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  • Beware of the Halloween Surprise: Final Rules for the Portland Sick Leave Ordinance Include Hidden Traps: Questions and Answers

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Beware of the Halloween Surprise: Final Rules for the Portland Sick Leave Ordinance Include Hidden Traps: Questions and Answers

Submitted By Firm: Miller Nash LLP

Contact(s): Michael Porter, Susan Stahlfeld

Author(s):

Jeffrey Chicoine and Kathryn Kammer

Date Published: 11/13/2013

Article Type: Legal Update

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On November 1, 2013, Portland adopted final rules for implementing the Portland Sick Leave Ordinance. Perhaps inspired by Halloween pranks, the final rules include three "traps" for the unwary by expanding coverage and requirements that a reading of the ordinance might not lead you to expect. The ordinance goes into effect January 1, 2014.

First, the final rules require that all employees accrue "Sick Time" from the date of hire or the January 1 effective date. This requirement appears to contradict terms in the ordinance, which states that accrual begins only after an employee has worked 240 hours in a calendar year. And this portion of the final rules is contrary to typical employer practices of beginning benefit accrual only after an employee meets eligibility standards.

Second, the final rules make the 240-hour calendar-year requirement a one-time test and not one that must be satisfied each year. This is contrary to similar work requirements in state and federal leave laws that must be met each year.

Third, under the final rules, employer sick-leave or paid-time-off ("PTO") policies are deemed compliant with the ordinance if the employer provides "Sick Time" that "equals or exceeds the requirements of the Ordinance." Employers should therefore adjust their current sick-leave or PTO policies to ensure that available time off for new hires satisfies the obligations discussed above.

Following are some questions and answers about key employer obligations under the Portland Sick Leave Ordinance and final rules:

1. How much Sick Time must be provided?

  • All employers must provide one hour of Sick Time for every 30 hours of work performed by any employee (including overtime work).
  • Salaried overtime-exempt employees earn Sick Time at a presumed 40 hours per week or their regular workweek if less than 40 hours per week.
  • Employers can cap accrued Sick Time at 40 hours, but are permitted to allow for more accrual. If an employer plans to cap Sick Time, we recommend adopting clear language that describes the cap as part of the employer's policy.
  • The final rules require that employers give employees notice on a quarterly basis of the amount of accrued and unused Sick Time available for use by that Employee.

2. Is the Sick Time paid or unpaid?

  • Paid Sick Time must be provided by employers of six or more employees.
  • Unpaid Sick Time must be provided by smaller employers.

3. Which employers are covered?

Only private employers are covered. Employers excluded from coverage are all public corporations and public entities other than the City of Portland.

4. What employees are covered?

  • All employees working in Portland accrue Sick Time for time spent working in Portland.
  • Telecommuting from the city: Any employee who works from home in the city is covered even if the employer is outside the city.
  • Temporary workers are covered (for the purposes of the ordinance, however, temps provided by a staffing agency are considered employees of the staffing agency).
  • Out-of-city employees working in Portland: Employees traveling to or conducting business in the city earn the benefit for the time spent in the city.

5. What employees are NOT covered?

  • Employees working outside the city even if the employer is located in the city. This includes telecommuters working from homes outside the city even if the employer is located in the city.
  • Employees based outside the city (1) who are simply passing through the city and do not stop in the city "as a purpose of their work," and (2) who make only incidental stops (eating a meal, purchasing gas, changing a flat).
  • Independent contractors (not defined).
  • Work-study participants under 42 USC chapter 2753.
  • Railroad workers.

6. What if an employee is transferred?

It depends on where the employee is transferred. If the employee's new location is still within the city, the employee keeps all the Sick Time that he or she accrued before the transfer. If the employee is transferred to a location outside the city, he or she loses the right to use Sick Time, but the employer must keep records of the accrued time for two years. If the employee transfers back to the city within those two years, his or her accrued Sick Time is reinstated.

7. When does accrual of Sick Time start?

Accrual starts on the date the ordinance goes into effect (January 1, 2014) or, if hired after that date, the date of hire.

Be careful here. The final rules and the ordinance have different definitions of the term "Employee," and these differing definitions affect the date on which Sick Time accrual begins. Under the ordinance, an employee is an individual who has worked at least 240 hours in a calendar year, and therefore, arguably, workers (current and new) would not begin to accrue Sick Time until they have completed 240 hours of service. In contrast, the final rules require that all employees accrue Sick Time from date of hire or the January 1 effective date, regardless of whether they have met the 240-hour requirement for eligibility—in short, under the final rules, there is no waiting period for accrual, and an employee begins accruing Sick Time well before he or she is eligible to use it. Until there is more clarity on application of the ordinance and final rules, we advise that you follow the final rules and begin accrual for employees before they reach the 240-hour requirement.

8. When can an employee use Sick Time?

After the employee has worked 240 hours in a single calendar year and 90 calendar days after his or her date of hire. Once the employee has met these two requirements, he or she can use Sick Time for a qualifying absence as soon as it is accrued. But the employee may use only 40 hours of Sick Time per year, unless the employer permits use of additional Sick Time.

9. How much does the employer pay an employee for Sick Time?

The same base hourly rate of pay that the employee would have earned during the Sick Time.

Employees who are paid base wage plus piece rate, tips, or commission accrue and are paid for Sick Time based on the base wage.

An employee's annual salary is divided by 52, and the result is divided by the number of hours in the employee's normal workweek.

10. Can an employee carry over accruals from year to year?

Yes. An employee may roll over up to 40 hours of unused Sick Time from year to year. But the employee may be restricted to use only 40 hours of Sick Time in a calendar year. Therefore, for example, if an employee carries over 40 hours of unused Sick Time into 2015 and he or she uses all 40 hours for time off, he or she will continue to accrue additional Sick Time in 2015, but the employer is not required to permit the employee to use those new accrued hours until 2016.

11. What can Sick Time be used for?

Sick Time can be used when the employee (1) is "scheduled to perform work in the city" and (2) needs time off for any medical diagnosis, treatment, or care of the employee or family members, leave under the state domestic violence leave law (ORS 659A.272), if the employer is closed for public health reasons or to care for a child whose school is closed for public health reasons.

12. How much Sick Time can an employee use at one time?

An employee can take Sick Time in increments of one hour and to cover all or part of a shift. If it is "physically impossible" for the employee to work only part of a shift, the employee may be charged with the full day of Sick Time usage.

13. What kind of notice can an employer require from an employee?

An employer may establish a policy or standard requiring notice of use of Sick Time "as soon as practical." And if a policy is established, it must be in writing.

14. Can medical documentation be required?

Yes, it may be required for absences of more than three consecutive days, including but not limited to a note from a health care provider or a signed personal statement at the employer's cost to the extent not covered by insurance.

15. Does an employer need to pay out unused Sick Time at separation of employment?

Nothing requires an employer to pay for unused Sick Time on separation. We recommend implementing a policy that makes this clear.

16. Is notice or a posting required?

Yes, a posting is required. No sample poster has yet been published.

The employer must also provide a written notice about the ordinance to all employees no later than the first pay period in 2014 or for new employees no later than their first pay period. The notice can be included in a paycheck, sent by e-mail, or made available through "accessible online programs."

The posting and notice must inform employees of "their entitlement to Sick Time; the amount of Sick Time and the terms of its use guaranteed under the Ordinance; the prohibition of retaliation against Employees who request or use Sick Time; and an Employee's right to file a complaint if Sick Time as required by the Ordinance is denied by the Employer, or if an Employee is retaliated against for requesting or taking Sick Time."

17. Is there a record-retention requirement?

The employer must retain records documenting hours worked and Sick Time accrual and use for two years.

18. What should an employer do now?

An employer with a current policy should review it and possibly upgrade it to make sure that it complies with the Portland ordinance and rules.

An employer with no policy will need to comply with the ordinance and start tracking time accrued.

The employer should look for the notice to be published, and then post it at the workplace.

An employer that uses a payroll processing service should check with the service. The employer should call us if it needs help in complying with the ordinance.

This is not a comprehensive list of all obligations and rights under the ordinance and rules.

 

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