Sick Leave Plans
Combined Paid Time Off Plans
Holidays (Floating or Personal)
Unlimited Time Off Plans

7. Considerations for Vacation / PTO Policies
Accruing or Granting Hours
Use it or Lose It Program
Prohibited in some states, including CA, CO, MT
Establishing a reasonable cap
Payout of Hours on Termination
Required in some states, including CA, MA, and IL

8. Unlimited PTO Policies
Is it truly unlimited?
What about Family Medical Leave Act leaves?
What about leave as an accommodation?
How will employees request time off?
What happens to previously accrued hours?
Effect on separation cash-outs?

9. Sick/Safety Leave Laws
Jurisdictions with Sick/Safety Leave Laws
Connecticut
California and California cities: San Francisco, Oakland, Emeryville, Los Angeles, and San Diego
Washington cities: Seattle, Tacoma
New Jersey cities: Bloomfield, East Orange, Elizabeth, Irvington, Jersey City, Newark, New Brunswick, Paterson, Passaic, Plainfield, Montclair, Trenton
Montgomery County, Maryland (Baltimore)
Washington, D.C.
Philadelphia
New York City
Massachusetts
Oregon (threshold # of employees depends on location)

10. Hospitality Industry Ordinances
LAX Ordinance
City of Long Beach, California
Coming Soon (January 1, 2017)
Vermont
Spokane, Washington
Santa Monica, California
Minneapolis
Chicago

11. States Saying “No” to Local Sick Leave Laws
- Alabama - Louisiana
- Arizona Mississippi
- Florida Oklahoma
- Georgia Tennessee
- Indiana Wisconsin
- Kansas

12. General Structure of Sick/Safety Leave Laws
Accrual formula: 1 hour PSL for every X hours worked.
Provisions for when accrual begins, and when accrued time can be used.
Require minimum accruals caps, carryovers, or grants
Employer’s current PTO policies may satisfy if they meet all other elements of the law

13. General Structure (continued)
Employer and employee notice requirements
Pay at end of employment usually not required
But leave may need to be reinstated upon re-hire within a certain period of time
Anti-retaliation provision
Enforcement mechanism
Paid or unpaid depends on number of employees
May include temporary/contingent/seasonal employees

14. Common Uses of Paid Sick/Safety Leave
Medical Reasons
Employee’s illness or injury, including preventative care and other medical appointments
To care for a family member’s illness or injury, including taking the family member to medical appointments
Family Member Defined Broadly: Parent, Child (biological, adopted, foster), Spouse, Sibling, Grandparent, Grandchild, In-Laws
Victims of stalking, rape, or domestic violence

15. Comparing Various Paid Sick/Safety Leave Laws
Connecticut
Massachusetts
Oregon
Granting Hours
40 Hours
40 hours
Accrual Formulas
1 hour for 40
1 hour for 30
Cap on Accrual & Rollover
40 hours/40 hours
Use Increment
1 hour
1 hour (unless employer allows use in smaller increments)
Reasons for use
Illness, Injury, Safety
Illness, Injury, Safety, Funeral Arrangements

16. Comparing Various Paid Sick/Safety Leave Laws
Montgomery County, MD (Baltimore)*
Philadelphia
New York City
Granting Hours
56 hours
40 hours
Accrual Formulas
1 hour for 30
1 hour for 40
Cap on Accrual & Rollover
56 hours/56 hours
(use 80 hours a year)
40 hours/40 hours
Use Increment
Smallest increment available under payroll system & minimum increment may not exceed 4 hours
Smallest increment used for other absences
Minimum increment may not exceed 4 hours
Reasons for use
Illness, Injury, Safety, Closure of workplace or school
Illness, Injury, Safety
Illness, Injury, Closure of workplace or school

17. California Dreaming!!!!

18. California State Law
Fully effective as of July 1, 2015 (accrual and usage)
Applies to all employers, regardless of size
Applies to all eligible employees, including those from a temporary placement agency
Provide either through a grant or as an accrual
If grant - greater of 3 days or 24 hours
If accrual 1 hour for 30 is the standard, up to 48 hours
Grandfather provision for pre-existing policies that provide 8 hours of leave in 90 days and 3 days of leave in 9 months

19. California State Law (continued)
Use for illness and injury reasons
Employee’s or employee’s “family member”
Use for safety reasons
Employers can set a minimum use increment of 2 hours
Rate of pay requirements
Exempt employees – at same rate as other leaves
Non-exempt employees – at the regular rate or using a 90-day formula

20. California State Law (continued)
Employee notice requirements
“reasonable advance notice” if foreseeable
“as soon as practicable” if not foreseeable
Employee “may determine how much paid sick leave he or she needs to use”
Employer notice requirements
Poster
At time of hire (Wage Theft Prevention Act)
Available hours every payday
No pay on termination, but may need to reinstate accrued hours if re-hired
Retaliation prohibited

21. Comparing City Ordinances
State
San Francisco
Los Angeles
San Diego
Granting Hours
3 days or 24 hours
Advances allowed
48 hours
40 hours
Accrual Formulas
1 hour for 30
Cap on Accrual
72 hours
80 hours
Use Increment
2 hours
1 hour
2 hour
Reasons for use
Illness or Injury and Safety Reasons
Adds Designated
Person
Adds Close due to Blood or Affinity
Same as State

22. Federal Contractors (Executive Order)
1 hour of leave for every 30 hours worked
Accrual cap no less than 56 hours (7 days) a year
Must be allowed to carryover all unused, accrued time
May be used for illness, obtaining care/diagnosis, caring for family member, or domestic violence
Oral or written requests to use leave
7-days in advance for foreseeable absences
“as soon as practicable” if not foreseeable

23. Federal Contractors (continued)
May require documentation only for absences of 3 or more consecutive workdays
No pay upon separation of employment, but there are reinstatement requirements for re-hires
Applies only to new federal contracts beginning in 2017
Nothing in the order supersedes any state or local law requiring greater benefits

24. The Compliance Challenge
Most employers do not provide leave to part- timers or temps
Some employer policies provide for leave accrual based on scheduled hours, not hours worked
Policies may not meet accrual and carryover requirements
Policies may not meet minimum use increment requirements

25. Options for Modifying Leave Policies
Modify existing policies to comply
One size fits all? Or separate policies for various employee groups
Close existing PTO banks and move to separate sick and vacation banks
Amend existing PTO policies and move some days into a new sick leave bank
Continue to existing programs and adopt a new sick leave program to run concurrently

26. Integration with Other Laws
ADA (ADAAA) and state anti-discrimination laws
Family Medical Leave Act (FMLA) and state laws
FLSA/State salary deductions for exempt employees
Pregnancy disability leave
Workers’ compensation

27. Integration with Other Policies/Benefits
Attendance policies
Those that involve “points” and other discipline
Method of “calling out sick”
Paid benefits – LTD/STD plans
Collective bargaining agreements

28. Employee Messaging is Key
What will happen to previously accrued hours?
What are the reasons for which time can be used from the various banks?
Who is eligible to receive benefits under each program?

29. Drafting Policies When and how much leave can an employee accrue?
When can leave can be used?
Minimum use increments
Rate of pay when used
Notice or scheduling requirements
Interaction with other policies (e.g., holidays or if employee is sick)
Advancing Hours
Restrictions on recovering hours through salary deductions for separating employees
What happens on termination?

30. Implement payroll requirements
Wage statement requirements
Calculating rate of pay
Determine “commission” v “bonus”
Accrual methods
Change payroll systems?
Tracking generally
Recordkeeping

31. Curbing Abuse Set expectations for employees up front
How much time is available and for what purposes?
What employees must say to trigger sick leave rights?
When will sick leave rights will not be triggered?
When will employees be required to provide a doctor’s note?

32. Curbing Abuse Train Supervisors
What can they ask when an employee calls in?
How to tracking leave usage?
When can they mention absences on performance evaluations?
Identifying patterns to support documentation requests and potential disciplinary actions?
When to involve Human Resources?

33. Looking Ahead to the Future:
DOL encouraging States to enact paid sick leave
Obama administration pushing for paid maternity leave
Administration awarded $500,000 in total grants for states to explore the feasibility and evaluate the effectiveness of paid leave policies.
More State and local sick leave laws expected

34. The Next Wave: Paid Parental Leave
Wage replacement - not leave - programs
Available for Baby Bonding
California, New Jersey and Rhode Island: 6 weeks partial pay;
New York - 12 weeks partial pay
San Francisco – 6 weeks supplements State program

35. What Can Employers Do Now?
Ensure there is a currently compliant policy
Designate a person to track “updates”
Conduct training
Evaluate agreements with outsource vendors
Comply with posting and notice requirements
When conducting training, employers should identify who needs to attend. Should training be limited to just HR and/or payroll managers? Or do you want to expand the training to include managers who may be responsible for implementing sick leave programs? The subject matter of the training will likely dictate who attends – is the training focused on implementing policies and compliance? Or is it focused on policy administration – the procedures for calling in sick, when can supervisors ask for a doctor’s note, and when can absences be mentioned in performance evaluations.

36. QUESTIONS?