If Pain, Yes Gain – Part 112: New York City Publishes Final Amendments to Earned Safe and Sick Time Rules

What You Need to Know:

• On September 15, 2023, the New York City Department of Consumer and Worker Protection (the “Department”) released final amendments to the New York City Earned Safe and Sick Time Act (“ESSTA”) Rules (“Rules”).
• Importantly, there are several ESSTA topics that are impacted by the final amended Rules, including employer size, employee eligibility, notice requirements, documentation standards, payment of sick/safe time, and written ESSTA policy requirements.
• The binding, amended Rules take effect on October 15, 2023.

Legislative Background

The original version of ESSTA, formerly known as the New York City Earned Sick Time Act, took effect on April 1, 2014.  The ordinance mandates that covered employers provide eligible employees with a certain amount of paid time off to care for themselves or a qualifying family member.  Since its enactment, ESSTA has been amended several times.  For instance, ESSTA was amended in 2018 to include “safe” time as a covered absence.  In 2020, ESSTA was amended again to align the New York City ordinance with the New York State Paid Sick Leave Law (“NYSPSL Law”).[1]  Along with these amendments, the Department has generally published updated ESSTA Rules, Frequently Asked Questions and notices.

However, following the 2020 ESSTA amendments, there was no formal update to the corresponding ESSTA Rules. It was not until October 2022 that the Department published an initial version of amendments to the ESSTA Rules to better align with the ordinance’s 2020 amendments.  Seyfarth submitted comments in response to the initial Rules, and the Department held a public hearing on November 23, 2022.  The long-awaited final amendments were released last week and are set to take effect on October 15, 2023.

Substantive Highlights

The final amended Rules address several important ESSTA topics. The amendments include both alignment with the current ESSTA requirements and notable changes that go beyond the current ordinance and previous rules.  Here are the substantive highlights:

• Determining Employer Size: Certain obligations under ESSTA, such as the annual amount of earned safe and sick time accrual and usage, depend on employer size. Specifically, the ESSTA accrual and usage cap standards are 40 hours per year for employers with 99 or fewer employees and 56 hours per year for employers with 100 or more employees. Before the release of the final amended Rules, it was unclear whether employers should only count New York City employees or their total U.S. workforce when determining applicable ESSTA obligations.  Now, the final amendments make clear that employers must count their total U.S. workforce.[2] As such, employers with 100 or more employees nationwide must provide their New York City employees with at least 56 hours of paid safe and sick time per year.
  
  Nonetheless, we note that the final amendment’s clarification will likely have a limited impact in practice for many New York City employers.  This is because the NYSPSL Law (1) has the same general employee thresholds and annual accrual and usage amounts as ESSTA, and (2) the State Department of Labor commentary to the NYSPSL regulations already specified that for purposes of accrual and usage cap obligations under the State law, employer size is determined by the employer’s total U.S. workforce.  The final amended Rules now expressly align ESSTA with this New York State guidance.

• Employee Eligibility: The 2020 amendments to ESSTA removed the requirement that an employee work more than 80 hours per calendar year in New York City in order to be covered by the ordinance.  In light of this amendment, the final Rules now state that employees are covered by ESSTA so long as they physically perform work in New York City.  The final Rules also clarify that an employee who primarily works in another state (e.g., New Jersey) is also covered by ESSTA, so long as they “regularly perform, or are expected to regularly perform, work in New York City during a calendar year.”  In this case, only the hours worked in New York City will count for accrual purposes.  Relatedly, employees who strictly work remotely from outside New York City are not covered by ESSTA, regardless of whether the employer is located in the City.
• Fractional Accruals: The final amended Rules state that employee accrual of earned safe and sick time “must account for all time worked,” even if the time worked is less than a 30 hours increment. The Rules state that employers can round accruals to the nearest five minutes, one-tenth of an hour, or one-quarter of an hour. Imposing a fractional accrual standard deviates from a number of other state and local paid sick leave mandates, which state that paid sick leave accrual can occur in hour-unit increments and that fractional accruals are not required.
• Reasonable Notice Procedures: The final amendments added a definition of “foreseeable leave,” stating that “[a] need is foreseeable when the employee is aware of the need to use safe/sick time seven days or more before such use. Further, the final amended rules include additional examples of reasonable notice procedures when the need for safe/sick time is foreseeable. Namely, employers may instruct employees to “send an email to a designated email address” or “submit a leave request in a scheduling software system” when the employee is aware of their need to use safe/sick time.  Although these procedures were likely already considered reasonable under ESSTA, the final amended Rules now explicitly include them in a nonexclusive list of “reasonable procedures.”
• Reasonable Documentation: Importantly, the final Rules further clarify what constitutes reasonable written documentation under ESSTA. While ESSTA broadly states that written documentation from a “licensed health care provider” is considered reasonable for sick time purposes, the final Rules provide additional examples.  Namely, the final Rules clarify that documentation signed by a licensed clinical social worker or licensed mental health counselor will be considered reasonable as long as the documentation indicates a need for the sick time taken. Previously, the ESSTA rules only expressly discussed sufficient sick time documentation as coming from a licensed health care provider.
  
  Consistent with ESSTA, the final amended Rules also reiterate that employers must reimburse their employees for all reasonable costs or expenses incurred for the purpose of obtaining required ESSTA documentation for the employer. As a reminder, employees must be afforded at least seven days from the date they return to work to obtain such documentation.

• Balance Notification: The final amended Rules include a new section titled “Notice of Safe/Sick Time Accruals and Use on Pay Statement.” This section reiterates the balance notification requirements of ESSTA, including the need to notify employees of their safe/sick time accrual and usage during the relevant pay period, and their balance of sick/safe time available for use.[3] Per ESSTA, this notification must be provided via a paystub or other written documentation provided to the employee each pay period.
  
  Importantly, the final amended Rules provide new guidance regarding the use of an electronic system to comply with ESSTA’s balance notification requirements.  According to the Rules, employers may use an electronic system to comply with their balance notification obligations under ESSTA if: (1) employees are electronically alerted each pay period that their accrual, use and available balance information is available for review; (2) the required information within the electronic system is readily accessible by employees outside the workplace; and (3) the required accrual, use and available balance information from past pay periods is also readily accessible by employees outside the workplace.

• Rate of Pay: Consistent with ESSTA, the final Rules clarify that the “regular rate of pay” under ESSTA means the employee’s regular rate of pay at the time the safe/sick time is taken, and that this rate cannot be less than the highest applicable rate of the pay the employee is entitled to under applicable law, contract, or agreement.
• Written ESSTA Policy: The final amended Rules include a few important points regarding written ESSTA policies. First, employers who provide paid safe and sick time to employees via an annual upfront lump grant must inform employees that this safe/sick time is immediately available for use.
  
  Second, employers who require employees to provide reasonable documentation for use of safe/sick time must specify this requirement in their written policy, as well as acceptable forms of documentation and the manner in whi\ch employees should submit documentation.
  
  Third, employers who, consistent with ESSTA’s standards, withhold payment of safe/sick time until reasonable documentation is received, must explicitly state this practice in their written ESSTA policy and explain how employees can submit requests for reimbursement for costs associated with obtaining the reasonable documentation.  Employers cannot withhold payment of safe/sick time “when the required documentation is unattainable by the employee due to associated costs.”
  
  Finally, instead of merely including a description of the employer’s obligation to keep reasonable documentation confidential, as was the case under the prior ESSTA rules, the final amended Rules require employers to include a more specific statement in their written ESSTA policy.  Namely, the policy must now include a statement that the employer “will not ask the employee to provide details about the medical condition that led the employee to use sick time, or the personal situation that led the employee to use safe time, and that any information the employer receives about the employee’s use of safe/sick time will be kept confidential and not disclosed with anyone without the employee’s written permission or as required by law.”

• Potential Penalties: ESSTA maintains a broad set of potential penalties that can be enforced against employers alleged to have violated ESSTA or the Rules. The final amended Rules have expanded the scope of potential penalties by creating a “reasonable inference” that an employer who does not (1) maintain and distribute a compliant earned safe and sick time policy (in accordance with ESSTA’s written policy requirements) or (2) maintain adequate records of employees’ accrued ESST use and balances (in accordance with ESSTA’s recordkeeping and balance notification requirements), does not provide or refuses to allow use of earned safe and sick time in accordance with ESSTA as a matter of official or unofficial policy or practice. Further, each year that the unlawful policy or practice is in effect is considered a separate violation under ESSTA.
  
  The final amended Rules provide several other examples of evidence that may be used by the City in finding that an employer has an unlawful policy or practice of refusing or not allowing use of safe/sick time. Nonexclusive examples include: (1) Unlawful barriers to employees’ use of safe/sick time, whether written or unwritten, such as unreasonable notice requirements and requirements that workers provide documentation for absences of three consecutive days or fewer; (2) probation periods, waiting periods, blackout days, or other measures that prevent employees from using safe/sick time as it is earned; and (3) failing to notify employees that safe/sick time is available.
  
  The final amended Rules emphasize that where an employer has an unlawful policy or practice of refusing or not allowing use of safe/sick time, each affected employee is entitled to relief that includes “application” of the amount of safe/sick time they would have accrued, capped at two times the maximum number of hours available for use in a year. This is in addition to monetary relief equal to $500 per employee per calendar year the unlawful policy or practice was in effect.

As a reminder, under ESSTA employers must permit employees to accrue paid sick and safe time at a rate of 1 hour for every 30 hours worked, up to (1) 40 hours per year for employers with 99 or fewer employees; and (2) 56 hours per year for employers with 100 or more employees nationwide.  These ESSTA accrual caps conform with the NYSPSL Law.  Additionally, regardless of carryover balances, employees need not be permitted to use more than 40 or 56 hours of paid safe and sick time per year, depending on employer size.

Eligible employees can use ESSTA for the following reasons: (1) an employee's mental or physical illness, injury or health condition, need for medical diagnosis, care, or treatment of a mental or physical illness, injury or health condition, or need for preventive medical care; (2) care of a family member with a mental or physical illness, injury or health condition, who needs medical diagnosis, care, or treatment of a mental or physical illness, injury or health condition, or who needs preventive medical care; (3) certain absences from work when the employee or employee’s covered family member has been the victim of domestic violence, a family offense, sexual offense, stalking or human trafficking; and (4) absences due to closure of the employee’s place of business or the employee’s child’s school or childcare provider that has been closed by order of a public official due to a public health emergency. For additional details on ESSTA, see our prior Legal Updates here and here.  

Employer Takeaways

We will continue to monitor the Department’s ESSTA website for additional paid sick leave developments in New York City, including potentially updated FAQs, and update employers as appropriate. In the meantime, as the final amended ESSTA Rules’ October 15, 2023 effective date approaches, here are some steps to consider:

• Review existing sick leave or PTO policies and practices and either implement new policies and practices or revise existing policies and practices to ensure compliance with the final amended Rules, while doing the same for any related attendance, conduct, anti-retaliation, and discipline policies and practices.
• Train supervisory and managerial employees, as well as HR, on the new requirements.
• Monitor the Department’s ESSTA website for the release of updated administrative guidance on employers’ paid sick leave compliance obligations in light of the final amended Rules.

With the paid leave landscape continuing to expand and grow in complexity, we encourage companies to reach out to their Seyfarth contact for solutions and recommendations on addressing compliance with these laws and paid leave requirements more generally.  To stay up to date on paid leave developments, please click here to sign up for Seyfarth’s Paid Leave mailing list.  Companies interested in Seyfarth’s paid sick leave laws survey should reach out to sickleave@seyfarth.com.

 

[1] Today, the states that have enacted a statewide general non-COVID-19 paid sick leave or paid time off mandate include: (1) Arizona; (2) California; (3) Colorado; (4) Connecticut; (5) Illinois (PTO law) (effective 1/1/2024); (6) Maine (PTO law); (7) Maryland; (8) Massachusetts; (9) Michigan; (10) Minnesota (effective 1/1/2024); (11) Nevada (PTO law); (12) New Jersey; (13) New Mexico; (14) New York; (15) Oregon; (16) Rhode Island; (17) Vermont; and (18) Washington. In addition, (19) Virginia has a statewide paid sick leave law that applies only to certain home health workers. There also is a non-COVID-19 paid sick leave mandate in (20) Washington, D.C.. Further, including New York City there are more than two dozen municipalities with non-COVID-19 paid sick leave or paid time off mandates in the United States.

[2] This includes employees who are jointly employed by more than one employer, as well as employees on paid or unpaid leave as long as the employer has a reasonable expectation that the worker will return to active status.

[3] The final amended Rules acknowledge that, depending on an employer’s paid sick time setup, an employee’s total safe/sick time balance may be greater than the amount of safe/sick time the employee actually has available for use in that benefit year. The Rules state that when this occurs, the employer must nonetheless inform the employee of the amount of safe/sick time they have available to use in that year.