What Employers Should Know About Vermont’s New Paid Sick Time Law

Source: Vermont Employment Law Letter

 

By Karen McAndrew

As most Vermont employers know by now, state lawmakers recently passed and the governor signed H. 187, a paid sick leave law that is scheduled to go into effect in January 2017. Because you may not be aware of the specifics of the law, we’re offering the following distillation of some of the significant provisions.

Who is covered by the new law?

First, any individual, corporation, partnership, organization, or entity of any kind “doing business in or operating within Vermont” is an “employer” covered by the statute. And any person who, for “direct or indirect gain or profit,” is employed for an average of at least 18 hours a week per year is an “employee” under the law. That sounds all-inclusive, and it is. But there are exemptions for certain categories of employees.

Who is not entitled to benefits under the law?

The new law doesn’t require employers to provide paid sick leave to:

• Employees of the federal government;

• Anyone who is employed for 20 weeks or fewer during a 12-month period and in a job scheduled to last 20 weeks or fewer. (This provision is unclear. The two clauses are separated by “and,” which suggests an employee is excluded from coverage only if she is both in a job scheduled to last less than 21 weeks and she doesn’t actually work more than that. But the legislature may have meant to exclude an employee who meets either one or the other of the disqualifying provisions. This will likely have to await clarification from either the Vermont Department of Labor or the courts.);

• Employees of the state who are exempt or excluded from the classified service of the state, but not persons who are employed by the state “in a temporary capacity.” (Don’t you love the way the state mandates that private-sector employers provide paid sick leave but then provides an exception for many of its own employees? And the second half of this provision is also ambiguous: It isn’t clear whether the statute is intended to mean that temporary workers are or are not covered.);

• Anyone employed by a healthcare facility on a per diem or intermittent basis;

• Substitute teachers who do not work on a regular schedule and are not providing long-term substitute coverage; • Employees younger than 18;

• Sole proprietors or executive officers, partners, or managers of entities that are exempt from requirement that workers’ compensation coverage be provided to employees; and

• Casual laborers.

What’s the leave entitlement, and how is it accrued?

Under existing law in Vermont, employers must provide employees unpaid parental and family leave. The difference between that and the new law is that H. 187 requires sick leave to be paid time off (PTO). The basic rule under the new law is that paid sick leave accumulates at no less than one hour for every 52 hours worked. (When virtually every other benefit is calculated using a 40-hour workweek, it isn’t hard to imagine the bookkeeping headaches the 52-hour rule may foster.)

You may require an eligibility waiting period of up to one year under the new law. A newly hired employee will accumulate paid sick leave during the waiting period but may not use it until the waiting period has expired.

Obviously, employers may choose to provide more paid sick time than is required under the statute. But from January 1, 2017, to December 31, 2018, you may limit the amount of leave employees can accrue in a 12-month period to a maximum of 24 hours; thereafter, you may set a maximum accrual amount of 40 hours. In other words, you must provide employees up to three days of paid sick time during the first two years the statute is in effect (2017 and 2018) and allow them up to five days of leave after that.

You may also limit the number of hours against which sick time accrues to 40 hours a week for employees who are nonexempt under the Fair Labor Standards Act (FLSA)—i.e., hourly employees. In other words, the law doesn’t require you to include overtime hours in the 52- hour increment for calculating the accrual of sick time.

Sick time may be calculated either as it accrues during each pay period or on a quarterly basis. However, if you calculate accrual on a quarterly basis, you must allow an employee to use earned sick time “as he or she accrues it during each quarter.” That doesn’t seem to make any sense because you would have to be calculating the time as it accrues to know how much time an employee is accruing.

For absences shorter than a full day, you may calculate the time used in the smallest increments your payroll system uses to calculate time used for other absences (or that your PTO policy permits). You aren’t required to permit employees to use sick time in increments smaller than an hour.

Carryover and payout of accrued sick leave

Accrued sick time carries over from year to year. However, you may limit the use of paid sick time in any year to the annual cap you have established or choose to pay employees at the end of every year for accrued but unused sick time, in which case there would be no carryover.

The law does not require you to pay employees for unused sick time upon termination of employment, unless you have adopted a policy that states you will pay departing employees for that time.

For what purposes may sick time be used?

In general, employees may use sick time under the new law for the same purposes leave may be taken under the Vermont Parental and Family Leave Act (VPFLA). Those reasons include:

• To recover from an injury or illness or to attend healthcare appointments (including physical therapy appointments);

• To care for a family member who is sick, injured, or attending healthcare appointments;

• To arrange for social, legal, or medical support or assistance with relocating for the employee or a family member who is a victim of domestic violence, sexual assault, or stalking; and

• To care for a family member whose school or business is closed for health or safety reasons.

What if you have a CTO policy or a CBA?

If you already have a combined time off (CTO) policy under which employees may use earned time off for vacation, sickness, or personal reasons, you don’t have to provide additional paid sick time as long as your policy provides CTO that’s equivalent to the time off allowed under the new law. If you provide CTO that can be used as sick leave, you are not required to provide additional sick leave to an employee who chooses to use his CTO for purposes other than sick leave.

If you provide employees (or are subject to a collective bargaining agreement, or CBA, that requires) a fixed amount of PTO that can be used at any time during the year in at least the amounts mandated under the new law, you don’t otherwise have to comply with the statute’s calculation and accrual provisions. In that situation, you also aren’t required to carry over paid sick time from one year to the next.

Nothing in the statute is intended to be construed in a way that relieves employers of their existing obligations under a CTO policy or a CBA, and nothing in a CTO policy or a CBA can diminish the rights provided in the statute.

Miscellaneous provisions

Finally, the statute contains the following miscellaneous provisions:

• An employee is not required to use earned sick leave for one of the purposes in the statute and her employer is not required to pay for the time off if (1) they agree that she will make up the hours later in the same pay period or (2) she trades hours with another employee and each of them works the equivalent of their normal number of hours.

• An employer may adopt a policy requiring an employee who uses time for one of the purposes in the statute to use accrued sick time for the absence.

• Nothing in the statute is intended to preempt or override a CBA that’s in existence as of January 1, 2017.

• A new employer is exempt from the provisions of the statute for one year from the date it hires its first employee to an affiliated entity to allow either entity to claim the exemption.

• Notice of the statute’s provisions must be posted in a prominent place in the workplace, in a form approved by the commissioner of labor, and new employees must be informed of the policy at the time of hire.

An employer that violates the statute may be subject to a fine of not more than $5,000, and a corporate officer who knowingly violates the statute may be personally liable to an employee for unpaid wages under the statute. It doesn’t appear that noncompliance with H. 187 will subject an employer to the penalties and attorneys’ fees and costs that may result from a violation of other wage and hour laws.

Cautionary note

This article provides a less-than-comprehensive summary of the major provisions of Vermont’s new paid sick leave law. It shouldn’t be construed as legal advice applicable to any specific situation. You should consult your employment counsel for advice on how the law applies to your particular circumstances.

The new paid sick leave law goes into effect January 1, 2017. Vermont Employment Law Letter editors Amy McLaughlin and Jeff Nolan will present a webinar explaining employers’ new compliance obligations on May 18. Details and information on how to register will be announced in our April issue.

The author can be reached at kmcandrew@dinse.com or 802-864-5751.

 

Thank you to Dinse for sharing Vermont Employment Law Letter’s article!

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