2016 Parsons Behle & Latimer Employment Law Seminar in Salt Lake City, Utah - Maria Hart

1. 28th Annual Parsons Behle & Latimer Employment Law Seminar
Sick Leave and Other Paid
Time Off Policies
Maria O. Hart
Thursday, April 28th, 2016
Salt Lake City, Utah
Thursday, April 28, 2016 | Little America Hotel
parsonsbehle.com

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 The concept of paid leave started in the U.S.
 In 1910, President William Taft proposed that every
American worker needed 2 to 3 months of vacation. He
said it was “in order to continue his work next year with
the energy and effectiveness which it ought to have.”
 Despite using his presidency to hammer away at
Congress, his law never passed.
 Shortly thereafter, Sweden and Germany both passed
legislation giving their employees seven weeks of paid
vacation per year.
History

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History of Paid Leave

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 By 1930, the U.S. Dept. of Labor looked at the issue
again. By then, over 30 countries had laws requiring paid
time off.
 The Family Medical Leave Act (FMLA), passed by
Congress in 1993, guarantees a minimum of 12 weeks
unpaid time off so workers can deal with their own or
extended medical issues of immediate family members.
 In 2009, “The Paid Vacation Act” failed in Congress.
 In 2013, “The Healthy Families Act” was introduced.
History of Paid Leave

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 Paid leave was the most prevalent employee
benefit provided by employers in private industry
throughout the United States in 2012. 84% of
private industry workers received vacation,
holiday, or personal leave.
 See August 2013 Report issued by the Bureau
of Labor Statistics, U.S. Dept. of Labor.
History of Paid Leave

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Quantifiable Benefit

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The Basics
 Paid time off plans: a paid time off (PTO) plan includes sick, vacation and personal
days all in one plan or policy. This excludes paid holidays such as Labor Day,
Memorial Day and Thanksgiving.
 Paid vacation plans: a paid vacation plan is a stand-alone plan that provides
employees with paid leave from work, typically taken in increments of days or weeks.
This excludes paid holidays such as Labor Day, Memorial Day and Thanksgiving.
 Paid sick leave plans: a paid sick leave plan is a stand-alone plan providing
employees with paid leave for absences from work caused by illness for injury,
appointments, and travel time to and from health care facilities. These plans
sometimes provide paid leave for employees to care for immediate family members.
 Paid personal leave plans: a paid personal leave plan provides employees with paid
leave for any purpose an employee chooses or any purpose that may not be covered
by a paid vacation or paid sick leave plan. This excludes paid holidays such as Labor
Day, Memorial Day and Thanksgiving.
 Paid sabbatical leave: Sabbatical leave is paid time from work to accomplish
professional development objectives.
 Paid parental leave: paid parental leave refers to paid time away from work to care
for a child. This leave can include maternity, paternity or adoption leave.

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The Basics
Additional Definitions:
 Civic leave: Civic leave refers to paid and unpaid time away from
work to perform civic obligations such as:
– Jury Duty
– Voting
– Subpoena/Deposition
– Military Leave
 Bereavement Leave: Paid leave following the death of a member of
the employee's immediate family, which is not charged against other
accrued leave (i.e., sick or annual leave. “Immediate family” is
statutorily defined.
 Miscellaneous Others: Organ Donor Leave, Disaster Relief
Volunteer Leave, Leave Bank

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PTO v. Traditional Leave

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PTO v. Traditional Leave
See World at Work Report.

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 Utah Labor and Wage Claims, UT Admin. Code
Rules issued by the Labor Commission R610-3-
4(B)(1)
 UT Labor Comm. FAQs.
 In Utah, employers are not required to provide
employees with vacation or sick leave benefits,
either paid or unpaid.
 If an employer chooses to provide such benefits,
it must comply with the terms of its established
policy or employment contract.
Utah Law

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 “[W]ages also includes the following items, if due
under an agreement with the employer or under
a policy of the employer
a. vacation;
b. holiday;
c. sick leave;
d. paid time off; and
e. severance payments and bonuses.
 See R610-3-4.
Utah Law

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 Bereavement Leave, R477-7-9, only applies to
employees of the state of Utah.
 Employees of the State of Utah are also able to
take:
– Military leave, jury duty leave, organ donor leave,
Utah’s Law

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 Issued on September 7, 2015
 “This order seeks to increase efficiency and cost
savings in the work performed by parties that
contract with the Federal Government by
ensuring that employees on those contracts can
earn up to 7 days or more of paid sick leave
annually, including paid leave allowing for family
care.”
Executive Order 13706

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 Applies to Federal contractors and
subcontractors
 Provides that:
– Earn 1 hour of sick leave per 30 hours worked.
– Mandatory minimum cap of 7 days
– Carries over year to year.
 Applies to federal government contracts solicited
or awarded on or after January 1, 2017.
Executive Order 13706

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 Issued February 24, 2016 (though not published
in the Federal Register until February 25th).
 Public comment period was extended to April
12, 2016.
Dept. of Labor Proposed Rule

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 The bill known as the Healthy Families Act was
introduced in 2013 (H.R. 1286, 113th Congr.).
 If passed, the Act would require private
employers with 15 or more employees and
public agencies to provide employees with one
hour of paid sick time for every 30 hours worked.
 Maximum accrual requirement of 56 hours of
leave per year.
Pending Legislation

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 Sponsor is Rep. DeLauro, Rosa L., Connecticut,
134 co-sponsors.
 Introduced in the House March 20, 2013.
 Latest action, on April 23, 2013, the Act was
referred to the Subcommittee on Workforce
Protections.
 In addition, the Paid Sick Leave Act was
introduced in the house on December 11, 2014.
Referred to the House Judiciary on the same
date.
Pending Legislation

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 Five States
– California
– Connecticut
– Massachusetts
– Oregon
– Vermont
– District of Columbia
– Puerto Rico
 More than 20 municipalities (CA and NJ)
States and Municipalities
Mandating Sick Leave

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 No federal mandate.
 No state mandate.
 HOWEVER…
 A number of states have passed laws that define
accrued vacation leave as wages.
– Payable upon termination (e.g., Montana, Nebraska,
California)
– Unused vacation must be paid if employer policy is to
pay (24 states, not including Utah)
– PTO days are sometimes considered vacation days.
Vacation

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 Employees are typically subject to the laws that apply
where they work. Generally, state laws and agencies
govern all employment within their state lines, including
workers who are only temporarily present. Moreover,
state laws usually do not control what occurs across their
borders.
 See e.g., Oracle Corporation learned that California's
overtime rules applied to its traveling instructors when
they worked in California. The instructors lived in Arizona
and Colorado, but California's overtime law governed
Oracle's overtime obligations for labor performed within
the Golden State. [Sullivan v. Oracle (CA 2011)].
Employees in Multiple States

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 Forum Selection in Employment Agreements
 Verdugo v. Alliantgroup, L.P. (CA Ct. Ap., 2015)
 Court held that the forum selection clause employee had signed was
not enforceable, and that her claims must proceed in California.
 The Court of Appeal recognized that while forum selection clauses
are generally enforced unless “unreasonable or unfair,” “California
courts will refuse to defer to the selected forum if to do so would
substantially diminish the rights of California residents in any way
that violates our state’s public policy.” Thus, the inquiry was
whether the employee’s rights under California law would be
substantially diminished if she pursued her claims in Texas.
Employees in Multiple States

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 Because all of the employee’s claims (even her unfair business
practices claim) were based on rights created by the California
Labor Code, the Court focused on the California Labor Code’s
explicit language stating that the rights it created could not in any
way be contravened or set aside by a private agreement.
 Based on this language, the Court found that the employee’s claims
were all based on unwaivable rights under California law. Because
the case involved unwaivable rights, the party seeking to enforce the
forum selection clause (employer) bore the burden to prove that the
opposing party’s rights (employee’s) would not be diminished
“in any way” if the case proceeded in the out-of-state forum.
 In essence, the employer was faced with proving that a Texas Court
would provide the same or greater rights than California, or that the
Texas court would apply California law to the claims at issue.
Employees in Multiple States

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 Clarity: Communicate in writing whether or not vacation will be paid
out at separation and list any conditions in the same section of your
employee handbook. Many employers confuse the issue by having
pay out discussed in multiple areas of the policy handbook. The
topic should only be discussed in the vacation policy section, and if
necessary, identically repeated in the section on
separations/terminations.
 Consistency: Employers should avoid pay out for some employees
but not others without a neutral and clearly written policy statement,
such as: “Employees that have been with the company for X years
and are not being terminated for misconduct will be paid out their
unused but accrued vacation.” The risks for making exceptions can
be substantial, so employers should refrain from doing so. Failing to
be consistent can lead to costly discrimination complaints.
Best Practices

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 Practice matches policy: Employers should avoid having a
practice that contradicts with written policy. Policies should be
evaluated on a regular basis, and if necessary, handbooks re-issued
to reflect the preferred practice.
 Caps: In states where accrued and unused vacation is considered
a wage, employers should identify the point when vacation stops
accruing. For example, in California, an accrual cap can prevent a
significant financial impact on an employer when a long-time
employee who rarely took vacation separates from the company.
“Use it or lose it” rollover policies also should be considered (and
evaluated against state law) and articulated in the company
handbook.
Best Practices

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 Provide definition: Employers must be careful to call the pay out
what it is. E.g., if the employer is actually paying out vacation in
order to deter a potential employment claim, the employer might
instead consider giving the same amount of money in exchange for
a release of claims.
 Going into the red: Some employers allow their employees to take
time off that they have not yet accrued. A problem arises when the
employee separates from the company without having earned all of
the vacation taken, leaving a negative balance. Some employers
want to be repaid for the time. Whether that is legally permitted can
depend on the state where the employee works and recovery
typically ranges from being difficult to impossible.
Best Practices

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 Compliance: As always, companies should regularly contact their
employment lawyer to keep abreast of changes in applicable local,
state or federal employment laws.
Best Practices

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 Maria O. Hart
208.562.4893
mhart@parsonsbehle.com
Thank You