Paid Sick-Leave Policies Can Be Fraught With Compliance Traps
Employers could face big consequences for missteps
February 19, 2019
Stephanie Alexander and Catharine Morisset
Its been more than a year since the effective date of Washington states Paid Sick Leave Act, bringing both legal and practical compliance challenges to employers with Washington-based employees. For most employers, the law added a layer of paid-sick-leave compliance on top of already complex and nuanced city ordinances. One year later, there are still common compliance traps.
ACCRUING OR FRONTLOADING
State law requires that employees accrue at least one hour of paid sick leave for every 40 hours worked, with no cap, while Seattles law sets a higher accrual rate for larger employers of one hour for every 30 worked for their Seattle employees. Seattle employers should be cognizant of the citys requirement and make sure they comply. While employers may choose to frontload all the paid sick leave an employee is predicted to accrue for the entire benefit year, they still must meet each laws carryover requirements. For example, even if a company frontloads 40 hours of paid sick leave each calendar year, it must still allow employees to carry over up to 40 hours of unused time from the previous year. Seattles law has even higher carryover rates, depending on the employers overall size. Each January 1, employees have both their 40 frontloaded hours and their carryover hours available for immediate use.
Employers cannot cap the accrual or use of paid sick leave; Seattles law changed to contain the same prohibition. This means some employees may end up accruing and using more than 40 hours of paid sick leave in a year. The only allowable limit is the year-end carryover.
Employers must allow employees to use paid sick leave in the same increments that their payroll systems track an hour of work. For example, if an employer tracks in 15-minute increments, it must allow employees to use paid sick leave in 15-minute increments.
PTO AND SICK PROGRAMS
While employers may provide paid sick leave to employees in the form of a paid-time-off program, such programs must meet or exceed all of the laws requirements. Many employers are now creating separate buckets of paid sick leave and vacation to avoid applying the stringent legal requirements to a paid-time-off program.
SEPARATION AND REHIRE
In industries where there is quick employee turnover and potential rehires, employers must remember to reinstate an employees previously accrued, unused paid sick leave when rehiring that worker within 12 months of separation. An employer is not required to reinstate any hours of paid sick leave if they were paid out at separation of employment. Upon rehire, an employer must provide notification to the employee of the amount of accrued, unused paid sick leave available.
UNAUTHORIZED PAID SICK LEAVE
Employers still struggle with the practicalities of employee notice and verifying the need for paid sick leave. Employers cannot ask for a doctors note to verify the need for paid sick leave until after the employee has been absent for three consecutive scheduled work days. Employers also must engage in an interactive process if the employee alleges that obtaining the medical verification would be an undue burden. Even if an employer can demonstrate that an employees use of paid sick leave was for an unauthorized purpose, the employer must provide written notification to the employee to withhold payment. Employers may not deduct unauthorized hours from the employees available paid sick leave. Employers should exercise caution when withholding payment because they bear the burden of proving fraudulent or unauthorized use.
A final compliance trap is failing to have a written policy. Some things must be in writing, such as whether the employer will require medical verification for paid sick leave use and if there is no payout of accrued unused paid sick leave upon termination.
Leave laws continue to be complex. As employers start to work on compliance with Washingtons Paid Family Leave Act, a prudent employer will seek legal advice to update existing policies.