ESTA: New York City to Join Other Major Cities in Mandatory Paid Sick Leave Plan

Many employers have offered paid sick leave plans for their employees as part of their business practice. However, under the Earned Sick Time Act (“ESTA”) (the “Act”), employers in New York City (“NYC”) with 15 or more employees must now provide up to five (5) paid sick days per calendar year for all eligible employees as of April 1, 2014. Employers with 15-19 employees must provide five (5) unpaid sick days in a year, starting April 1, 2014, and then, starting October 1, 2015, those employers, and employers with at least one (1) domestic employee, must provide up to five (5) paid sick days to eligible employees.

Employees are eligible for leave if he or she works in NYC for a minimum of 80 hours per year. Sick time accumulates at a rate of one (1) hour for every 30 hours worked, with a maximum accumulation of 40 hours in one calendar year. Time can be carried over from year to year, with a maximum of 40 hours per year. This time can be taken for one’s own health, or to care for a family member who cannot care for his or her own self.

In accordance with the Act, employers may require a seven-day notice in the case of a foreseeable need for leave, and notice as soon as practicable in the case of unforeseeable situations. As is common with employment legislation, the Act contains a non-retaliation provision for employees who choose to take paid sick leave. This means that employers cannot punish or harass employees who choose to take sick leave under ESTA.

ESTA Does Not Apply to Everyone:

It should be noted that ESTA does not affect employers who already provide paid leave policies with a minimum of five (5) days of paid leave, such as paid time off, vacation, personal days or sick days. Under the new law, it appears that these employers are not required to provide any more time off, paid or unpaid, under the new law.

The Act also does not apply to employees covered by a collective bargaining agreement (“CBA”) if the coverage is both expressly waived in the CBA and the agreement provides for a “comparable benefit.” In the case of employees covered by a CBA in effect on or before the Act’s effective date, the Act takes effect for those employees on the expiration date of the collective bargaining agreement.

Additionally, ESTA does not apply to manufacturers, true independent contractors and federal and state government employees.

Possible Impacts of ESTA:

As a result of ESTA’s requirement for paid sick leave, small business owners have expressed concern that this “one size fits all” policy will serve as a detriment to their businesses due to the Act creating an additional payroll burden. The Act also does not consider exceptions in non-traditional leave businesses, such as restaurants and daycare centers. In these types of businesses, employees who take leave from work will often trade shifts to accommodate schedules; under ESTA, employers of these types of businesses will now be required to pay both the sick employee and that employee’s replacement. In NYC, Mayor Bloomberg vetoed the Act because of the possibility that it would cause layoffs and possibly result in a hiring freeze for businesses to remain below the threshold employment hiring trigger under the new law.  The City Council overrode the Veto.

Paid sick leave ordinances have already been implemented in San Francisco, Seattle, Portland (Oregon), the District of Columbia and the state of Connecticut. Thus, fears over the potential cost of this Act to small businesses can be mitigated, to some extent, by the experiences of similar businesses in these cities, state and district that have had mandatory paid sick leave plans in place for months or years, most with little or no affect to their businesses.

Bill Stone, owner of a café in San Francisco, was fearful of the cost to his business when the Act was first proposed in his city, “basically, it’s just going to make it more expensive to operate your business,” Stone had told National Public Radio (“NPR”) at the time. “Small business is going to have to pass that cost onto their customers.”

However, this year, six (6) years after the Act was passed in San Francisco, when the New York Times followed up on Stone’s thoughts on paid sick leave, he revealed that the paid leave increased his payroll cost by less than one (1) percent. “In retrospect,” Stone said, “it really hasn’t been a big expense at all.”

Another small business owner, Richard Crain, who runs a grill in San Francisco, said that his nine employees were not sick very often. “You have to give them one week per year,” he said. “But usually it’s just a day or two here and there.”

With the official passage of ESTA in NYC, employers must ensure that they abide by the new law and give all eligible employees their proper paid sick leave. Sick leave will begin to accrue when the Act goes into effect, or when the employee begins working, depending on which one is later. Employees should know that they cannot assert a private right of action in the case of violations to the Act; rather, they must go through the Department of Consumer Affairs.

If you or your company would like more information on employment law, contact James G. Ryan at jryan@cullenanddykman.com or via his direct line at  516-357-3750.

A special thank you to Cathryn Ryan, an intern at Cullen and Dykman, for her assistance with this blog post.