State Paid Leave Laws Leave Employers With Policy Options

Many states require employers to provide earned paid sick leave to employees, and employers have several policy options to choose from to comply with all applicable laws, a legal compliance expert said March 17.

Paid sick leave refers to employer-provided sick leave that is generally earned and taken by employees who are sick or caring for family members, said Tim Morris, legal compliance director for ADP, Inc. Unlike family-leave or temporary disability insurance, paid sick leave is intended to be used for relatively short periods of absence from work, such as a day or a week.

Many states have enacted paid sick leave laws, but the requirements vary, Morris said at PayrollOrg’s Capital Summit. Some use broad definitions of “family member,” for example, to include individuals beyond an employee’s immediate family. These laws might also have different minimum accrual rates of paid sick leave, unique methods for calculating the rate of pay for paid sick leave, and inconsistent wage statement requirements, among other distinctions.

These dissimilarities can pose a challenge for multistate employers creating their own paid sick leave policies, he said.

“You can use a separate paid leave policy to comply [with paid leave laws],” Morris said. “But, you need to make sure that, if you have a policy, that it is consistent and doesn’t run afoul of any of the FMLA or the state leave laws.”

Employers could adopt state-specific policies that comply that the requirements of each state, he said. However, these policies would need to match the paid sick leave law in every aspect, which could pose administrative difficulties.

A better approach for multistate employers might be adopting a “one size fits all” policy, he recommended.

“A one-size-fits-all policy allows the employer to capture all the requirements for all states that an employee is performing work in,” Morris said. “It’s beneficial for remote and hybrid workers, it can be a windfall for employees in states with no leave laws or laws with less generous offerings.”

Such a policy could also incorporate state-specific addenda, which would allow employers to tailor their general paid sick leave policy to particular jurisdictions, he added.

Alternatively, employers might consider establishing a paid time off policy, although that can be burdensome, he warned. Paid time off policies generally provide employees leave for any purpose, not just in the event of an illness or other medical situation.

A paid time off policy complies with applicable state laws if it provides at least the minimum amount of time off and accrual rates under the laws, he said. Employers will also need to determine if the laws require employers to annually carryover a certain amount of unused leave to the following year.

Employees must be able to use to use paid time off for the same reasons as paid sick leave, and the same conditions for statutory paid sick leave must apply, he added.

Paid time off policies that offer employees unlimited paid sick leave or paid time off for any reason comply with most state paid sick leave provisions by providing more benefits than legally required. However, employers must still report paid time off usage in accordance with each state’s wage statement requirements, Morris said. For example, California requires employers with unlimited paid time off policies to indicate “unlimited” time off on each employee’s itemized wage statement or notice.