On March 9, 2016, Vermont Governor Peter Shumlin signed into law a measure
that will make Vermont the fifth state to require employers to provide paid sick
leave. Vermontfs new sick leave law bears similarities to some
other statesf paid sick leave laws, but has its own unique features. Here are
the key aspects of the Vermont law:
- Phased Effectiveness. Most employers will need to comply
with the law starting on January 1, 2017. However, employers may elect to
establish a waiting period of up to one year, during which employees who are
employed as of January 1, 2017 will accrue sick leave, but will not be
permitted to use it. Small businesses will not be required to comply until
January 1, 2018.
- Coverage. The law applies to all private employers doing
business or operating in Vermont. However, newly established businesses will
be given a grace period, and will not be required to be in compliance until
one year after the hiring of their first employee. In addition, there are
several categories of employees who are not entitled to receive sick leave.
Notably, the Vermont law excludes several employee populations that would
otherwise have presented difficult compliance challenges (and which are not
exempted under some other statesf laws): part-time employees who work less
than 18 hours per week on average; temporary employees who work (or are
scheduled to work) fewer than 20 weeks in a year; and per diem and
intermittent employees.
- Permitted Usage. The Vermont law requires that employees
be permitted to use paid sick leave for several reasons in addition to caring
for their own illnesses or injuries. Specifically, an employee also must be
permitted to use accrued leave for absences that occur because the employee:
- gobtains professional diagnostic, preventive, routine, or therapeutic
health care;h gcares for a sick or injured parent, grandparent, spouse,
child, brother, sister, parent-in-law, grandchild, or foster child [efamily
memberf], including helping that individual obtain diagnostic, preventive,
routine, or therapeutic health treatment, or accompanying the employeefs
parent, grandparent, spouse, or parent-in-law to an appointment related to
his or her long-term care;h
- gis arranging for social or legal services or obtaining medical care or
counseling for the employee or for the employeefs [family member], who is a
victim of domestic violence, sexual assault, or stalking or who is
relocating as the result of domestic violence, sexual assault, or stalking;h
or
- gcares for a [family member] because the school or business where that
individual is normally located during the employeefs workday is closed for
public health or safety reasons.h
Eligible employees also must be allowed to take leave in the smallest
increment that the employer uses to track other absences, but are not required
to allow employees to take sick leave in increments of less than one hour.
- Accrual Rate and Annual Accrual Cap. The Vermont law
requires that employees accrue sick leave at rate of at least one hour of paid
sick leave for every 52 hours worked. The total amount of paid sick
leave that employees must be provided each year is to be phased in gradually.
During the first 2 years the law is in effect (i.e.,between January
1, 2017 and December 31, 2018), employers may limit total annual accrual to 24
hours. Beginning on January 1, 2019, employees must be allowed to accrue up to
40 hours of paid sick leave per year.
- One Year New-Hire Waiting Period. Employers may impose a
one-year waiting period on new employees, during which the new employee must
accrue earned sick time, but need not be permitted to use it. As noted above,
employers also may impose such a one-year waiting period on employees who are
employed as of the January 1, 2017 effective date of the law.
- Carryover, Cap on Annual Usage, and Payout Issues.
Employers must allow employees to carry over any unused, accrued sick hours
from one year to the next, unless the employer chooses to make a payout to the
employee at the end of the year. Employers are permitted to cap the amount of
paid sick leave that an employee may use (regardless of the accrued amount
available) as follows: 24 hours per year between January 1, 2017 and December
31, 2018, and 40 hours per year in 2019 and thereafter. Moreover, an employer
is not required to pay out any unused sick leave hours that remain at the time
of an employeefs separation.
- Compliance Based on Existing PTO Policies and Collective
Bargaining Agreements. Covered employers can comply with the Vermont
lawfs requirements by maintaining a paid time off (PTO) policy or being party
to a collective bargaining agreement that provides employees with any type of
PTO—including sick, personal, vacation, all-purpose and/or general PTO, or
similar types of leave—so long as the relevant policy or agreement (1) allows
employees to use their PTO for all of the reasons allowed by the Vermont sick
leave law and (2) provides an annual amount of PTO equal to or greater than
the amount required by the Vermont sick leave law, either by accruing time at
a rate equal to or greater than the statutory accrual rate or providing a lump
sum of PTO at the start of the year (which need not be carried over year to
year).
Vermontfs enactment is part of an ongoing national trend. With passage of
this law, three of the six New England states will require state-wide paid sick
leave. In addition to Vermont, Massachusetts already requires paid sick leave for most
employees (small businesses are only required to provide unpaid leave), and Connecticut requires paid sick leave for employees in
certain occupations. Also, paid sick leave is required by law in California, Oregon, and many municipalities across the United States.
The Obama administration has been pressing for national action on paid sick
leave as well, including in the ongoing rulemaking to implement an executive order mandating
that federal contractors provide paid sick leave. Indeed, the administration
trumpeted Vermontfs passage of paid sick leave, with President Obama issuing a
statement commending Vermontfs action and calling on Congress to pass national
sick leave legislation; Sharon Block, Principal Deputy Assistant Secretary at
the U.S. Department of Labor, even participated in the Vermont bill signing
ceremony.
Vermontfs new sick leave law adds to the growing patchwork of state and local
laws mandating employer-provided sick leave. Though all of these laws share a
common purpose and many similar aspects (e.g., expanding sick leave usage for
the illness of family members), they differ substantially in key areas,
including the required amount of paid sick leave, the rate of accrual, covered
employee populations, and the ability to rely on existing PTO benefits.
Employers with Vermont operations—or operations in California, Connecticut,
Massachusetts, Oregon, or the many municipalities that have enacted such laws
(notably including New York City, Seattle, Philadelphia, and Washington,
D.C.)—should review their existing sick leave and PTO policies to determine if
any changes are needed to ensure compliance.