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Did the Cost of Sick Employees Just Go Up?

So what IS the deal with the new Washington State Paid Sick Leave Law?

Well, for some Washington employers, the new Paid Sick Leave Law is not much of a “deal” at all. For others, the new requirements won’t have much, if any, impact on them. However, the new burden of revising and administering their sick-leave and PTO policies is bound to cost them a lot, at least indirectly.

Whatever the case…It’s here! Don’t fear! Get used to it!

Employers, maybe this post will help. I know you like “short and sweet” but, as much as I’ve tried, there’s just no getting around it. Here’s the “long” and “bitter” of it and what you need to know…

For starters, so as not to be confused, the paid sick-leave measure is included in the Washington Minimum Wage Act, passed in November of 2016. This paid sick-leave requirement is not to be confused with the Washington State paid family and medical leave law that will begin in 2019.

Here we go…paid sick-leave requirements:

  • Became effective January 1, 2018.
  • Applies to virtually all employers, regardless of your size or number of employees.
  • Covers all “non-exempt” employees – those who are covered under the Washington Minimum Wage Act. This refers to all employees except those whose job duties meet the definition of a bona fide “Exempt” class of positions. They include:  Executive, Administrative, Professional, Computer Professional, or Outside Salesperson.
  • Non-exempt employees also includes those hourly-paid part-timers and full-timers, as well as seasonal, temporary, commissioned inside sales, per diem, and piece rate employees. It’s even possible that people who are paid a salary, but their position doesn’t fulfill the “duties” requirement to qualify for “exempt” status because that class of people must still be paid for their OT work at time & 1/2. (If you have those, that’s a whole other discussion for another time).
  • Employees in positions that DO meet the duties test for exempt classification, per the Washington’s Minimum Wage Act, are NOT entitled to paid sick-leave under the new law.
  • The accrual requirement requires your people to accrue one (1) hour of paid sick-leave for every forty (40) hours they work (or are assigned a location to be on duty). This accrual must begin on the first day of the employment for new employees and they must be allowed to use it starting on the 90th calendar day of their employment.
  • Overtime hours worked must be included in the accrual calculation. But, you don’t have to pay out sick-leave hours at an overtime rate. However, you must pay it out at the employees regular rate of pay. CAUTION:  You DO have to include shift differential, commission, and piece rate when calculating their “regular” rate of pay.
  • There is no limit on the number of hours an employee may accrue in one year.
  • You must allow employees to carryover up to forty (40) hours of unused paid sick-leave from one year to the next. You don’t have to allow more.
  • You’re not required to “cash out” or pay employees for their unused paid sick-leave when they terminate employment. (You can if you want. Just be sure to apply your policy and practice consistently for all).

 

What About My PTO Plan?

  • Your existing paid-time-off (PTO) plan may possibly meet the requirements of the Act, as long as it is at least as generous as the new requirements. But that’s unlikely! You can’t only take into consideration the amount of time (hours) that you must pay for time off. Unless your practice or policy already satisfies all of the notification requirements, it’s safe to say your current PTO plan probably needs a new coat of paint.
  • If you decide to fold in the required paid sick-leave into your existing PTO plan, ensure your plan includes the required number of hours, which may seem like 52 hours for a full-time employee who works all of their hours. But what if someone works more? You probably have employees that work overtime, so your PTO policy would have to account for the hours when calculating their accrual of paid sick-leave. Remember, it is calculated at one hour for every forty hours they work, including OT!
  • Your employees must be allowed to use paid sick-leave for any of the reasons outlined in the law:  Most commonly to care for themselves or a family member, but there’s a host of other reasons!
  • Employees must be allowed to use paid sick-leave in increments that are no greater than the time increments used for your payroll, and those increments cannot exceed one (1) hour.

 

Tracking & Notification Requirements

  • At the start of their employment, you must inform every new employee about their entitlement to paid sick-leave.
  • For existing employees (those on board before Jan. 1, 2018), you must communicate this paid sick-leave entitlement to them by March 1, 2018.
  • You must track the accrual and usage of sick-leave and you’re required to provide at least monthly notification to each individual employee about how much paid sick-leave they accrued, used, and have available. (Think emails, payroll stuffers, or on their pay stubs). Make the notification requirements easier on yourself by using L&I’s forms.
  • You can require employees to provide verification of the reason for their absence (for example, a doctor’s note) but only for absences greater than three consecutive days AND that stipulation must already be included in your policy.
  • You cannot retaliate against an employee for using their paid sick-leave.
  • You may choose to front-load the sick leave as long as it is sufficient to meet the requirements of the law. If you discover it is not, you must have it corrected within thirty (30) days. (There are additional sample forms for that!)

 

Of course, employers can elect to offer a more generous PTO plan than what’s required under the Washington Paid Sick Leave Law. But remember, the new requirements aren’t just about the amount of paid time off you give, they’re also about the required notifications and ongoing communications you must provide.

If you choose to lump the paid sick-leave in with your PTO plan, proceed with caution! Doing so could present an administrative nightmare when it comes to tracking and administering two different types of paid leave under one policy and procedure. Think about how you will ensure compliance with the new law as part of your good ol’ comfy and straightforward PTO plan. If you’re going to go the combined PTO route, you might want to consider treating all of the paid time off (vacation, paid sick-leave, etc.) in the same manner by allowing employees to use their time for any and all reasons, with basically no questions asked. But still, make sure “any and all reasons” really does include all of those reasons outlined in the new law. By choosing this approach, you’d give up some control in exchange for simpler administration!

Believe it or not, in spite of all of these new requirements, there IS NO requirement for you to maintain an actual paid sick-leave policy. You’re only required to ensure your fulfilling all of the new requirements – provide the right amount of time, tell ‘em about it, communicate what they have available each month, and don’t retaliate when they use it. But why not make your life simpler? I suggest you check out the Washington State Department of Labor & Industries sample template for a Paid Sick Leave Policy. It’s a “plug-and-play” proposition.

In the end, there’s a real sense that the onerous requirements of this new law are at least partly designed to steer employers back to the days of having separate and stand-alone policies and procedures for sick-leave, vacation, and holidays. I think I’d opt for that route. But whatever you choose…

“Here’s to Good Health in 2018 Washington Employers!” Your business could depend on it!

I’m full of opinions but I never know which ones are good. And I’m not an employment attorney, so I had to include my disclaimer below:

DISCLAIMER: The comments and materials contained herein are intended to be for informational purposes only. This is not legal advice and is not intended to create or constitute a lawyer-client relationship. Before acting on the basis of any of this information or material, you are advised to consult your employment attorney for legal advice. Any views or opinions presented in this email are solely those of the author and do not necessarily represent those of the company or agency. Neither Brown & Brown Insurance nor EHL Insurance accepts any liability for any damages or other liability arising out of this communication or the reliance upon any of the information provided within.

AUTHOR:  John Bower
Employee Benefits Advisor

(360) 779-4448 ext. 8177

John is an Employee Benefits Advisor, a seasoned Human Resources practitioner, and is curious about enough things to be a little bit dangerous! He’s full of opinions, which are a lot like odors, sometimes their good but other times they stink. John has two teenage boys and a sports fanatical family. GO HAWKS!

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