Rutgers Case Teaches Valuable Lesson: The Best Defense Is Documentation

The New Jersey Conscientious Employee Protection Act (“CEPA”) is arguably the broadest employee protection law in the country. CEPA protects an employee from workplace retaliation related to the employee’s “whistle-blowing” activities. Thanks, in part, to documentation of performance issues, in late November 2018, the New Jersey Appellate Division upheld a trial court’s decision dismissing an employee’s CEPA claim against her employer and supervisor. The decision marks an important victory for employers, since CEPA claims are rarely decided in favor of the employer. This case also teaches the valuable lesson that diligent documentation can be an employer’s best defense to whistle-blowing and harassment claims.

Facts

In May 2012, Tammy Russell was hired by Rutgers Associate Chancellor to serve as the Director of the Rutgers Camden Educational Opportunity Fund Program (“EOF”). The EOF is funded by the State, and provides scholarships, academic year and summer program access to higher education for economically or educationally disadvantaged students.

Russell was responsible for oversight of the program budget, which is submitted annually to the state. Early in her employment, Russell discovered that EOF funds may have been used to pay salaries for non-EOF Rutgers staff. Russell also complained about issues the state raised regarding the EOF reports, and that the employees who replaced her EOF duties lacked experience and therefore did not complete the reports correctly.  Once notified of the issues by Russell, Rutgers performed an internal investigation of its EOF program. The report concluded that there was no need for further investigation.

Russell alleged after she notified Rutgers of the issues in the EOF program, she was treated differently in the workplace. Russell alleged that budgeting responsibilities were taken away from her, she was told that she would no longer have access to the budget, and that she was no longer responsible for completing state mandated EOF reports. However, Russell was still responsible for reviewing and approving items in the budget, and signing off on Camden’s ultimate EOF budget. Although Russell also claimed that she was retaliated against, she admitted that her supervisor never forced her to approve the budget or otherwise threatened her about it in any way.

Russell also had performance issues throughout her employment at Rutgers. Although she received “meets expectations” on her performance reviews, Russell had communication issues with both her supervisors and co-workers. Employees complained she was “abrasive, harsh, and combative.”  Additionally, Rutgers documented complaints from employees regarding Russell’s job performance, and shared a memo with Russell regarding her “poor communication and program management” and failure to follow instructions regarding the completion of certain tasks.  As a result of her documented poor work performance, Rutgers sent Russell a pre-termination letter and scheduled a conference for the following day. The next day, Russell was terminated. Russell sent a letter to Rutgers advising she was “fully prepared to have legal counsel represent [her] and [was] very prepared to go outside of Rutgers University regarding this case.”  Rutgers investigated and found that no violation of their policies had occurred, and that there was no nexus between Russell’s alleged whistle-blowing complaints and her impending termination.

Well-documented defense

To prevail under her CEPA claim, Russell was required to prove four elements:  (1) that she reasonably believed that the employer’s conduct was violating a law, rule, regulation, or a clear mandate of public policy; (2) that she engaged in “whistle-blowing” activity; (3) an adverse employment action was taken against her; and (4) her whistleblowing activity caused the adverse employment action.

If an employee establishes these elements, the employer must set forth a legitimate, non-retaliatory reason for the adverse conduct against the employee. The employee must then provide factual reasons why the employer’s proffered reason is pretextual.

In this case, the trial court found that Russell’s apparent “issues on the job” were the real reason for her termination. The court was persuaded by the various complaints against her,  the timing of those complaints – both before and after her alleged whistle-blowing complaint – and the fact that Russell’s job performance did not improve even after she was informed of her performance deficiencies. Thus, Rutgers was entitled to summary judgment.

The Appellate Division affirmed the decision of the trial court and noted that although stripping an employee of her job responsibilities could constitute retaliation, in this case, Russell’s duties shifted, but she bore the same responsibility to ultimately approve the program budget as she did prior to her complaint.  Although she testified that she “perceived” that her boss would make her job more difficult if she did not approve the budget, she could not identify anything that her boss did or said to that effect. According to the Appellate Division, this lack of specifics did not support Russell’s claim of retaliatory reduction in job responsibilities.

Bottom Line

Not every action which makes an employee unhappy constitutes retaliation under CEPA. However, employers are reminded to document all workplace performance issues. Your documentation of performance issues will be critical in allowing a court to determine whether a termination was due to retaliation, or the employee’s poor performance. A termination that is warranted can still be misconstrued by an employee, and perceived as retaliatory by the courts, if the employer lacks sufficient documentation. Here, Rutgers persuaded the court through written complaints in the employee’s personnel file, despite performance reviews that the employee “met expectations.”  In the end, Rutgers’ diligent documentation when the employment issues arose helped them to achieve a pre-trial win, and to avoid the cost of a protracted litigation.

For more information, please contact John C. Petrella, Esq., Chair of the firm’s Employment Litigation Practice Group, at jpetrella@nullgenovaburns.com, or Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Practice Group, at dmastellone@nullgenovaburns.com, or 973-533-0777.

The 10 Most Frequently Asked Questions and Answers About New Jersey’s New Paid Sick Leave Law

Fall brings requests for time off for school conferences.  Winter brings absences for colds and flu.  The New Jersey Paid Sick Leave Law (the “Sick Leave Law”) provides paid sick leave to virtually every New Jersey employee to attend to these needs.  The Sick Leave Law became effective on October 29, 2018, and requires all New Jersey employers, regardless of size, to provide paid sick leave for full-time, part-time, casual, and seasonal employees.  Sick leave may be used for the employee’s own medical condition, or the medical condition of the employee’s family member.  Employees may also use paid sick leave for absences due to public health emergencies and absences related to domestic violence suffered by the employee or the employee’s family member.  Finally, paid sick leave may be used by the employee to attend school conferences and events. Employers may choose to either allow employees to accrue sick leave at a rate of 1 hour for every 30 hours worked, up to a maximum of 40 hours per year, or “frontload” the 40 hours of sick leave at the beginning of the benefit year.

In this article, we explore the 10 most frequently asked questions we have been receiving in assisting employers to comply with the requirements of the new law:

  1. When do employees accrue sick leave and how soon may they start using it?

The law and the proposed regulations conflict on this issue as it pertains to current employees. The statute states that for employees who were hired before October 29, 2018, earned sick leave begins to accrue on October 29, 2018. The current employee can use his or her earned sick leave 120 calendar days after his or her start date. This means that current employees can use paid sick leave as soon as it is accrued, and if an employer frontloads the full entitlement of paid sick leave, then the employee can use that leave immediately.

The proposed regulations, however, provide that current employees cannot use paid sick leave until the 120th calendar date after the employee commences employment, or February 26, 2019, whichever is later. We have the statute, on one hand, that allows current employees to use their accrued paid sick leave immediately, and the proposed regulations, which state that they must wait until February 26, 2019.  How do employers comply with the Sick Leave Law considering this conflict?  There is no clear-cut answer, but instead employers must look at their current PTO policies and benefit year.  Employers must also determine if any segment of the workforce is receiving less than the full complement of leave provided for under the law (and not the proposed/draft regulations).

The statute and regulations are consistent with respect to new hires.  Employees hired after October 29, 2018, accrue paid sick leave immediately on the employee’s first day. New employees cannot use accrued paid sick leave until the 120th calendar day after the employee commences employment.

  1. Do I need to take any action if I already offer paid time off (“PTO”)?

It depends.  An employer’s PTO policy will only be compliant with the Sick Leave Law if the employer provides at least the minimum amount of sick time as required by the Sick Leave Law (1 hour of paid sick leave for every 30 hours worked). An employer may offer a more generous PTO policy; however, the policy must meet or exceed all the requirements of the Sick Leave Law and allow employees to use the time for all the reasons permitted by the law.

  1. What is the interplay between the Sick Leave Law, the federal Family and Medical Leave Act (FMLA) and the New Jersey Family Leave Act (NJFLA)?

The FMLA provides 12 weeks of unpaid job-protected leave for employees suffering from a serious health condition or for the care of a family member with a serious health condition. Similarly, the NJFLA provides 12 weeks of unpaid job-protected leave for employees to care for a newly born or adopted child, or for the care of a family member with a serious health condition. When an employee is eligible to care for a family member under both FMLA and NJFLA, the leave may run concurrently pursuant to the employer’s policy.

The Sick Leave Law may also be used for illness by the employee or the employee’s family member. The Sick Leave Law, however, limits leave up to 40 hours, and, unlike the FMLA and NJFLA, the time off is paid. It is feasible that situations may exist where the Sick Leave Law runs concurrent with either FMLA or NJFLA, or both. Notably, the Sick Leave Law carries with it an extremely broad definition of “family member,” which includes anyone “whose close association with the employee is the equivalent of a family relationship.” This means that New Jersey employees may use paid sick leave to care for a person, regardless of biological or legal relationship. This allows employees to take leave to care for individuals not covered as family members under the FMLA and NJFLA.

Another important distinction is that unlike the FMLA or NJFLA, the Sick Leave Law may not be used to bond with a newborn or newly adopted or fostered child.  In addition, FMLA and NJFLA take precedence when they require employers to do more than the Sick Leave Law.

Finally, the FMLA and NJFLA only apply to employers that meet certain criteria and only eligible employees (based on length of service and hours worked) are entitled to take FMLA and NJFLA leave.  The Sick Leave Law applies to almost all New Jersey employees and employers, so employees ineligible for FMLA or NJFLA will likely be entitled to paid sick leave, particularly those employed by small businesses.

  1. If my municipality already has a paid sick time law, does the new law affect my
    workforce?

Yes. The new law fully preempts and displaces the municipal ordinances that previously provided paid sick leave in 13 municipalities in New Jersey.

  1. Can employers require that employees provide notice when taking sick leave?

            Yes and No. Employers can require that employees provide up to 7 days’ notice of “foreseeable” absences. Foreseeable absences include time off for scheduled medical appointments. Where the need for leave is unforeseeable, an employer may only require notice “as soon as practicable,” and only if the employer has notified the employee, in advance, of this notice requirement.

Employers may only require documentation to substantiate the need to sick leave under two circumstances: 1) when the employee is absent for 3 or more consecutive days or 2) when the employee is absent during established “black-out dates.” Blackout dates must be limited to verifiable high-volume periods or special events (like the winter holidays). Importantly, employers must provide notice to employees of these backout dates.

  1. If we offer a more generous PTO policy than the law requires, are we exempt from the law’s carry-over provision?

          No. Employers whose employees accrue PTO in excess of the law’s requirement are still required to carry-over a maximum of 40 hours paid leave to each new benefit year. An employer is not required to carry over more than 40 hours paid leave per year.

  1. Are employers required to change the “benefit year”?

          Employers are required to establish a single benefit year (the 12-month period in which employees accrue or are frontloaded paid sick leave) for all employees. Employers who calculate PTO based on the employee’s anniversary date can no longer do so if that PTO is being used for paid sick leave. This requirement also means that employers must work closely with payroll to address accrual dates.

The law also requires that if employers seek to change the benefit year they must provide at least 30 calendar days’ notice to the Commissioner of the NJDOL. Employers are not required to provide notice to the Commissioner of the initial establishment of a benefit year.

  1. What happens to unused sick time at termination?

            Employers are not required to payout for unused sick time at termination unless a company policy or a collective bargaining agreement provides for payout. Employers should update their policies to unambiguously provide that accrued and unused paid sick leave will not be paid out at termination.

  1. The law only exempts construction employees subject to a collective bargaining agreement, public employees who are provided with sick leave, and per diem health care employees. What constitutes a per diem health care employee?

          This is another great example of where the law and proposed regulations contradict. The statute defines “per diem health care employee” as any New Jersey licensed health care professional (or license applicant) employed by a facility licensed by the New Jersey Department of Health or any first aid, rescue, or ambulance squad member employed by a hospital system, who fulfills the following three qualifications: (1) works on an as-needed basis to supplement a health care employee or to replace or substitute for a temporarily absent health care employee; (2) works only when the employee indicates that the employee is available to work, and has no obligation to work when the employee does not indicate availability; and (3) either (a) has the opportunity for full time or part-time employment under that healthcare provider or (b) has waived earned sick leave benefits for alternative benefits or consideration. So, under the law, a per diem health care employee must meet an exceedingly high standard to be exempt. However, the proposed regulations eliminate the three qualifications.

          Whether this departure from the law was intentional or a mere scrivener’s error is unclear and we await the publication of the final regulations. For now, the statute controls.

  1. Does the new law impose additional recordkeeping and compliance requirements?

Yes. Employers must post the NJDOL’s required notice in a conspicuous place, accessible to all employees in each New Jersey workplace. In addition, employers must distribute the notice (1) to all existing employees by November 29, 2018; (2) at the time of hiring; and (3) if the employee requests a copy of the notice. The required notice may be distributed by email. Employers are not required to obtain signed acknowledgments confirming that employees received the notice.  Significantly, employers must distribute the notice in English and if the employee’s primary language is other than English, the employer must also provide the notice in the employee’s primary language.

Employers must also maintain records documenting the hours worked and earned sick leave used by employees. Records must be maintained for 5 years and made available for inspection by the NJDOL. If an employee claims an employer violated the Act, and that employer has failed to maintain adequate records, then the law creates a presumption that the employer failed to provide paid sick leave.

Bottom Line

The answers to the questions above are based on a review of the FAQs and proposed regulations released by New Jersey Department of Labor and Workforce Development (NJDOL). Employers reviewing the draft regulations for guidance may also find that some of the sections contradict the Sick Leave Law. The proposed regulations are not binding and are open for public comment until December 14, 2018.  We will continue to monitor developments and will provide an update once the final regulations are released by the NJDOL.

In the meantime, employers should work closely with counsel to address the specific needs of their workplace.  In addition, employers must adhere to the notice and recordkeeping requirements, and review and revise existing policies, practices and procedures related to calculating employee’s sick leave to ensure compliance with the new law.

For more information please contact John C. Petrella, Esq., Chair of the firm’s Employment Litigation Practice Group, at  jpetrella@nullgenovaburns.com, or Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Practice Group, at dmastellone@nullgenovaburns.com, or 973-533-0777

New York Legislature Amends Paid Family Leave Act

On June 20, 2018, the New York legislature overwhelmingly passed a bill to give employees up to 12 weeks of partially paid bereavement leave. The bill will still require the approval of Governor Andrew Cuomo. The bill expands the Paid Family Leave Act (the “Act”), which went into effect on January 1, 2018. The Act already provided employees up to 12 weeks of leave paid at a percentage of their salaries for situations including child birth or adoption, a qualifying exigency arising out of a family member’s military service, or the need to care for a sick relative. The Act covers the care of a spouse or domestic partner, child, parent, parent-in-law, grandparent, or grandchild, by blood or marriage. The recent amendment was passed in an effort to explicitly clarify the legislative intent that bereavement leave for the death of such relative would be covered by the Act as well.

The original Act guarantees an employee the same or comparable job when they return from leave, and bars employers from cutting off health insurance. While employees with planned births or adoptions are required to provide 30 days’ notice under the Act, the bereavement amendment will permit employees to give notice “as soon as practicable.” Employees eligible for leave under this amendment will be required to provide a death certificate.

While some employers are concerned that the bill will impose hardship on small businesses, the New York State Assembly justifies the amendment because “[g]rief-related losses cost U.S. companies as much as $75 billion annually.” As such, the legislature purports that the amendment will result in “greater employee loyalty, better outcomes, better quality of life for that person, and an overall healthier workforce that has been given the necessary time to mourn their loss.” The bill is sponsored by State Senator Rich Funke, who suffered the sudden loss of his adult son. If the bill is signed by Governor Cuomo, New York will offer the most generous bereavement leave benefits in the country.

For more information on what your company can do to ensure compliance with New York or New York City employee benefits laws, please contact John C. Petrella, Esq., Chair of the firm’s Employment Litigation Practice Group, at jpetrella@nullgenovaburns.com, or Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Practice Group, at dmastellone@nullgenovaburns.com, or 973-533-0777.

“Pass the Trash” Compliance Update

Private employers (“Employers”) holding contracts with New Jersey school districts and charter schools are reminded that it is now time to comply with the extensive background check requirements under the New Jersey “Pass the Trash” Act (the “Act”) in order to screen applicants and employees for child abuse and sexual misconduct in their former employment.  This law became effective on June 1, 2018, and requires employers/independent contractors to conduct a 20 year employment review of its applicants and employees who will have “regular contact with students.”  This employment review requires employers to:

  • Request information from the applicant/employee about child abuse and sexual misconduct with current and former employers for the last 20 years;
  • Collect the names, addresses, telephone numbers and relevant contact information of an applicant’s current and former employers for the 20 year time span, where the applicant/employee worked for a school or in a position that involved direct contact with children and inquire about child abuse and sexual misconduct.
  • Obtain authorizations from applicants to conduct the employment review;
  • Contact any out-of-state employers with whom the applicant/employee held a position involving regular contact with students; and
  • Update employment applications for positions that involve regular contact with students to include the penalties for applicants who provide false information. The penalties include termination or denial of employment and fines up to $500.

In addition to its affirmative obligation to conduct an employment review for child abuse and sexual misconduct, New Jersey employers will also be on the receiving end of these inquiries.  If an employer receives a request for information under the Act, it must respond within 20 days and disclose the requested information. Failure to do so may be grounds for the applicant’s automatic disqualification from employment. Importantly, the Act provides immunity to Employers who provide the requested information in good faith.

Employers who do business with New Jersey school districts or charter schools should review and revise existing hiring policies, practices and procedures to ensure compliance with the Act.  Human Resources personnel should also be trained on these new legal requirements to ensure that internal hiring processes and employment applications are updated to comply with the Pass the Trash Act.

For more information about the potential impacts of the “Pass the Trash” Act or forms your company can use to comply with this new law, please contact Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Practice Group, at dmastellone@nullgenovaburns.com, 973-533-0777 or Brigette N. Eagan, Esq., Counsel in the Human Resources Practices Group at beagan@nullgenovaburns.com, 973-535-7114.

New Jersey Courts Double-Down on Arbitration Enforcement

In late June 2018, New Jersey state and federal courts issued opinions on arbitration agreements that effectively reinforced the state’s rocky pro-arbitration bearings. The first opinion came from the Third Circuit Court of Appeals on June 20, 2018, in a case called Ace American Insurance Co. v. Guerriero. In Ace, the Third Circuit held that an employee must arbitrate his employment-related claims, despite his allegations that the company never provided him a full copy of the arbitration agreement. Only one day later, in Victory Entertainment, Inc., et al. v. Schibell, et al., the New Jersey Appellate Division held that strip club owner/managers must arbitrate an ownership dispute despite the employee’s argument that the arbitration agreement lacked clear and unambiguous language to do so.

An “Ace” In the Pocket for Arbitration Agreements In Federal Court

In Ace, after the employee and his counsel refused to arbitrate the employee’s employment claims, Ace filed a complaint in U.S. District Court in Newark, New Jersey, to compel arbitration under the Federal Arbitration Act (“FAA”). One day later, the employee filed a whistle-blower suit in New Jersey state court claiming that his employer illegally fired him after he reported to his supervisors that the company was destroying documents it was required to preserve in violation of the New Jersey Conscientious Employee Protection Act (“CEPA”). The employee alleged that he was never provided the company’s full three-page Employee Dispute Arbitration Policy and instead was only provided the signature page. The employer produced the signed acknowledgment page, which at the top read “Arbitration Agreement.” Moreover, the employee’s offer letter, which expressly referenced the Employment Dispute Arbitration Policy, was also signed by the employee.  Employees could also access the Employee Dispute Arbitration Policy using the company’s intranet site. The U.S. District Court enjoined the employee from pursuing his state court case and ruled in ACE’s favor, which was upheld on appeal to the Third Circuit.

Reinforcing the FAA’s “strong federal policy” of resolving parties’ disputes through arbitration by enforcing the parties’ arbitration agreements, the Third Circuit affirmed the District Court’s finding that the arbitration agreement was still enforceable, whether or not the employee actually read the agreement. The court found that the Employee Dispute Arbitration Policy unambiguously stated that the employee would “submit any employment-related legal claims to final and binding neutral third-party arbitration …” and specifically mentioned CEPA.  This decision confirms New Jersey’s strong pro-arbitration stance in federal court.

A “Victory” In State Court

In Victory Entertainment, employers also enjoyed a victory in the Appellate Division. The plaintiff was a manager part-owner of The Den, holding company for Delilah’s Den strip clubs throughout the state. His two business partners certified that plaintiff suffered spells of delusion that led him to mismanage the company, including brandishing a gun in the workplace, refusing to remit payment to vendors, and sexually harassing entertainers. After plaintiff was hospitalized for mental health issues, his two business partners, along with plaintiff and plaintiff’s counsel, executed a Sales Agreement whereby plaintiff’s trusted associate, as plaintiff’s agent, would purchase the two other owner’s shares of The Den over a 10-year period. The parties also drafted a separate Shareholder/Stakeholder (Deadlock) Agreement to resolve impasses between the shareholders and stakeholders, which created a 1/3 voting right between plaintiff’s agent/associate and the two part-owners. This Deadlock Agreement contained a binding arbitration clause. Although the shares in The Den were expressly subject to the terms and conditions of the Sales Agreement and the Deadlock Agreement, plaintiff and his trusted agent/associate were the only parties to the Deadlock Agreement.

When plaintiff’s mismanagement issues re-arose, the two part-owners executed their authority to remove plaintiff from managing the business. Plaintiff filed suit, claiming he was improperly removed.  The trial court dismissed his complaint and ordered that the parties arbitrate the dispute. Plaintiff appealed. In affirming the trial court’s decision, the Appellate Division found that although only the plaintiff and his trusted associate were parties to the arbitration clause, the two owners could enforce the arbitration clause since the Sales Agreement and the Deadlock Agreement arose from the same transaction. The two agreements were executed on the same day, pertain to the control and management of the same company, and contain numerous cross-references. Further, the Appellate Division determined the two part-owners could enforce the arbitration provision as either third-party beneficiaries or the trusted associate’s agents. Finally, the Appellate Division held the plaintiff claims were within the scope of the arbitration provision because they implicated the Deadlock Agreement explicitly or the alleged conduct occurred after the parties executed the agreement or related to the execution of the Deadlock Agreement.

Bottom Line

Unlike New York, and arguably contrary to the Federal Arbitration Act, New Jersey state courts have historically imposed a higher standard to enforce an arbitration agreement. The New Jersey Supreme Court has ruled that arbitration agreements in the state must provide “clear and unambiguous” terms that the parties are waiving the right to a jury trial. Although federal courts staunchly enforce arbitration agreements in favor of employers, employees sometimes reap the benefits of this state court hurdle for employers. Together, these recent opinions stand for the proposition that arbitration agreements may be strictly enforced in New Jersey.

While these opinions are triumphs for the enforcement of arbitration agreements, it is still imperative to include explicit language that your employees waive the right to a jury trial for all employment-related claims. Likewise, the law surrounding arbitration agreements is constantly shifting and all arbitration agreements should be carefully reviewed with counsel.

If you have questions on drafting arbitration agreements or arbitration disputes, please contact John C. Petrella, Esq., Chair of the firm’s Employment Litigation Practice Group, at jpetrella@nullgenovaburns.com, or Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Practice Group, at dmastellone@nullgenovaburns.com, or 973-533-0777.

New Jersey Passes Mandatory Paid Sick Leave

On May 2, New Jersey Governor Phil Murphy signed a law mandating all private and public New Jersey employers, regardless of size, offer paid sick leave. This makes New Jersey the 10th state to adopt mandatory paid sick leave legislation. The Paid Sick Leave Act (“the Act”) also permits employees to use the leave for their own care or for the care of a family member and expands how paid sick leave can be used, encompassing protections beyond the federal Family Leave and Medical Act, the New Jersey Family Leave Act as well as other leave laws. The new law also fully pre-empts the 13 municipalities in New Jersey with local paid sick leave ordinances, allowing employers to adopt a state-wide uniform paid sick leave policy.

Coverage

Permissible use of sick leave includes the following:

(i) Diagnosis, care, treatment, recovery and/or preventive care for the employee’s own mental or physical illness or injury or the employee’s family member’s mental or physical illness or injury;

(ii) Absence due to a public health emergency declared by a public official that causes the closure of the employee’s workplace or the school or childcare facility of the employee’s child or requires the employee or an employee’s family member to seek care;

(iii) A necessary absence for medical, legal or other victim services because of domestic or sexual violence perpetrated on the employee or the employee’s family member; or

(iv) To attend a school-conferences, meetings, or any event requested or required by a child’s school administrator, teacher, or other professional staff member responsible for the child’s education, or to attend a meeting regarding a child’s health or disability.

The Act also broadly defines “family members” to include an employee’s child, spouse, domestic partner, civil union partner, parent (including adoptive, foster or step-parent, or legal guardian), sibling (including foster or adoptive siblings), grandparent or grandchild, and the parent, grandparent or sibling of the employee’s spouse, domestic partner or civil union partner. Notably, an employee has the opportunity to use their sick leave for the care of a non-related individual whose close association with the employee is the “equivalent” of a family relationship.

Exemptions & Employees Covered by a CBA

Per diem healthcare employees, construction workers subject to a collective bargaining agreement (CBA), and public employees who are provided with sick leave with full payment pursuant to any other law, rule or regulation are exempt from the new law. Non-construction employees covered by a CBA at the time the law goes into effect are also not effect, but will apply once the agreement expires. Further, employees and their representatives may waive the rights available under the law and address paid leave in collective bargaining.

Accrual of Paid Sick Leave

Under the new law, employees accrue 1 hour of paid sick leave for every 30 hours worked. Employees may accrue up to 40 hours of paid sick leave per benefit year.  Employers are also permitted to designate the “benefit year” as any 12-month period but may not modify it without notifying the New Jersey Department of Labor and Workforce Development (NJDOL).

Employees become eligible to use earned sick leave beginning on the 120th day after they are hired, and may use their earned sick leave as it is accrued. Employers are also permitted to offer, or “frontload” 40 hours of paid sick time or utilize a paid-time-off (“PTO”) policy as long as it provides equal or greater benefits and accrue benefits at an equal or greater rate than the benefits provided under the Act. There is no requirement to payout accrued and unused sick leave upon termination absent a company policy to the contrary.

Upon the mutual consent of the employee and employer, an employee may voluntarily choose to work additional hours or shifts during the same or following pay period, in lieu of hours or shifts missed, but shall not be required to work additional hours or shifts or use accrued earned sick leave. In addition, an employer may not require, as a condition of an employee’s using earned sick leave, that the employee search for or find a replacement worker to cover the hours during which the employee is using earned sick leave.

Notice

Employers are entitled to 7 days advance notice of “foreseeable” absences and can restrict employee’s use of “foreseeable” paid sick leave on certain dates.  Where the need is unforeseeable, an employer may only require notice “as soon as practicable,” if the employer has notified the employee of this requirement.  In addition, employers are only permitted to ask the employee for documentation to substantiate the sick leave if the employee is absent for 3 or more consecutive days.

Compliance

Employers will be required to maintain records documenting the hours worked and earned sick leave used by employees. Records must be maintained for 5 years and made available for inspection by the NJDOL. If an employee claims an employer violated the Act, and that employer that has failed to maintain adequate records, then there is a presumption that the employer failed to provide paid sick leave.

Employers must also post a notification and distribute a written notification alerting employees of their rights within 30 days of the notice being issued by the NJDOL and provide the notification to all new employees at the time of hiring.

Anti-Retaliation

Employers are prohibited from retaliating or discriminating against employees under the Act. The Act broadly defines retaliation to include not only retaliatory personnel action like suspension, demotion, or refusal to promote, but also includes threatening to report the immigrant status of an employee or family member of the employee. Employers are also prohibited from retaliating or discriminating against an employee who files a complaint with the commissioner or a court alleging the employer’s violation of the Act, or informs any other person of their rights under the Act.

There is a rebuttable presumption of unlawful retaliatory action whenever an employer takes adverse action against an employee within 90 days of when that employee opposes any violation of the Act, informs any person about the employer’s alleged violation of the Act, files a complaint alleging a violation of the Act, or cooperates in an investigation into an alleged violation of the Act.

Penalties

Any failure of an employer to make available or pay earned sick leave as required by the new law, or any other violation of the law, shall be regarded as a failure to meet the wage payment requirements of the New Jersey Wage and Hour Law.  Employers will also be subject to the penalties and remedies contained in the New Jersey Wage and Hour Law, including fines and possible imprisonment, reinstatement of a discharged employee to correct any discriminatory action and payment of all lost wages in full.

Bottom Line

The New Jersey Paid Sick Leave Act takes effect in 180 days, on October 29, 2018. Employers in New Jersey, in consultation with legal counsel, must review and revise existing policies, practices and procedures related to calculating employee’s sick leave to ensure compliance with the Act.  Human Resources and Benefits personnel should also be trained on the new paid sick leave law requirements and Managers should also receive updated training to ensure that internal recordkeeping processes are sufficient to keep track of time taken under the new law.

For more information about the potential impacts of the Paid Sick Leave Act or what steps your company can take to effectively ensure compliance with wage and hour laws, please contact John C. Petrella, Esq., Chair of the firm’s Employment Litigation Practice Group, at jpetrella@nullgenovaburns.com, or Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Practice Group, at dmastellone@nullgenovaburns.com, or 973-533-0777.