In May 2018, New Jersey Governor Phil Murphy made good on a campaign promise when he signed into law the New Jersey Paid Sick Leave Act (the “Act”). New Jersey is one of ten states that require employers to provide paid sick leave, joining Arizona, California, Connecticut, Maryland, Massachusetts, Oregon, Rhode Island, Vermont, and Washington.

Before the state passed the Act, more than a dozen New Jersey municipalities had enacted their own paid sick leave laws, creating confusion for employers conducting business throughout New Jersey. The Act now preempts these local laws and bars municipalities from passing their own paid sick leave laws. The preemption aspect of the Act is welcome news for employers because they will only have to comply with the Act, rather than a patchwork of local laws. Here are some important components of the Act that employers should be aware of before its effective date on October 29.

Available Paid Sick Leave

The Act allows employees to accrue one hour of sick leave for every 30 hours worked, with a maximum of 40 hours per year. Employers do not have to allow employees to accrue or use more than 40 hours of earned sick time in any benefit year, or allow employees to carry over more than 40 hours of earned sick time from one benefit year to the next. Under the Act, a benefit year is a period of 12 consecutive months during which an employee can accrue and use earned sick time. An employer cannot alter its benefit year without first notifying the Commissioner of the New Jersey Department of Labor and Workforce Development (“NJLWD”).

If they choose to do so, employers may frontload employees with 40 hours of paid sick time at the start of the benefit year. Employers also have the option of following their own paid time off (“PTO”) policies regarding the accrual of sick days. However, any such PTO policy must allow employees to accrue paid time off at a rate equal to or greater than the Act. Further, employers must pay employees taking earned sick time at their normal rate of pay, which must not be less than minimum wage.

Paid Sick Leave Carry Over

The Act permits employees to carry over up to 40 hours of unused earned paid sick time from one benefit year to the next. However, employers are not required to provide more than 40 hours of paid sick leave during a single benefit year.

Covered Employees and Employers

The Act covers most employees working in New Jersey. However, the Act does not apply to per diem health care employees, or employees performing services in the construction industry under a contract pursuant to a collective bargaining agreement. New employees hired after October 29, 2018, will begin to accrue earned sick leave the day their employment begins, and become eligible to use earned sick leave 120 calendar days after, unless the employer agrees to an earlier date.

Virtually all employers (except governments) are covered by the Act, which does not contain a small business exception. The Act expressly applies to temporary staffing agencies. Under the Act, a temporary staffing agency must provide paid sick leave based upon the total time an employee works with the agency itself, rather than the agency’s clients.

Employee Notice and Documentation Requirements

Under the Act, employers are allowed to require employees to provide up to seven days’ notice if paid sick leave is foreseeable. Employers can prohibit employees from using foreseeable paid sick leave on certain dates, and require documentation for unforeseeable sick leave used during such dates.  Employers can also require employees to provide documentation for paid sick leave of three or more consecutive days.

Employer Notice and Recordkeeping Requirements

Employers must post a notice of employee rights under the Act in a conspicuous place in the workplace. In addition, employers must give each existing employee, as well as new employees upon hire, a written copy of the notice.

Also, employers must keep records documenting hours worked and paid sick leave used by employees. Documenting paid sick leave hours is particularly important for employers who have catch-all PTO policies that allow employees to use PTO for any reason. To ensure compliance with the Act, such employers should track their employees’ use of PTO for paid sick leave purposes. Further, the Act requires that hours worked and paid sick leave used by employees be maintained for five years, and be made available to the NJLWD upon request for inspection.

Leave Reasons

The Act allows an employee to use paid sick time for: (i) diagnosis, care, treatment of, or recovery from the employee’s mental or physical illness, injury or other adverse health condition, or for the employee’s preventive medical care; (ii) time to aid or care for a family member in one of the situations described in (i); (iii) time needed due to an employee’s or family member’s status as a victim of domestic or sexual violence; (iv) closure of the workplace, school, or childcare facility issued by a public health authority due to a public health emergency; or (v) a school-related conference or meeting.

The definition of “family member” is expansive under the Act, and includes any individual “whose close association with the employee is the equivalent of a family relationship.”

Private Right of Action and Anti-Retaliation

The Act permits employees to sue employers for violations and to recover, among other remedies, liquidated damages in an amount equal to the actual damages incurred by the harmed employee. The Act also includes an anti-retaliation provision, which establishes a rebuttable presumption of retaliation if an adverse employment action is taken against an employee within 90 days of engaging in a protected activity (such as filing a complaint alleging a violation of the Act, cooperating in an investigation related to the Act, or informing an employee of his or her rights under the Act).

What Employers Should Do Now

The Act goes into effect on October 29, 2018. Prior to that date, New Jersey employers should decide whether to use the accrual or frontloading method to calculate paid sick time during the benefit year, and review and revise their PTO and recordkeeping policies to ensure compliance with the Act’s requirements.