Playing by the Rules: NYC Proposes Amendments to Enforcement Rules for Earned Safe and Sick Time Act

When New York City amended its Earned Safe and Sick Time Act (NYC ESSTA) two years ago to align with New York State’s Paid Sick Leave Law (NYS PSLL) more closely, Big Apple employers found themselves with limited formal guidance regarding the new law.

Thanks to several recently proposed amendments to the NYC ESSTA enforcement rules (the “proposed amendments”) from the city’s Department of Consumer and Worker Protection, this gap might soon be closed.

As we previously reported, the 2020 amendments to the NYC ESSTA expanded both employer obligations and worker protections thereunder, providing new paid leave obligations for certain small employers, expanding the paid leave obligations of certain large employers, and adding new notice requirements. While the proposed amendments address these changes and more, this Insight highlights six significant updates for New York City employers of all sizes to consider.

Employer Coverage: Employee Threshold Calculations

Under the NYC ESSTA, an employer’s obligations vary considerably depending on the size of its workforce. The proposed amendments provide new guidance on counting the size of the workforce, clarifying that the threshold calculation must include all employees nationwide, which aligns with guidance issued in connection with the NYS PSLL. New York City employers should therefore be mindful to properly account for all employees across the country, not merely those employed in the city, when determining their NYC ESSTA obligations.

As to “how,” rather than relying on the employer’s average number of employees per week, the proposed amendments state that an employer’s obligations are determined by counting the highest total number of employees concurrently employed at any point during the calendar year to date. In practice, this means that while an increase in an employer’s workforce may change the employer’s obligations during that calendar year, a reduction in the employer’s workforce will not reduce those obligations until the following calendar year. For example, an employer with four employees at the start of the calendar year then hires three new employees in April. Three months later, in July, the employer lays off four employees. Under the proposed amendments, this employer will need to begin paying paid leave benefits (as required for employers with five or more employees) to all employees in April and must continue to do so for the eight remaining months of that calendar year, even when the workforce dips below the five-employee threshold for paid leave obligations.

Employee Coverage: “Employed for Hire Within New York City”

Only those employees who are “employed for hire within the City of New York” may accrue or use benefits under the NYC ESSTA. An employee need not perform all work within the city. Instead, an employee who regularly performs or is expected to perform their work within the city, including work that is performed through telecommuting, will also qualify for coverage under the law. The proposed amendments provide several examples of types of regular work that will or will not entitle an employee to benefits under the law:

• An employee who lives and works out of state but is required to attend daylong meetings in New York City twice a year is not “employed for hire within the City of New York.”
• A retail employee who lives and primarily works out of state may be “employed for hire within the City of New York” if the employer estimates that, for at least some months during the calendar year, the employee will work one to three daylong shifts per month in New York City. Such an employee must accrue and be allowed to use leave benefits for the hours worked in New York City.
• A construction employee who performs 300 hours of work on her employer’s Queens worksite during the first two months of the year, who then performs 450 hours of work on her employer’s Long Island worksite during the next four months and becomes ill while working on the Long Island worksite is “employed within the City of New York” during the first two months of the year and is entitled to accrue and use leave at that time. The employee is not “employed within the City of New York” while working on Long Island, so she may not accrue or use NYC ESSTA leave during the next four months (including when she becomes ill, though she may be eligible for NYS PSLL).

Although the examples do not specifically address telework arrangements in discussing employees who are not “employed for hire within the City of New York,” the proposed amendments confirm that employees who perform all work outside of the city, “including telework,” are not covered under the NYC ESSTA. Applying this principle to the examples included in the proposed amendments suggests that employees who have hybrid work arrangements under which they regularly work within the city (either physically in a New York City office or teleworking from their New York City home) would be considered “employed for hire within the City of New York” during those hours in which they are in New York City.

Importantly, this guidance may prove useful to employers as they consider whether employees work within New York City for purposes of other laws, including the city’s new pay transparency law.

Accrual/Use: Frontloading and Carryover

Both the NYS PSLL and NYC ESSTA require employers to permit employees to accrue up to either 40 or 56 hours of leave, depending on their workforce size. Both laws also permit employers to frontload these benefits to employees at the beginning of the year. However, one clear distinction between the two laws—which the proposed amendments seek to codify—is what limitations, if any, an employer has on the number of hours that an employee may carry over from one year to another. Under the proposed amendments, employers may cap that number at 40 or 56, as applicable. The proposed amendments do not change an employer’s ability to avoid NYC ESSTA’s carryover requirements if they have a policy of (1) paying out unused time at the end of the calendar year and (2) providing employees with frontloaded leave benefits at the beginning of the next calendar year. In contrast, under the NYS PSLL, employers may not cap the amount of unused benefits that employees may carry over, regardless of whether they use a frontload or accrual system, but an employer can give employees the option to elect payment at the end of the year in lieu of carrying over unused time.

Although the carryover requirements differ, it is important to note that both the NYS PSLL and NYC ESSTA permit employers to cap the amount of leave employees may use each year at 40 or 56 hours, as appropriate.

Accrual/Use: Corporate Transactions

The proposed amendments confirm that when a business sale, transfer in corporate ownership, or change in subcontracting relationship occurs, employees are entitled to retain all benefits accrued before the transaction and—provided such employees continue to perform work within New York City for the successor employer or subcontractor—use such benefits post-transaction, even if the successor employer’s workforce is smaller than the original employer such that it would not otherwise have to provide such benefits. Employers that change employees’ leave balances as a result of a corporate transaction violate the NYC ESSTA, and successor employers, original employers, and any joint employers may be held individually and jointly liable for failing to properly transfer employees’ benefits.

Accrual/Use: 120-Day Waiting Period

The proposed amendments conform to the change in the law that eligible employees will not be subjected to a 120-day waiting period before using their leave. Instead, employees can use the time starting from “the first day of employment and on the first day of each new calendar year.”

Notice: Pay Statement Requirements

The proposed amendments set forth additional details pertaining to the information that employers must provide on employee pay statements or other written documents regarding employee accrual and use of benefits under the NYC ESSTA. Specifically, the proposed amendments state that such documentation must identify:

• the amount of leave the employee accrued and used during each relevant pay period;
• the employee’s total balance of accrued leave; and
• what amount of that balance, if any, is available for use during the calendar year.

Employers that use an electronic system to issue pay statements or other documentation may meet these requirements by electronically alerting the employee each pay period of the relevant information, making the relevant information readily accessible within an electronic system outside the workplace, and maintaining accrual, use, and balance information for any past pay period in the electronic system.

What Employers Should Do Now

The Department of Consumer and Worker Protection accepted comments and held a public hearing regarding the proposed amendments on November 23, 2022. Epstein Becker Green will continue to monitor these developments, but in the meantime, employers in New York City should begin reviewing their paid safe and sick leave policies to identify what compliance gaps they may have if and when the proposed amendments are finalized and (if they have not yet already) update pay statements and relevant electronic systems as necessary to provide employees with the required information.

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For more information about this Insight, please contact:

Nancy Gunzenhauser Popper New York 212-351-3758 npopper@ebglaw.com

Genevieve Murphy-Bradacs New York 212-351-4948 gmurphybradacs@ebglaw.com

Naomi C. Friedman, a Law Clerk – Admission Pending (not admitted to the practice of law) in the firm’s New York office, contributed to the preparation of this Insight.