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Judge Upholds Municipal Sick-Leave Laws, Clears Way for Proliferation

Business associations argue that letting towns make own laws would create statewide patchwork of rules and regulations

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The town-by-town campaign to require employers to give their workers a few days of paid sick leave every year overcame a potential legal hurdle, at least for the time being, when a judge yesterday dismissed a suit arguing that such local laws stray into an area that should be the sole domain of the state legislature.

Mercer County Assignment Judge Mary Jacobson not only rejected a request from business groups for an injunction temporarily blocking Trenton’s new paid sick leave law, but went further and made the unusual decision to dismiss their suit without holding a trial.

The New Jersey Business and Industry Association and other business associations argued that the law passed by Trenton voters in November imposed rules on employer-employee relationships that only the state can establish. It warned that the increasing number of such laws threatened to create a patchwork system that companies would struggle to navigate.

But Jacobson rejected those arguments and several others alleging that the law violates the state constitution. She said the city ordinance was allowed in part because it was clearly intended to keep sick workers at home and prevent the spread of disease.

“Municipalities can reasonably pass laws related to the health of their citizens,” she said.

Jacobson’s quick decision came as a welcome surprise to New Jersey Working Families and New Jersey Citizen Action, which have helped get paid sick leave laws passed in nine cities and joined the suit on the city’s side.

Dena Mottola Jaborska, director of organization and advocacy for NJ Citizen Action, said the NJBIA’s argument had seemed “flimsy and frivolous” from the start and its dismissal will give traction to efforts to pass sick leave laws in more towns.

“It clears the way for us to continue our work, working with local people in others towns in New Jersey to pass this law,” she said. “We already know it’s popular. Now we know it’s 100 percent legal, which is what we already believed. We will continue to press the issue and move forward.”

The two organizations have received many inquiries from people interested in passing local sick-leave laws and said more towns could move forward on those efforts this year, Jaborska.

The suit was filed by the NJBIA, New Jersey State Chamber of Commerce, New Jersey Food Council, New Jersey Restaurant Association, New Jersey Retail Merchants Association, and National Federation of Independent Businesses. Their attorney, Christopher Gibson, said the decision could pave the way for growing confusion among companies that work in multiple towns.

“There is a certain danger in our state that having these types of issues of general applicability, such as the relationship between an employer and an employee, decided under public health grounds, on a patchwork or piecemeal basis,” he said after the decision.

“To allow that power to reside in 565 municipalities certainly creates a great degree of uncertainty. Certainly it creates a great possibility for mischief and confusion, and frankly makes it very difficult to comply and to have any employer with the potential for 565 different laws,” he said.

Gibson said he would consult with his clients before deciding whether to appeal. The NJBIA declined to comment after yesterday’s decision.

While the state Assembly is considering a sick leave measure (A2354), NJ Working Families and other advocates for low-wage workers began pushing for local laws a few years ago after concluding that passage of a statewide law was unlikely in the near term, especially given Gov. Christie’s stated opposition to paid sick-leave mandates.

The city laws were created off a template and are very similar. The new Trenton ordinance allows workers to accrue up to three days a year at small firms or five days at companies with at least 10 workers. Government employees and construction workers with union contracts are exempted. The state bill would require five days for small firms or nine days for larger ones.

In objecting to paid sick-leave mandates, the NJBIA points out that some 70 percent of employers offer it voluntarily and argues that decisions on which benefits to offer should be left to companies. In addition to the direct costs, the association says firms, especially small businesses, should not be forced to take on the burdens of tracking accrued sick leave hours and finding last-minute replacement workers. It also objects to anti-retaliation provisions that make employers vulnerable to employee lawsuits.

Jacobson’s decision follows the release this month of a favorable report on the state’s first municipal paid sick-leave law, which went into effect in Jersey City in January 2014. The report, by the CWW Center for Women and Work at Rutgers University, found that most businesses that provide paid leave have seen no change in their employees’ use of sick leave, and some businesses reported positive effects from having leave.

For example, among companies that changed their policies in response to the Jersey City law, 42 percent said they saw increases in productivity, improvement in the quality of new hires, or reduced turnover.

Business groups criticized the report, saying that the Center for Women and Work is biased and it is too soon to evaluate the law because employees at many companies may not have used their accumulated sick leave days yet.

In addition to Jersey City and Trenton, Bloomfield, East Orange, Irvington, Montclair, Newark, Passaic, and Paterson have recently passed paid sick leave laws. An attorney for Paterson was among those in Jacobson’s court yesterday arguing that cities have the authority to pass such laws.

He joined the lawyer for the city of Trenton, Louis Rainone, an attorney representing NJ Working Families and NJ Citizen Action, and a lawyer representing the SEIU 32BJ union.

A key factor in Jacobson’s decision was a clarification by Rainone of which businesses were subject to Trenton’s new sick leave law.

Part of the NJBIA suit focused on the law’s apparent applicability to anybody who worked in the city for more than 80 hours in one year. Gibson said it appeared from the ordinance that a lawyer like himself, or anybody who was obligated to visit state or federal courts or state offices in Trenton as part of his job, would have to be allowed to accrue paid sick leave even if his firm was based in another city or even another state.

He argued that the law was unconstitutionally vague on that and other points, and that it gave Trenton too much power to regulate companies in other municipalities.

But Rainone said the scope of similar laws had not proved to be a problem in Jersey City and Newark, which also have courts and other state offices. He explained the law was intended only to apply to companies physically located in city, and pointed to language in the ordinance that referred to companies within Trenton specifically.

Jacobson said the law could have stated that scope more clearly, but she accepted Rainone’s clarification and said her order dismissing the lawsuit would note the law’s limitation to businesses in Trenton and hold the city to that interpretation. The clarification appeared to remove the final obstacle to her rendering of a decision.

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