On June 19, 2015, Massachusetts Attorney General Maura Healey issued long awaited regulations concerning the Massachusetts Earned Sick Time Law. The ESTL was enacted by a ballot initiative on November 4, 2014. The basic rule under the ESTL is that employees may accrue the right to use paid sick leave at the rate of one hour for every 30 hours worked, up to 40 hours per year, to be used for various purposes, most of which involve illness or medical care for the employee or a family member.
The enactment of the ESTL led to numerous questions and concerns on the part of employers. The Attorney General initially promulgated proposed regulations, which addressed some questions but left others unanswered and led to other concerns for employers.
In May 2015, the Attorney General issued guidance providing a “safe harbor” for employers with paid time off policies to use for the period of July to December 2015, as an alternative to fully modifying existing policies to conform to the ESTL and to take into account paid time off already used in 2015. Following public hearings and other meetings with interested parties, the Attorney General finalized the regulations for the ESTL.
The immediate priority for employers with employees in Massachusetts is to decide whether they will use the safe harbor for the balance of 2015 or simply revise their policies effective July 1 to comply with the ESTL.
This Client Alert reviews the key provisions of the ESTL regulations that are relevant to utilizing the safe harbor and to developing and administering policies to comply with the ESTL both during 2015 and in future years. While we have reviewed ESTL developments in previous client alerts, which can be reviewed here and here, this Client Alert is intended to cover all key provisions of the ESTL and the regulations.
Covered Employers and Employees
All employers with employees in Massachusetts are covered by the ESTL. Employers with fewer than 11 employees need not provide paid leave but are obligated to provide at least unpaid leave. The 11-employee threshold counts all employees, both within and outside Massachusetts. The regulations include detailed rules concerning counting of employees for purposes of this threshold and the consequences of going above and below that threshold.
For an employee to be eligible for leave under the ESTL, the employee must have a primary place of work in Massachusetts. If an employee works in multiple states, Massachusetts will be the primary place of work if the employee works more time in Massachusetts than in any other single state. Note, however, that several other states and cities (including, without limitation, California, Connecticut, District of Columbia, New York City, San Francisco, Seattle, Newark, Philadelphia and Portland, Oregon) have recently developed paid sick leave laws that may also provide benefits to employees who work the required amount of time in those locations.
Accrual of Leave
Basic Rule and Categories of Employees
As stated above, the basic rule is that an employee earns one hour of sick time for every 30 hours worked, including overtime hours. Only working time counts; sick time is not earned for the use of paid time off.
For hourly employees, the accrual is straightforward. All hours worked count, up to the cap described below. Employees who are exempt from overtime earn sick time at the rate of 40 hours per week, up to the cap, unless their jobs specify a lesser number of hours per week, in which case the lower number of hours applies. For other categories of employees, such as piece work employees, a “reasonable measure” of their hours should be used.
Start of Accruals
Accrual of sick time begins when the ESTL goes into effect on July 1, 2015. For employees who are hired after July 1, 2015, accrual begins at the start of employment.
An employer can cap accrual of sick time at 40 hours in a benefit year. If so required, once an employee accrues a balance of 40 hours of unused sick time in his or her sick time bank, the employee stops accruing sick time.
The “benefit year” can be any measurement year that the employer selects, such as a calendar year, an employee anniversary year, or a fiscal year. For purposes of this Client Alert, references to a “year” mean a “benefit year.”
Once the year ends, the employee’s then accrued, unused sick time balance rolls over into the new year. The rollover limit is the same as the annual accrual limit — 40 hours. Once an employee possesses a bank of 40 hours of unused earned sick time, including rollover sick time, the employer may opt to delay further accrual (subject to an employer's accrual cap of 40 hours per year) until the employee draws down the bank of earned sick time to below 40 hours.
An employer is not obligated to pay an employee for unused sick time, either at or before separation from employment. However, if an employer decides to pay an employee for an unused balance of sick time at the end of a year, a special rule applies, which is basically intended to ensure that an employee can use up to 16 hours sick time that would have been carried over if the employee had not been paid for accrued sick time. In that event, the employee’s accrual of new sick time in the new year will be applied to any time advanced to the employee under the special rule.
Break in Service
Breaks in service of less than four months do not affect an employee’s sick time bank. Special rules apply to breaks in service of between four and 12 months, which are beyond the scope of this Client Alert. An employee is not entitled to previously accrued but unused sick time after a break in service of 12 months or more.
Rate of Sick Time Pay
For hourly employees, sick time pay is based on an employee’s hourly rate. For a salaried exempt employee, the hourly rate is based on the weekly salary rate divided by 40 or, for those with a normal workweek of fewer hours, the number of hours in the normal workweek. For commissioned employees, the hourly rate is based on the employee’s base pay rate or the minimum wage rate, whichever is greater.
Use of Sick Time
Earned sick time may be used for any of several purposes:
- Care for an employee’s own medical needs
- Care for the medical needs of an employee’s child, spouse, parent, or parent’s spouse
- Attendance at a routine medical appointment for the employee or for the employee’s child, spouse, parent, or parent’s spouse
- Travel to or from an appointment, a pharmacy, or a location related to the care (e.g., an ill parent’s residence)
- Addressing the psychological, physical, or legal effects of domestic violence
While an employee accrues sick time from the start of employment, an employee does not have the right to use sick time until the employee has been employed for at least 90 days. For those employed when the ESTL takes effect, their date of hire rather than the effective date of the ESTL is used to measure whether the 90-day period has been completed. Thus, any current employee whose employment began on or before April 2, 2015 will have satisfied the vesting requirement when the ESTL takes effect.
Annual Cap on Use
Just as accruals may be limited to a balance of 40 hours, the right of employees to use sick time may be limited to 40 hours in a year.
Increments of Use
Employees may be required to use sick time in increments of at least one hour. If an employee uses more than an hour of sick time, the additional time will be measured in smaller increments if the employer uses smaller increments to account for absences or measure use of other time. For example, if time for use of other absences is measured in 15-minute increments, an employee who is reports to work one hour and 25 minutes late due to illness may be charged for the use of one and one-half hours of sick time, while an employee who reports to work 15 minutes late due to illness may be charged for the use of one hour of sick time.
Special rules apply, however, if an employee’s use of sick time requires the hiring or call-in of a replacement employee. If the employer calls in a replacement due to an employee’s inability to report on time due to the use of sick time, the employee may be charged for the use of sick time to the extent of the time worked by the replacement employee, up to a full shift.
Notice of Use
An employer may establish a written policy concerning notice of use of foreseeable sick time, e.g., a routine medical appointment, requiring up to seven days’ notice. However, if the employee learns of a need for time off less than seven days before it is needed, the employee’s notice obligation is accordingly reduced.
If the need for sick time is not foreseeable, the required notice is the notice that is reasonable under the circumstances, which may in some cases mean no advance notice.
If the employee needs to use more than one day of sick time, the employer may require notice of the expected length, and if that is not known, daily notice from the employee or a surrogate (e.g., the employee’s spouse) may be required, unless such daily notice is unreasonable under the circumstances.
The employee does not need to specify that he or she is exercising legal rights to use paid sick time. However, time off is not protected as sick time unless the employer is on notice that the employee seeks to use time for one of the qualifying circumstances under the ESTL.
An employer may establish policies for notices of use of sick time, such as specifying the individual to whom notices of the use of sick time must be given. However, the employer may not establish a mechanism that is different than what is customarily used for notices of absences.
When Documentation May Be Required
The general rule is that medical documentation to support the use of sick time may not be required unless the employee is out of work for more than three consecutive days. However, there are some other circumstances that do not meet the three-day standard but in which medical documentation may be required:
- The absence exceeds 24 consecutive work hours
- The employee has had four unforeseeable and undocumented absences within a three-month period
- The absence occurs within the two week period before the employee’s scheduled final day of employment (except that this does not apply if the individual is a temporary employee)
Regardless of whether these standards for requiring medical documentation are satisfied, an employer may require an employee to verify in writing that any use of sick time, regardless of the length, was for one of the qualifying circumstances.
In addition, if an employee exhibits “a clear pattern of taking leave on days just before or after a weekend, vacation, or holiday, an employer may discipline the employee for misuse of sick time,” unless the employee provides “verification of authorized use.” The regulations do not specify what form that verification may take.
What Documentation May Be Required
For absences other than those related to domestic violence, the written documentation may be a statement signed by a health care provider indicating that there was a need to take earned sick time. The definition of a “health care provider” is the same as the definition under the Family and Medical Leave Act regulations, which include various forms of health care providers, in addition to medical doctors.
The documentation may not require an explanation of the nature of any illness related to the sick time.
For absences related to the use of sick time due to domestic violence, the ESTL regulations identify numerous forms of acceptable documentation, including a signed statement by the employee attesting to the abuse. The employee may not be required to provide details concerning domestic violence.
Employees without health insurance who seek to use sick time may provide their own signed statement rather than one signed by a health care provider.
What Deadline May Be Required for the Documentation
The employer may impose a deadline of seven days for the submission of the documentation. An employee is entitled to relief from the deadline for “good cause,” which is not defined in the regulations.
What Consequences May Be Imposed for Failure to Satisfy Documentation Requirements
If an employee does not satisfy the documentation requirements in a timely manner “without reasonable justification,” the employer may recoup the amount paid for sick time from a future payment. To exercise this recoupment right, the employer must provide advance notice to employees of this right.
Requiring Fitness for Duty Certifications
Employers’ rights to require fitness for duty certifications in connection with an absence that includes the use of earned sick time are limited to circumstances in which (1) the certification is “customarily required,” (2) it is consistent with industry practice or federal or state safety requirements, and (3) reasonable safety concerns exist regarding the employee’s ability to perform duties. Literally read, this provision applies to absences that include the use of paid sick time even if they extend beyond the expiration of paid sick time rights and require that each of (1), (2) and (3) above be satisfied. Since the regulations simply state what employers may require without stating what is prohibited, it is not clear that all of these elements need to be satisfied to require a fitness for duty certification in connection with a return from any period of absence that includes a use of sick time of any length.
Integration with Paid Leave Policies
The regulations state that “[e]mployers may have their own sick leave or paid time off policies, so long as all employees can use at least the same amount of time, for the same purposes, under the same conditions, and with the same job protections provided in [the ESTL].”
Different standards may apply to different categories of employees, as long as all employees have at least the minimum entitlement that is established by the ESTL.
Observations About Integration with Paid Time Off and Sick Leave Policies
For employers with paid time off policies who seek to use those policies to comply with the ESTL, advance notice requirements may need to be modified to take into account the use of paid time off for unforeseeable circumstances. To have the policy serve as the employer’s mechanism for compliance with the ESTL for all employees, the eligibility criteria need to be expanded to all employees whose primary location of work is Massachusetts, even if their work schedule would ordinarily render them ineligible.
If an employer uses a general paid time off policy as its mechanism for compliance and that policy provides at least 40 hours of paid time off, the employer is not required to provide additional time for qualifying sick time purposes under the ESTL. However, the regulations state that the policy should “make clear” that additional time for sick time will not be provided.
For employers with sick leave policies who seek to use those policies to comply with the ESTL, existing sick leave policies need to be conformed to the ESTL, which would typically require expanding the permissible uses for leave, as well as expanding those who may participate and possibly increasing the benefit level.
Lump Sum Option
The regulations provide an option for minimum levels of paid time off or sick leave that would satisfy the ESTL without needing to track the accrual of hours based precisely on actual hours worked. Instead, the regulations set an average level of weekly hours that would lead to minimum monthly accrual levels. Specifically, those are as follows:
|Average Weekly Hours||Minimum Monthly Accrual|
|37.5+||Eight hours per month for five months|
|30||Five hours per month for eight months|
|24||Four hours per month for 10 months|
|20||Four hours per month for nine months|
|16||Three hours per month for 10 months|
|10||Two hours per month for 10 months|
|5||One hour per month for 10 months|
The same annual right to roll over up to 40 hours of unused sick time would apply, as would the right to delay accruals for so long as an employee has a sick time bank of 40 hours.
Transition Rule for 2015
Although accrual rights under the ESTL do not commence until July 1, 2015, paid leave given in the applicable year (calendar, anniversary date, fiscal or other) before July 1, 2015 will be credited toward the permissible cap on use of 40 hours for the year.
Employers with a paid time off or paid sick leave that was in effect on May 1, 2015 may satisfy the ESTL for the balance of 2015 by satisfying the following safe harbor requirements:
- Ensure that full-time employees have the right to earn paid time off and/or sick leave of at least 30 hours for calendar year 2015.
- For all other employees, ensure that their accrual rate is the same as the accrual rate for full-time employees.
- Special rules apply to lump sum allocation arrangements, under which lump sum accruals may be halved for employees who begin coverage on July 1 and proportionately reduced for those hired thereafter. As with hourly or other accrual arrangements, the lump sum allocations must otherwise be proportionate for part-time employees.
- Employees must have the same job-protection rights as under the ESTL for up to 30 hours of available time (or any lesser amount available).
- Up to 30 hours of available time must be permitted to be used for the same purposes applicable under the ESTL.
- Up to 30 hours of unused accrued time must be rolled over on January 1, 2016.
Concurrent Use with Other Leave Laws
Employees may use time off under the ESTL concurrently with any leave rights applicable to the same time off under other leave of absence laws, including the Family and Medical Leave Act, the Massachusetts Parental Leave Act, the Massachusetts Domestic Violence Leave Act, and the Massachusetts Small Necessities Leave Act, among other laws.
Prohibition on Retaliation
The ESTL includes provisions prohibiting interference with leave rights and retaliation for opposing practices that an employee reasonably believes to be in violation of the ESTL. These prohibitions are similar to those under other leave of absence laws.
By the same token, if an employee fraudulently claims to use sick time for a qualifying circumstance that does not apply, the regulations specify that the employee may be disciplined.
Recordkeeping and Disclosure
Employers must keep accurate records of the accrual and use of earned sick time for each employee, for three years, and make the records available for an employee to review, within 10 business days of a request. However, if an employer provides time off to employees under a paid time off or vacation policy that complies with the ESTL, the employer is not required to track and keep a separate record of accrual and use of earned sick time.
Employers are required to post a notice prepared by the Attorney General that summarizes the ESTL, available here, in a conspicuous place accessible to employees in each location where employees work. Employers must include their policy on sick time or paid time off/vacation policy that complies with the ESTL in any employee handbook, or distribute a copy of the Attorney General’s notice to each eligible employee.
Covered employers should consider whether to utilize the safe harbor to satisfy their obligations under the ESTL for the remainder of 2015. Even if they use the safe harbor, employers should begin preparing to make additional policy changes to comply with the ESTL after the safe harbor ends, with as little disruption to their current policies as possible. Issues to consider include:
- What “benefit year” to select (e.g., calendar, anniversary, or fiscal)
- Whether sick leave should be accrued or granted in a lump sum
- Whether to pay employees for unused sick time at the end of a benefit year
- Whether an existing paid time off policy should be used (and revised as necessary)
- What rules should be established concerning advance notice for foreseeable leaves, how often and to whom notice should be given, and recoupment of paid sick leave that is not supported by documentation.