Will your PTO Policy Comply with NJ’s Sick Leave Law

Natalie Sabre

August 13, 2018

Many of JetPay’s clients, with employees working in NJ, are preparing for the NJ Paid Sick Leave Law that goes into effect Oct. 29, 2018.  Some employers are under the impression that because they have a PTO policy, they are compliant.  While that may be the case in some situations, many policies require different regulations for sick leave than they do for PTO. As a result, more employers are choosing to separate their PTO from their Sick Leave to ensure compliance with one of the nation’s strictest Sick Leave Laws.

What might require an employer to create a separate Sick Leave Policy?

  • Most PTO plans are available only to full time employees.
  • Under the NJ Law, all employees (including part-time employees) will be entitled to paid sick leave.
  • If you have a “use it or lose it” PTO policy, whereby the employee forfeits any accrued, unused time at the end of the plan year, the plan won’t comply.
    • The ruling requires that employers:
      • Allow employees to carry over up to 40 hours of accrued sick time from one plan year to the next.
      • Employers who do not allow carry over are required to pay employees for unused sick time in the final month of the benefit year.
  • If you award PTO after a length of service greater than four months – for example six months – or even after a year of service, you will need to make a change.
    • The law requires that employees begin to accrue 1 hour of sick time for every 30 hours of work – and can begin to use that time after the 120th day of their first date of employment.
  • If, under the employer’s current PTO policy, an employee leaves, is rehired and doesn’t reinstate unused sick time (and hasn’t ‘cashed it out’), you’ll need to make some changes.
    • Under the new law, separated employees who are rehired within six months must have their unused and accrued sick time reinstated.
  • If you reserve the right to deny PTO based on business requirements, you’ll need to make sure supervisors and managers who have approval/denial rights to PTO understand how the new law impacts the denial of leave.
    • Employees can use sick leave for many reasons, including their own physical or mental health or for a family member, the employee’s or a family member’s status as a victim of domestic or sexual violence, certain public health emergencies that require school/daycare closure, or attending a school meeting to discuss a child’s medical condition.

It should be noted that there is a broad definition in the law of a “family member” – which could include blood relatives, but also includes those whose close association is the equivalent of a family relationship.

We are recommending that clients take the following steps now:

  • Review their current policies and make changes or create a Sick Leave Policy – this should include a handbook update or addendum if leave policies are in the Employee Handbook.
  • Make sure they are posting and providing employees a written copy of the notice.
  • Ensure they have a tracking mechanism in place to record paid sick time taken by employees and be sure to retain those documents for a period of five years.

If you would like to discuss a review of your policies, handbook, or general HR strategies, our Professional HR team can assist.  Please give us a call for more information at: (800) 366-9729.

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