What Business Owners Need To Know About New York City’s Earned Sick Time Act (“ESTA”)

On February 26, 2014, the New York City Council passed an amendment to the City’s paid sick leave law known as the Earned Sick Time Act which was enacted in June 2013 (“ESTA” or “6/13 ESTA”). This amendment to ESTA (“2/14 Amendment”) became in effect on April 1, 2014. Eligible employees are entitled to start using earned sick leave beginning July 30, 2014.

Key Features of the 2/14 Amendment to ESTA

The 2/14 Amendment has substantial impact on the legal obligations of small businesses in New York City. A summary of the most important features are summarized below.

1.    Expansion of Employee’s Right to Paid Sick Leave

The original 6/13 ESTA only applied to employers with 15 or more employees.  However, the 2/14 Amendment extends the right to paid sick leave to employees working in New York City for private employers with 5 or more employees. Consequently, all New York City private employers with 5 or more employees must now provide up to 40 hours of paid sick time to their employees each calendar year. Private employers with less than 5 employees must also provide unpaid sick leave.

2.    Elimination of Phasing-In of Coverage

Under the 6/2013 ESTA, this mandatory paid sick leave requirement would not apply to employers with 15 to 19 employees until 2015, and businesses with less than 15 employees were exempt from such requirement. However, the 2/14 Amendment broadens the application of the mandate by requiring all private employers with 5 or more employees to provide paid leave beginning April 1, 2014.

3.    Removal of Exemptions for Manufacturing Sector

The 6/13 ESTA exempted certain employers in the manufacturing sector (e.g., plants, factories and mills, as well some bakeries, candy stores, custom tailors and similar establishments that manufacture products on site) from having to provide paid sick leave. The 2/14 Amendment eliminated this exemption altogether, and therefore all employers in the manufacturing sector are now subject to the same paid sick leave requirements as non-manufacturing businesses.

4.    Expansion of Definition of “Family Member”

Under the ESTA, workers can use their sick time to care for themselves as well as sick family members. The 6/13 legislation would have only permitted paid sick leave to be used to care for parents, spouses, and children. The 2/14 Amendment now allows employees to use their paid sick time to care for parents, spouses, domestic partners, children, grandparents, grandchildren, and siblings (which now include half siblings, step siblings, and adopted siblings).

5.    Expansion of Employer’s Compliance Obligations

The employer’s compliance obligations have increased under 2/26/14 Amendment.  All employers must maintain records of compliance with the ESTA for 3 years under the 2/14 Amendment (as compared with 2 years under the 6/13 ESTA), and employees alleging violations will have up to 2 years to file a complaint (as compared with 9 months under the 6/13 ESTA).

The current ESTA also requires employers to respond to a complaint filed with the Department of Consumer Affairs, or other applicable agency, within 30 days of receiving written notification of the complaint.

Overview of New York City’s Earned Sick Time Act (“ESTA”)

Which Employers Are Covered Under ESTA?

The ESTA applies to:

  1. private, non-government employers within New York City, including any person, corporation, limited liability company (LLC.), or business entity employing any individual in any occupation, industry, trade, business, or service;
  2. employers who employs 5 or more employees each of whom works more than 80 hours per year in New York City; and
  3. If an owner/principal owns a business which is part of a chain, group, or which has multiple locations engaged in the same business, and the owner/principal owns at least 30 percent of each establishment or location, or if the owner/principal of multiple establishments operates multiple locations under a franchise agreement with the same franchisor, the total number of employees performing work at all locations of the group of establishments are counted for purposes of coverage under the ESTA.

Which Employees Are Covered?

The ESTA applies to employees:

  1. who are employed by a private (non-government) “employer” within New York City;   and
  2. each of whom works more than 80 hours in a calendar year (including domestic workers), whether full-time or part-time.

Employee’s Right of Accrual of Paid Sick leave

A.    Domestic Employees

A domestic employee is one who works in his/her employer’s home.

Employers who have one or more domestic workers who have been employed at least one year and who work more than 80 hours a calendar year must provide paid sick leave. Domestic workers are entitled to 2 paid sick days after one year of employment with the employer, in addition to the paid day(s) of rest mandated under Section 161(1) of the New York State Labor Law.

B.    Non-Domestic Employees

Each non-domestic employee accrues at least 1 hour of sick time for every 30 hours worked, up to a maximum of 40 hours in a calendar year. A “calendar year” is defined as a regular and consecutive 12-month period, as determined by the employer.

Additional Rules for Accrual and Use of Sick Time

For all eligible employees, sick time begins to accrue upon commencement of employment OR on the effective date of the ESTA (i.e., April 1, 2014), whichever is later.

Regardless of when the time accrues, an employee may not use sick time until after 120 calendar days following commencement of his/her employment, or 120 calendar days following ESTA’s effective date (April 1, 2014), whichever is later.

Unused sick time could be carried over to the following calendar year. However, employers are not required to allow employees to use more than 40 hours of sick time in a given year.

Instead of permitting employees to carry over sick time, employers may opt to pay an employee for unused sick time at the end of the calendar year, so long as payment is made on or before the first day of the following calendar year.

There is no entitlement for payment for accrued, unused sick time upon termination (or resignation) of employment for any reason.

Employers are permitted to establish requirements for the use of sick time, including the minimum increments of time that must be used when exercising sick time, within identified parameters.  An employer may not establish a minimum increment that is larger than four hours per day.

Paid sick time is paid at the employee’s regular rate of pay.

Purposes for Which Sick Time Could Be Used Under the ESTA

An employee is entitled to use sick time for absence from work due to:

  1. such employee’s mental or physical illness, injury, health condition, need for medical diagnosis, care, treatment, or need for preventive medical care; or
  2. care of a family member who needs mental or physical illness, injury, health condition, or need for medical diagnosis, care, treatment, or preventive medical care; or
  3. declared public health emergencies, including closure of an employee’s place of business by order of a public official due to a public health emergency, or such employee’s need to care for a child whose school or childcare provider has been closed by order of a public official due to a public health emergency.

Under the 2/14 Amendment, a family member may include the employee’s parent, spouse, domestic partner, child, grandparent, grandchild, and sibling (half siblings, step siblings, and adopted siblings).

Employer’s Right to Advance Notice from Employee

Employer may require an employee to provide advance notice of up to 7 days for foreseeable sick leave. If a leave is not foreseeable, employee can be required to provide notice as soon as practicable.
If the sick leave is longer than 3 consecutive work days, employers may require documentation from a licensed health care provider confirming the need for that amount of leave.  Employer may not, however, require documentation that specifies the nature of the medical condition.
Employer may require employee to provide written confirmation that they used the sick time for the purposes permitted by the ESTA.

The ESTA does not prohibit an employer from taking disciplinary action, up to and including termination, against an employee who uses sick time for purposes other than those permitted under ESTA.

Employer’s Notice and Recordkeeping Obligations

Notice To Employees

An employer must provide an employee, at the commencement of employment, with a written notice of such employee’s right to sick time under ESTA, including the accrual and use of sick time, the calendar year of the employer, employee’s right to be free from retaliation and to bring a complaint to the department. The mandatory notice must be in English and the primary language spoken by the employee, provided that the Department of Consumer Affairs has made available a translation of such notice in that language.

The same written notice described above must also be conspicuously posted at an employer’s place of business in an area accessible to employees.

Retention of Records of Compliance

Employers are required to retain records documenting compliance with ESTA for a period of 3 years.

Additional Prohibitions Against Employers

Employers may not:

  • retaliate against an employee for exercising rights under ESTA;
  • interfere with an employee’s rights under ESTA;
  • require an employee to work additional hours to make up for the use of sick time;
  • condition the use of sick time on an employee’s ability to obtain a replacement worker to cover the hours during which such employee is utilizing sick time; or
  • require an employee to disclose the specific details related to the medical condition as a prerequisite of using sick time (and any information so obtained must be treated as confidential, and may not be disclosed without the written permission of the affected employee or as required by law).

Enforcement and Penalty

An aggrieved employee has the right to raise a complaint with the Commissioner of the Department of Consumer Affairs within 2 years from the date that the individual knew or should have known of the alleged violation. The Department of Consumer Affairs is granted the power to investigate, render decisions and orders, impose civil penalties for violations, and to order equitable relief and the payment of monetary damages.

The ESTA establishes civil penalties payable to the City, which must not exceed $500 for the first violation (with increased penalties for additional violations). Additionally, the ESTA provides schedules for determining appropriate monetary relief that may be awarded to an aggrieved employee for various violations (including failure to compensate for sick time, denial of sick time, retaliation, or unlawful termination, etc.). The Department of Consumer Affairs may make rules in the future that provide for other remedies and penalties, including civil or criminal actions or proceedings.

As a compromise to the concerns expressed by small businesses prior to the passage of the 2/14 Amendment, a 6-month grace period was allowed for employers with 5 to 19 employees. This means that if a violation of the ESTA occurs prior to October 1, 2014, employers with 5 to 19 employees will not be subject to civil penalties. No such grace period is provided to employers with 20 or more employees.

For additional information, you may visit the website of the New York City Department of Consumer Affairs at the link below: