Final Regulations for Massachusetts Earned Sick Time Law
By Emma L. Melton and Alexandra D. Thaler
Last November, voters approved a ballot initiative granting earned sick leave to Massachusetts employees. As we wrote in an earlier article, beginning on July 1, 2015, employees working in Massachusetts are entitled to earn up to forty hours of paid sick leave per calendar year. Employers with ten or fewer employees are not required to pay employees during this leave but must provide unpaid leave to their employees.
On April 27, 2015, the Massachusetts Attorney General’s Office released long-awaited proposed regulations, which we described here. After receiving many comments, both written and in the course of the six public hearings conducted across the Commonwealth, on June 19 the AGO issued final regulations implementing the Massachusetts Earned Sick Time law. Below we update our earlier advisory by summarizing the important changes from the draft regulations.
Employer Size: The final regulations specify that employer size is based on the employer’s average number of employees during the preceding benefit year. In addition, the regulations now explicitly state that temporary employees brought in through a staffing agency count as employees of both the staffing agency and the agency’s customer for purposes of determining employer size.
Eligibility after breaks in service: Employees with a break in service of 4 months or less get full credit for prior service and unused accruals; employees with a break of between 4 and 12 months get full credit only if they had at least 10 hours of unused sick time remaining prior to the break.
Accrual: Employers providing sick time on an accrual basis may cap accrual at 40 hours, including hours carried over from a prior year, and may delay any further accrual until the employee has used some of the available time.
Increments: The final regulations provide that an employer may require employees to use a minimum of one hour of sick time per absence, but after the first hour must allow employees to take time in the smallest increment used to record other time off. For example, if an employee uses 50 minutes of sick time, the employer may charge the employee one full hour, but if an employee uses 75 minutes and the employer records other forms of time off in 15 minute increments, only 75 minutes of sick time may be charged to the employee.
Rate of Payment: The final regulations include a revised and more detailed definition of term “same hourly rate” with respect to employees paid on different bases. For example, tipped employees who are paid a service rate must be paid the full minimum wage when taking sick time. The rate for employees paid on a piece work or fee-for-service basis may be based on a “reasonable calculation” of the wages that the employee would have received for the service if he or she had worked rather than requiring an averaging over the prior pay period. While the regulations do not define what is “reasonable,” an average taken over a representative period of time, such as a month or a calendar quarter, would appear to be acceptable. Finally, salaried, exempt employees may be assumed to work 40 hours per week for purposes of determining their regular rates, unless their normal work week is less than 40 hours.
Use of Sick Time: The definition of earned sick time now explicitly includes travel to and from appointments, pharmacies, or other locations, if the travel is related to the purpose for leave. The final regulations also appear to clarify circumstances in which an employer that brings in another worker to cover an employee’s absence due to use of sick time may require the employee to use sick time for the entire shift. Specifically, the employer must allow the original employee to work the remainder of shift if feasible; the employee may be replaced for the entire shift only if specific circumstances in the employer’s workplace or industry make it impossible for the employee to work only a part of the shift. Finally, in a full reversal from the draft regulations, the final version provides that employers may require that earned sick time run concurrently with other leaves that would otherwise be unpaid, such as leave under the FMLA, Massachusetts Parental Leave, Massachusetts Domestic Violence Leave, or Small Necessities Leave.
Verification: The final regulations attempt to give employers more flexibility to deal with abuse of sick time. For example, the regulations newly provide that a “clear pattern” of taking time off before or after a weekend, vacation, or holiday, without verification that the time was used for an authorized purpose, is a permissible basis for discipline. This is a much clearer standard than in the draft regulations, which referred to discipline for employees avoiding “duties perceived as undesirable.” The final regulations also explicitly state that employees may not use sick leave for tardiness, absent an authorized purpose. However, employers still face challenges in this area. In the first instance employers may not require more than after-the-fact “verification” that leave was taken for a permissible purpose. Further, verification appears to involve nothing more than an employee’s personal statement. The AG’s template verification form is not yet available.
Documentation: The final regulations revised the requirements relating to “documentation,” a term that refers to written documentation signed by a health care provider indicating the need for the earned sick time taken, or one of several types of documents indicating the need of leave related to domestic violence. Employers may require documentation supporting an employee’s need for sick time in several circumstances, including after taking more than 24 consecutive work hours, when absent for more than three consecutively scheduled work days, when taking any sick time within two weeks prior to the last scheduled day of work, or after four unforeseen absences over three months without prior notice to the employer. Employers may require documentation be provided within 7 days (down from 30 days), and if an employee fails to meet this requirement without justification, employers can recoup the amount of sick time paid to the employee from future pay as a valid set-off under the Wage Act (so long as the employee was on notice of this possibility). Small employers that are not required to provide paid sick leave may, deny an employee the right to use an equivalent amount of sick time until medical documentation is provided. Employers should note that taking any other adverse action against an employee for failure to provide documentation may run afoul of the law.
Notification: Pursuant to the final regulations, employees must provide advance notice of the use of sick time, except in the case of an emergency. This is a significant change in language from the draft regulations, which merely parroted the statutory text by requiring employees to make a “good faith effort” to give advance notice. Additionally, employers may now require that an employee taking a multi-day leave provide the expected duration or, if unknown, give daily updates. For unforeseeable absences, employees need only provide notice that is “reasonable” under the circumstances, which may include after-the-fact notification.
Allowable substitution of Paid Time Off (PTO): The final regulations confirm that an employer may implement different policies for different groups of employees (e.g. salaried versus hourly, full-time versus part-time, benefitted versus not), so long as each group receives at least the minimum required by the law. Additionally, employers that provide more than the minimum required time off may impose different requirements on the use of time in excess of 40 hours, as long as employees are allowed to designate which hours are taken as sick leave. The final regulations also clarify that if an employer grants sick time as part of a broader time off policy where job-protected time can be used for any reason, the employer may additionally provide notice that an employee who uses all of his or her time is not entitled to additional sick time later in the year. Employers that provide all 40 hours of sick time as a lump sum at the start of each benefit year do not need to offer carry-over of unused time. Finally, in an attempt to provide alternatives for part-time employees, the final regulations give employers the choice to allocate sick leave in monthly installments according to a chart (found in Section 33.07(8)).
Safe Harbor and Transition Year: The final regulations incorporate the AGO’s Safe Harbor regulation, issued June 10, 2015, which we discussed in a prior alert. Separate from the Safe Harbor, the regulations also preserve the original “Transition Year” rule, but the term “Transition Year” is now defined as the benefit year that includes July 1, 2015, which means that employers that have provided sufficient annual time off may still take advantage of the Transition Year rule, even if their benefit year began before January 1, 2015.
Notice and Record Keeping Provisions: New to the final regulations, employees may request records pertaining to their accrual and use of earned sick time and must be provided with a copy or an opportunity to inspect the records within 10 business days. In addition to having to post the AG’s notice relating to the law (available here), employers now have the choice to either provide the same notice to all employees, or include the employer’s earned sick time policy in its employee handbook.
Key Take-Aways for Employers
In recent years the trend among many employers has been to consolidate vacation, sick time, and personal days into PTO or similar mixed-use policies, to create consistent standards and alleviate the administrative burden of tracking the purposes for employee absences. The new mandate that sick time be granted certain specific protections may call that approach into question. While the AGO’s final regulations provide additional guidance for employers that offer PTO or other mixed-use time off, they do not resolve the practical question of whether employers (and employees) are better served by disaggregating their PTO policies back into separate vacation and sick time to avoid engrafting a slew of restrictions onto all available time off. The regulations arguably contemplate that a hybrid policy could be crafted, in which protections are granted to a limited amount of time off when the time is designated as being taken for purposes allowed by the sick time law, but until these policies are tested under the new law, questions will remain as to whether they are workable and, ultimately, consistent with the law.
Even employers who have previously offered stand-alone sick time policies may need to revise those policies. Some employers may need to increase allotment or accrual rates, reduce notice requirements, or revise permissible increments of use to meet the law’s minimum requirements. Others may wish to add new requirements for verification or documentation to keep potential misuse or abuse of time off in check.
Employers that relied on the draft regulations to begin the process of updating their policies, as well as those who are planning to take advantage of the Safe Harbor provisions until January 1, 2016, should carefully review the final regulations to ensure that their policies comply with the new, intricate requirements of the law.