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Legal Update

Nov 12, 2019

If Pain (or Anything Else), Yes Gain—Part 76: Nevada Labor Commissioner’s Office Releases Guidance on Paid Leave Law

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Seyfarth Synopsis: In June 2019, the Nevada Paid Leave Law (“PTO Law”) went into effect “for the purpose of adopting any regulations and performing any other preparatory administrative tasks necessary to carry out [its] provisions,” while the remainder of the mandate—containing the bulk of employer obligations—is scheduled to take effect on January 1, 2020, at which time Nevada will become the first jurisdiction with a fully operative paid personal leave mandate impacting private employers. With the new year approaching, the Nevada Labor Commissioner’s office has released various forms of guidance and required posters for covered employers to look to as they prepare to comply with the Nevada PTO Law.

Particularly fitting for the Silver State, Nevada became the second of three jurisdictions—between Maine and Bernalillo County, New Mexico—to enact a paid leave mandate requiring covered employers to provide eligible employees with paid leave that can be used for any reason.[1] Despite the PTO Law passing shortly after Maine’s paid leave law, Nevada is the first jurisdiction to have a private employment sector personal time mandate in effect in part and is on pace to become the first to have the same in effect in its entirety come the start of next year.[2] Under the law, covered employers will be required to permit eligible employees to accrue .01923 hours of paid leave for every hour worked, and use up to 40 hours of earned paid leave each year.

Yet while largely similar in structure and substance to many paid sick leave (“PSL”) laws familiar to employers that have felt the PSL bug’s symptoms since 2007,[3] the broader reasons for use required by the PTO Law and ambiguity surrounding some of its provisions have resulted in some uncertainty over employer obligations. While the guidance provides clarity on some provisions of the PTO Law, other questions persist and new questions have emerged based on the guidance released to date.

Here are some of the highlights from the materials issued thus far.

Posting Obligations

Notably lacking from SB 312—the legislation codifying the Nevada PTO Law—are substantive provisions on employers’ obligations to provide notice of employees’ rights or post such information in the workplace. However, SB 312 requires the Labor Commissioner to “prepare a bulletin which clearly sets forth the benefits created[,] . . . post the bulletin on [the office’s website],” and “require all employers to post the bulletin.” To this end, the Labor Commissioner’s office has released English and Spanish posters on the Nevada PTO Law, and updated its required Wage and Hour Abstract with information on the personal time mandate in both English and Spanish as well.

While the PTO Law takes effect on January 1, 2020 “for all . . . purposes” other than adoption of regulations and performance of preparatory tasks, it is unclear whether employers’ posting obligations are in effect at this time or will take effect with most other employer obligations next year.

Advisory Opinion

Last month, the Labor Commissioner issued an Advisory Opinion on the Nevada PTO Law, which states it “is intended to provide as much guidance as possible” regarding the looming mandate. Significant points addressed and passed over by the Labor Commissioner’s Advisory Opinion follow.

  • Eligible Employees: While the Advisory Opinion does not expressly define “employee,” its guidance on when an individual might fall within an exemption versus when they might not offers employers some direction in determining employee eligibility.
    • PTO Law: While the PTO law does not define “employee,” it is clear that temporary, seasonal, and on-call employees are not covered.
    • Opinion - Excluded Employees: The Opinion provides definitions for temporary, seasonal, and on-call employees (including per-diem employees). In particular, these definitions suggest that any employee working 90 or more days is eligible, even if otherwise considered a temporary, seasonal, or on-call employee.[4] Employers are also warned that any assignment exceeding 90 days “may trigger a presumption” of employee eligibility.
  • Covered Employers, Determining Employer Size, and Exemptions From Coverage: While the Opinion reiterates the definition of employer and exclusions therefrom found in the PTO Law, it reveals how the Labor Commissioner will (a) determine whether an employer has met the 50 employee threshold for coverage, and (b) interpret the PTO Law's exemption for employers  providing a sufficient amount of paid leave in existing policies.
    • PTO Law: As a reminder, “[e]very employer in private employment in the State of Nevada with 50 or more employees in the State of Nevada shall provide paid leave,” except that the law does not apply to an employer during its first two years of operation, nor does it apply to employers “who, pursuant to a contract, policy, collective bargaining agreement or other agreement, provides employees with a policy for paid leave or a policy for paid time off to all scheduled employees at a rate of at least 0.01923 hours of paid leave per hour of work performed.”
    • Opinion - Determining Employer Size: Per the Opinion, the Labor Commissioner’s office will be determine whether employers are covered based on whether 50 or more employees work for the employer in Nevada—inclusive of joint employers and successors in interest—in 20 or more non-consecutive workweeks in the current preceding calendar year. The Opinion also clarifies that temporary, seasonal, and on-call employees are not counted for purposes of this determination.
    • Opinion - General Provisions on Policy Exemption: While the Advisory Opinion says little more on the “new employer” exemption, it purports to provide clarity on the “existing policy” front. In particular, “[t]he intent and explicit, plain, and unambiguous language . . . clearly provides that employers already providing leave that matches or exceeds the 0.01923 hours of paid leave per hour of work performed pursuant to a contract, policy, collective bargaining agreement or other agreement are explicitly exempt from the [PTO Law’s] other requirements.” Despite this, the Labor Commissioner also notes that prior to January 1, 2020, “it is recommended that [employers] develop a policy . . . to offer paid leave . . . that matches or exceeds the requirements of SB 312.”
    • Opinion - Compliance Obligations Excused or Modified by Policy Exemption: “Other requirements” specifically referenced in whole or substantial part as inapplicable to employers exempt via policy, but with which compliance is “recommended” include (a) employer-implemented notice, request, or call-in procedures for employees using paid leave, which while permitted, should not “discourage” use of paid leave, (b) the outer limit for employer implemented waiting periods for employees’ use of paid leave, which can extend beyond the requirements of the PTO Law, despite recommendation that they do not, and (c) recordkeeping requirements, in that their inapplicability to policy-exempt employers does not change the “essential and necessary” tracking of accrual and use of paid leave, hours worked, and rates of pay.
    • Opinion - “Benefit Year” Required for Policy Exemption & Exempt CBAs: In outlining components of existing paid leave policies that may qualify employers as exempt, the Labor Commissioner’s office also offers insight into its interpretation of certain provisions of the PTO Law. First, the office indicates that an employer’s “Benefit Year” can only  be based on the employee’s anniversary date, in contrast to most PSL laws, which permit the employer to choose a calendar year, fiscal year, anniversary year, or other consecutive 12-month period as their benefit year. Second, although the PTO Law does not appear to distinguish between standards for meeting the existing paid leave policy exemption as applied to existing contracts, policies, handbooks, and CBAs, the Advisory Opinion suggests that CBAs’ existing paid leave policies or plans provided in lieu of paid leave will be looked at more flexibly by the Labor Commissioner. In particular, CBAs, mainly those involving trade, construction, and labor organizations, can be exempt from the PTO Law’s “new requirements” if they have language offering paid leave that matches or exceeds the PTO Law’s requirements or such previously offered leave provisions “have been modified to provide for a vacation bank/fund, savings plan, vacation plan/vacation savings plan, or other leave plan, or that instead offer the leave to be paid as part of the collective bargaining agreement.”
  • Accrual, Carryover, and Use of Paid Leave: Overall, the Opinion confirms many provisions that were not in question upon the PTO Law’s enactment, but does not otherwise address related points notably absent from the PTO Law.
    • PTO Law - Accrual Rate, Frontloading, Carryover, Annual Use Limit, Usage Waiting Period, and Increments of Use: Under the PTO Law, paid leave accrues at a rate of .01923 hours of paid leave “per hour of work performed,” however, at the start of each year, employers can frontload “the amount of paid leave the employee is entitled to accrue in a benefit year.” Additionally, employers must permit employees to carry over up to 40 hours of accrued, unused paid leave at year-end, and can limit employees’ annual use of paid leave to 40 hours per year regardless of carryover balances. While employees begin to accrue paid leave upon commencement of employment (or presumably the law’s effective date if later), employers may restrict employees’ ability to use accrued paid leave until their 90th calendar day of employment. Finally, employers may impose a minimum usage increment that is no greater than 4 hours when employees use paid leave.
    • Opinion - Open Questions on Frontloading and Carryover: Without more than confirmation of the above, like the PTO Law, the Opinion is silent on whether carryover is required when paid leave is frontloaded (i.e., it is not clear whether carryover applies only to accrued, unused paid leave as a result of limiting language, or the language was intended to apply more broadly to all earned, unused paid leave). More significantly, as noted above, the Opinion does not provide clarity on whether employers may cap employees’ annual accrual of paid leave, as accrual of paid leave is provided per hour worked without further measure or limitation.
  • Notice to Employer: The Advisory Opinion elaborates on the timing of notice requirement provided in the PTO Law and discusses its applicability when absences are foreseeable and unforeseeable. In addition to drilling down this point, the guidance speaks to permissible notice procedures and policy distribution requirements, notably absent from the PTO Law.
    • PTO Law: As drafted, the Nevada PTO Law simply states employers may require employees to provide notice of the need for paid leave “as soon as practicable.” As a reminder, employers may not require employees to disclose the reason for their paid leave absence.
    • Opinion - Timing, Procedures, Policy Distribution, and Denial of Paid Leave: While the PTO Law does not distinguish between foreseeable and unforeseeable paid leave absences, the Labor Commissioner’s use of the distinction may prove useful for employers in determining how much notice to require under various circumstances. As one might suspect based on the reasons for which paid leave may be taken (e.g., planned medical procedures, vacations, and personal commitments), the Opinion suggests an interpretation of the PTO Law permitting employers to require advance notice of planned paid leave absences, with acceptable timeframes depending on the circumstances. Keeping things open-ended, the Opinion provides “a written policy could provide for 3 to 5 days-notice or longer notice period if the employee knows they need to take leave, is going on vacation, or taking a voluntary day off, etc.,” and even cites the FMLA’s 30-day advance notice requirement when an employee knows they are taking leave for FMLA-covered reasons with approval. In contrast, for unexpected or emergency medical or personal absences, the Labor Commissioner appears to interpret the PTO Law as prohibiting advance notice requirements. The Opinion also indicates employers can require “reasonable” notice, including via existing notice procedures. Importantly, the Labor Commissioner recommends employers’ notice procedures be distributed to employees in writing for them to sign. Finally, while the Labor Commissioner’s office notably answers in the affirmative on whether employers may deny paid leave requests, employers are simultaneously reminded that, as written, the PTO Law does not allow denial of paid leave available for use as permitted by law.
  • Salary/Exempt Employee Rate of Pay: Addressing the PTO Law’s silence on how to calculate the rate of pay for salaried and exempt employees when using paid leave, the baseline guidance provided is that the calculation used must be “reasonable” and “consistent.” Despite implying many options for employers, the guidance provides one example of an employer calculating all salaried and exempt employees’ annual salary and arriving at an hourly rate based on number of workweeks in the year, days in the workweek, hours in the workday, etc.
  • Payout Upon Separation & Reinstatement Upon Re-hire: While largely confirming the PTO Law’s provisions on payout upon separation, which is not required, and reinstatement of earned, unused paid leave for re-hires, which is required when an employee (a) does not separate by voluntarily leaving employment; and (b) is re-hired within 90 days after the separation of employment, the Labor Commissioner’s office additionally “recommends” payout of unused paid leave where the employer has agreed to do so via policy, contract, agreement, handbook, or CBA.

Other Online Resources & Employers’ Next Steps

In addition to the information above, the Labor Commissioner’s office has updated its Wage & Hour FAQs to reference employers’ looming paid leave obligations and included a two page summary of the mandate in its 2019 Wage and Hour Legislative Information Presentation.

While the resources released to date may add to employers’ confusion regarding their compliance obligations, they also provide clarity on a number of points, and insight as to how this mandate may be enforced. With the January 1, 2020 effective date for most employer-related paid leave obligations approaching, here are some steps to consider:

  • Review existing paid time off policies and either implement new policies or revise existing policies to satisfy the Nevada PTO Law, as expanded upon by the Commissioner’s guidance.
  • Monitor the Labor Commissioner’s website for further information on the Nevada PTO Law, including the release of draft and final regulations.
  • Gather posters related to the Nevada PTO Law released by the Labor Commissioner's office.
  • Train supervisory and managerial employees, as well as HR, on the new requirements.

We will continue to monitor and provide updates on Nevada paid leave developments as the law’s effective date approaches and on any subsequent changes.

As the paid leave landscape continues to expand, companies should reach out to their Seyfarth contact for solutions and recommendations on addressing compliance with this Law and sick leave requirements generally. To stay up-to-date on paid leave developments, click here to sign up for Seyfarth’s Paid Sick Leave mailing list.

[1] After passing such a mandate in August 2019, Bernalillo County passed key amendments to its paid leave ordinance in October 2019. A Legal Update on the Bernalillo County ordinance, as amended, is forthcoming.

[2] Although not yet a paid personal time jurisdiction, talks of such mandates originated in New York City in April 2018. While the City’s current paid leave law requires employers to provide paid safe and sick time to eligible employees, a proposal to amend the Earned Safe and Sick Time Act to the Earned Safe, Sick and Personal Time Law is currently under consideration.

[3] Across 40 federal, state, and local jurisdictions, there are 42 private employer-provided paid leave mandates either in effect or scheduled to go into effect in the coming months: (1) The Federal Contractor PSL law; (2) Arizona; (3) California; (4) Connecticut; (5) Maine (PTO law); (6) Maryland; (7) Massachusetts; (8) Michigan; (9) Nevada (PTO Law); (10) New Jersey; (11) Oregon; (12) Rhode Island; (13) Vermont; (14) Washington; (15) San Francisco, CA; (16) Washington, D.C.; (17) Seattle, WA; (18) Long Beach, CA (hotel-specific law); (19) SeaTac, WA (hospitality and transportation industry-specific law); (20) New York City, NY; (21) Los Angeles, CA (1 general law 1 hotel-specific law); (22) Oakland, CA; (23) Philadelphia, PA; (24) Tacoma, WA; (25) Emeryville, CA; (26) Montgomery County, MD; (27) Pittsburgh, PA; (28) Austin, TX; (29) Santa Monica, CA; (30) Minneapolis, MN; (31) San Diego, CA; (32) Chicago, IL; (33) Berkeley, CA; (34) Saint Paul, MN; (35) Cook County, IL; (36) Duluth, MN; (37) San Antonio, TX; (38) Westchester County, NY (1 sick leave law, 1 safe leave law); (39) Dallas, TX; and (40) Bernalillo County, NM (PTO law).

[4] Temporary and seasonal employees are defined as individuals who work less than 90 days on an occasional or temporary, and seasonal basis, respectively.