08.27.2012

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Updates

Introduction

A Seattle ordinance passed in September 2011 requires all but the very smallest employers to provide their employees who work in Seattle a minimum amount of paid sick and safe time, or “PSST.”  Stated most broadly, an employee who is entitled to use PSST may use it for absences because of:

  • an illness, injury or health condition or the need to obtain preventive care (in each case, relating to either the employee or the employee’s partner or family members);

  • certain reasons related to domestic violence, sexual assault or stalking; or

  • a school or workplace/daycare closure by a public official to limit health hazards.

The theory behind the ordinance is that workers who have no paid time off are more likely to come to work when they or their family members are sick, thereby spreading disease and prolonging illnesses and injuries.  The “safe leave” provisions of the ordinance recognize that workers without paid time off find it more difficult to obtain legal, medical and other services relating to domestic violence, sexual assault and stalking.

The ordinance is codified as Chapter 14.16 of the Seattle Municipal Code.  The Seattle Office for Civil Rights has issued a set of interpretive rules and other materials that answer some of the questions that the ordinance leaves open.  The ordinance is effective September 1, 2012.

Important Note:  This Update highlights some of the compliance issues that might surprise employers.  It is not a complete discussion of the potential compliance issues that a given employer might face.  It is also not intended to be and should not be used as a substitute for specific legal advice.  Legal opinions may be given only in response to inquiries regarding specific factual situations.  Subsequent legal developments may affect some of the legal standards and principles discussed.  If legal advice is required, the services of counsel should be sought.

Tips and Traps

1. Employer Location Is Irrelevant

The ordinance requires that PSST be provided to employees who perform work in Seattle.  The ordinance does not distinguish between employees based on where their employer is located.  In fact, under the rules, an employer’s obligations begin even before any of its employees perform work in Seattle; one of the rules requires employers to provide notice to employees who sometimes work in Seattle “reasonably in advance of their first period of work in Seattle.”

Telecommuters who perform their work from Seattle are also covered by the ordinance, even if their employer is located outside of the city.  Conversely, the ordinance does not cover telecommuters who perform their work outside of Seattle for an employer located in the city (unless the telecommuters sometimes enter the city to work, in which case these individuals might be covered as “occasional” employees, as described in section 3).

2. Employer Size Is Highly Relevant

The size of the employer determines the rate at which PSST accrues for eligible employees and the amount of PSST that the employer must allow employees to use and carry over each calendar year.

 Employer Size  Accrual Rate   Use Per Calendar Year  Carryover to Next
 Calendar Year
 

 Tier One
 
more than 4 but fewer
 than 50 FTEs

 1 hour PSST / 40
 hours worked
 40 hours  40 hours

 
 Tier Two
 
at least 50 but fewer
 than 250 FTEs

 
 1 hour PSST / 40
 hours worked
 
 56 hours
 
 56 hours

 
 Tier Three
 
250 or more FTEs

 
 1 hour PSST / 30
 hours worked

 
 72 hours (if separate
 sick leave and
 vacation banks)


 108 hours (if combined
 or universal leave policy)

 
 72 hours (if separate
 sick leave and
 vacation banks)


 108 hours (if combined
 or universal leave policy)

Determining size for purposes of the ordinance involves some unusual counting rules.

Size is determined by full-time equivalent, or “FTE,” not by the number of individual distinct employees.  Thus, an employer with 10 employees, each of whom works 20 hours per week, has five FTEs if, at that employer, “FTE” means “40 hours per work week.”  FTE does not, however, always signify “40 hours per work week.”  The rules state:

      • “Full-time” means an eight-hour day and a five-day week or as full-time is defined, in writing or practice, by the employer.  There is no minimum number of hours for full-time; it is an employer-specific determination.  An employer may define full-time differently for exempt and nonexempt employees.
      • “Full-time equivalent” shall mean the number of hours worked for compensation that add up to one full-time employee, based either on an eight-hour day and a five-day week or as full-time is defined, in writing or in practice, by the employer.

For benefits eligibility or other purposes, some employers define “full-time” as less than 40 hours per work week.  Such a definition will not affect the tier placement of large employers, but it could affect a smaller employer’s “size” for purposes of the ordinance.

“Hours worked” also has a specific meaning under the rules—it means “time that an employee performs work for the employer.”  It does not include paid or unpaid leave.  It does include overtime worked by nonexempt employees.  Salaried exempt employees’ hours are determined based on the “normal work week” for each employee.

All compensated hours that employees work for the employer count for purposes of tier placement, including hours worked by

      • employees who do not work in Seattle;
      • temporary agency employees;
      • employees of other entities (if two or more entities form an “integrated enterprise”); and
      • employees as to whom a business is a “joint employer” (except for certain employee leasing or payroll administration arrangements).

Tier size for a given year is based on “the average number of full-time equivalents paid per calendar week during the preceding calendar year for any and all weeks during which at least one employee worked for compensation.”

3. Any Employee Who Works in Seattle at All Is Potentially Covered

At many employers, paid leave policies do not cover certain part-time employees; for example, paid time off might be offered only to employees who work 20 hours or more per week.  The ordinance does not permit such exclusions; even an employee working in Seattle for 10 hours a week or less can accrue PSST.

Also, an employee need not regularly work in Seattle to be covered by the ordinance.  Employees who work in Seattle on an occasional basis are covered if they perform more than 240 hours of work in Seattle in a calendar year.

Note that “occasionally in Seattle” employees, who must work 240 hours in Seattle in a year in order to obtain coverage, are distinct from employees who work less than 240 hours but only work in Seattle.  An employee who works exclusively in Seattle is covered by the ordinance, even if he or she doesn’t work much in a calendar year.

4. PSST Accrues Differently Than Paid Leave Accrues Under Some Employer Policies

Many employer policies do not provide paid leave to employees until they have worked for the employer for a certain amount of time.  PSST, however, begins accruing as soon as an employee starts working.  (The employer can, however, require employees to wait until their 180th day of employment to begin using their accrued PSST.)

Employer-defined paid leave policies commonly provide a fixed amount of paid leave to full-time employees and a prorated amount to part-time employees.  PSST, however, accrues based on the number of hours worked, not on “full-time” or other status.  Employers who “frontload” an employee’s leave bank by providing a block of leave time at the start of a calendar year will have to monitor the hours that their employees work to ensure that the frontloaded amount provides each employee with all of the PSST to which he or she is entitled (one hour of PSST per 30 or 40 hours worked, depending on an employer's tier size).

Caps on PSST accruals appear to be prohibited, even if employees end up “accruing” PSST that they can neither use nor carry over to the following year.  Employers can, however, limit use and carryover of PSST in amounts that vary depending on the employer’s tier placement.

5. There Are Rules About Using PSST

As noted, employers can limit the amount of PSST that an employee can use in a given calendar year, for example, to 40 hours in Tier One, 56 hours in Tier Two, and either 72 or 108 hours in Tier Three (depending on whether the employer has a combined or universal leave policy).

Importantly, the relevant year for PSST purposes is the calendar year—January 1 through December 31—not any other 12-month period.  This is true even if the employer normally grants paid time off on an employee’s anniversary date, uses a rolling 12-month period for Family and Medical Leave Act (“FMLA”) leave tracking, etc.

Under the rules, employees are entitled to use their PSST during times that they are scheduled to perform work in Seattle.  It appears, therefore, that an employer could adopt a policy permitting only such use.  In many cases, however, this would create daunting logistical obstacles to enforcing the policy for “occasional” Seattle employees.

Because employees are entitled to use PSST in circumstances that an employer’s attendance and leave policies might not otherwise cover, employers should educate themselves and their management teams on the broad range of circumstances in which an employee can use PSST.  For example, the ordinance entitles employees to use paid sick leave “to provide care of a family member . . . who needs preventive medical care.”  “Family member” includes parents-in-law.  Unlike the Washington Family Care Act, which entitles employees to time off for a parent-in-law only when the parent-in-law has a serious health condition or an emergency condition, the Seattle ordinance does not always require that the parent-in-law suffer from a current medical condition for the employee to be eligible for PSST.

6. There Are Rules About Pay During PSST

The general principle is that an employee is entitled to be paid while using PSST at the rate at which the employee would have been paid had he or she worked as scheduled.  Initially, the Office for Civil Rights proposed that an employee would also receive any overtime or other premium that the employee would have earned during the lost time.  The final rule, however, states: “For nonexempt employees who use paid sick/safe time for hours that would have been overtime hours if worked, employers are not required to apply overtime standards to an employee’s hourly rate of pay.”

The ordinance says that employees are not entitled to lost tips or commissions during PSST usage.  The rules, however, require that tipped employees and employees who are compensated on a piecework or commission basis must, during PSST, be paid at the greater of their base pay rate (if any) or the state minimum wage rate.

Note that the ordinance requires employers to pay an employee during PSST only for time that the employee was scheduled to work.  (Special rules apply to indefinite shifts and on-call time.)

7. Attendance Policies Do Not Apply to PSST

The ordinance and rules make it clear that an absence that qualifies as PSST can’t be the basis for any adverse action against the employee, even if the employer has a so-called “no fault” attendance policy.

8. Most Reasonable Notice Requirements Are Permissible

Borrowing conceptually from the FMLA, the ordinance permits employers to require compliance with their usual and customary notice requirements for absences if the requirements are not unduly burdensome and don’t interfere with the purposes for which PSST is taken.  The rules distinguish between foreseeable and unforeseeable leave and generally require employees to provide as much advance notice as possible under the circumstances.  However,

        • an employer can make inquiries to determine whether an absence qualifies as PSST and can require employees to state whether they are using time off for PSST purposes, but the employer can’t insist that the employee describe the nature of the illness or other condition necessitating the absence;
        • 10 days’ advance notice arguably is the maximum amount of notice that an employer can require for any PSST absence; and
        • the employer must make exceptions to its notice rules if circumstances prevent an employee from complying with the employer’s usual and customary notice procedures.

9. Some Reasonable Documentation Requirements Are Not Permissible

Employers who habitually ask for documentation confirming the need for sick leave will have to rethink their practices after September 1, 2012.  The ordinance prohibits employers from requiring employees to provide documentary proof of their need for PSST until they have been absent for three consecutive days.  (The rules recognize a necessary exception for clear instances or patterns of abuse.)

An employer who does not offer health insurance to an employee must pay for part of the cost of obtaining any required documentation.

Documentation suffices under the ordinance if it states that time off is needed for a purpose covered by the ordinance.  There are very few situations where the employer can require additional details.  The employer can, however, ask for additional detail if another law authorizes such inquiry.  (The FMLA, for example, often would permit the inquiry.)  According to the rules, if the employee refuses to respond to such a request, the employee’s entitlement to the benefits of the other law may be affected.  The employee would, however, still be entitled to the benefits of the Seattle ordinance.

10. Tier Three Employers Must Evaluate Potential PTO Policies

The ordinance imposes a rather dramatic penalty on Tier Three employers who offer paid time off that can be used for any purpose, as opposed to the more traditional separate sick leave and vacation banks.  These employers must allow 108 hours of PSST usage and 108 hours of PSST carryover per year—50% more than Tier Three employers who have separate sick leave and vacation policies.  In fact, a Tier Three employer who offered its Seattle employees 100 hours of PTO (useable for any purpose) would be out of compliance with the ordinance, but it could comply by changing its policy to offer a smaller amount (72 hours) of less flexible sick leave (useable only for sick/safe purposes as defined by the ordinance).

© 2012 Perkins Coie LLP