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Gauging the Health of Sick-Leave Mandates Adopted by Some Municipalities in NJ

Cities and towns across the state have implemented sick-leave laws, but business groups are taking their objections to court

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A national and state-level push to require paid sick leave at most businesses has led several New Jersey cities and towns to adopt sick-leave laws in the past two years, and the Legislature is considering passing a bill as well. But business groups are suing to block the new local statutes, arguing that the mandates unduly burden small businesses and conflict with the benefits most midsize and larger businesses already provide.

The New Jersey Business and Industry Association, the state Chamber of Commerce, and four other industry associations headquartered in Trenton filed suit this week to block a sick-leave law that voters in the capital city overwhelmingly approved in November. The law went into effect Wednesday.

Nine towns have adopted similar laws targeting low-paid service industries in the past two years, (most recently, Bloomfield, this week), and the Assembly could vote this month on a bill (A-2354, that would require companies to let their employees accrue paid sick time.

The lawsuit asks a judge to block Trenton’s new law because it extends local control to issues the state has jurisdiction over, interferes with employee contracts, and is impermissibly vague, among other claims.

But criticisms of the law by the NJBIA and the other plaintiffs have focused on what they describe as the law’s practical costs, including the administrative burden of tracking sick-leave hours accumulated and worked.

“The bill provides for record-keeping in hour increments, and for records to be held up to five years. That's an extremely burdensome task for a business of any size, but in particular small businesses,” NJBIA president Michele Siekerka said. “It accrues by the hour, it can be taken by the hour, and you have to report it by the hour.”

Sick-leave mandates can be particularly taxing for businesses that have transient workers, who may for example be absent for months while still maintaining a reserve of unused sick hours.

“Let's say they're seasonal, so they work for a season and they're accruing this time. When they come back the next season, they could immediately take all that time off. So it's very, very challenging on how you run a workforce,” she said.

Siekerka said her organization’s surveys find that 70 percent of New Jersey businesses already have some type of paid time off. Yet even they have new costs when a new sick-leave law is passed, she said.

“They're now going to have to rejigger their entire system to match the system that is being mandated,” she said. “So now you've got expenditures in terms of revamping your technology, training people, etcetera.”

Other concerns are anti-retaliation provisions, which Siekerka said put bosses at risk of being sued when they discipline workers suspected of abusing sick time, and a ban on requiring employees to find replacements when they are out sick.

The latter provision “puts an onerous burden on an owner of a business who, on the morning of a day they're opening their shop, has to scurry to make calls to find a replacement, in addition to all their other functions as a business owner,” she said. “Growing up, I was a bartender. If I had to call out for my shift, I'd call my colleagues and find someone to cover it. And I didn't think that was so much of a burden. I thought that was my loyalty to my employer to make sure that my employer has the shift covered.”

A simple formula

Sick-leave laws gained new prominence in January when President Obama, in his State of the Union speech, asked Congress for a bill that lets every worker earn seven paid sick days a year. Locally, the New Jersey Working Families Alliance in Newark has campaigned for municipal sick-leave laws and is pushing for the state bill.

Working Families executive director Analilia Mejia rejected Siekerka’s criticism. She defended retaliation provisions, saying studies show abuse of sick leave is rare and, in any case, the new Trenton law allows workers to accrue only up to three days a year at small firms or five days at companies with at least 10 workers. (The state bill would require five or nine days.)

“I just call into question, with someone taking three days over the course of the year in order to care for themselves -- that's abuse?” Mejia said. “Are employers now doctors, that get to certify whether someone is ill, or family member or child is ill?”

Requiring the employer rather than the employee to find a replacement makes sense because the employer is more likely to know all his workers’ contact information, skills, and availability, and can decide whether a replacement is needed at all, she said.

Mejia called “incredible” the argument that businesses will have difficulty tracking their employees’ accrued and used sick-leave hours, given that they already have to track workers’ hours to do payroll and pay taxes.

“(It’s) one extra line on an Excel spreadsheet, in which quite frankly the only thing you're doing is saying, for every 30 hours’ work, you get an hour (of leave),” she said. “It is really easy. The formula is actually very simple. So that's a disingenuous argument, I would say.”

In addition to Trenton and Bloomfield, similar paid sick-leave measures have become law in East Orange, Jersey City, Irvington, Montclair, Newark, Passaic, and Paterson. The municipal strategy has allowed Working Families to circumvent Gov. Chris Christie, who at a town hall Wednesday said that mandatory paid sick-leave leads to job losses.

Asked whether the state bill was headed for a certain Christie veto, Mejia made the case that both parties should favor paid sick leave.

“Allowing workers to have time to care for themselves or their families is something that crosses the aisle. It's not a Democrat phenomenon to get sick or to have a child get sick. Republicans catch the flu too,” she said. “For some families, especially those working at minimum wage, losing a couple days' work shorts their weekly paycheck and has a spiraling effect. It's a very minimal ask for a very big benefit for public health and economic stability.”

Allegations of overreach

The lawsuit against the city of Trenton was filed in Mercer County Superior Court on Monday by the NJBIA, Chamber of Commerce, New Jersey Food Council, New Jersey Restaurant Association, New Jersey Retail Merchants Association, and National Federation of Independent Businesses. It asks for an injunction blocking the law. A hearing is scheduled for today, but may be delayed because of inclement weather.

“The city of Trenton does not have the legal authority to implement this ordinance,” said the associations’ attorney, Christopher Gibson of Archer & Greiner. “Trenton’s mandatory paid sick leave ordinance is vague, ambiguous, and contrary to New Jersey law and impossible to interpret, administer, or implement. For these reasons the ordinance must be struck down.”

The suit argues that the municipal police powers under which the law was authorized do not extend to issues of general and statewide significance, like employee-employer relationships. By targeting any worker who works at least 80 hours a year in Trenton, the law also impermissibly regulates companies that are based in other towns, the suit says.

The state oversees sick-leave rules, as demonstrated by the Temporary Disability Benefits Act, Family Leave Act, and proposed paid sick-leave bill, and thus preempts municipal laws, the complaint contends.

Gibson argues that the new sick-leave benefit also amounts to an increase in the minimum wage; that it violates due-process rights because it affects workers based primarily outside of Trenton and “arbitrarily exempts” government workers and some union employees; and that some of its definitions and employer requirements are unconstitutionally vague, among other claims.

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