Update on Washington State Paid Sick Leave, Effective January 1, 2018

Beginning January 1, 2018, all employers in Washington State must provide non-exempt employees with paid sick leave under a new state law, Initiative 1433. The Department of Labor and Industries recently released its final rules. Among other things, the rules clarify that employers may not impose caps on accrual or use of sick leave required by the law. The rules also require that employers promulgate written policies if they intend to require verification of illness (only allowed after three consecutive absences), or if employees must provide advance notice of the need for leave. Employers – particularly those with multi-state or multi-city operations – should carefully review their existing sick leave policies, or create a policy if one does not exist, to ensure that they are meeting the technical requirements of the new law.

Basics of Paid Sick Leave

Our previous advisory details key aspects of the state sick leave law.

• The law does not apply to employees performing work in Washington who are excluded from the definition of "employee" in the Washington Minimum Wage Act, RCW 49.46.010(3), such as white-collar exempt employees, outside salespersons, and others. In other words, for most employers this law only applies to non-exempt employees and includes part-time, full-time, seasonal and temporary non-exempt employees.
• Employees must accrue sick leave at a rate of at least 1 hour for every 40 hours worked. Accrual begins upon commencement of employment or after January 1, 2018.
• There is no maximum accrual or maximum use caps allowed under the law. In other words, employees must be allowed to use as much sick leave as they are able to accrue each year.
• At the end of the year, employees must be allowed to carry over up to 40 hours of their accrued but unused sick leave.
• Employees may use sick leave for: their own illness or medical appointment; care for a family member (broadly defined); closure of employee's workplace or child's school for health-related reasons; or domestic violence leave.
• Employers may impose a waiting period of 90 days before new employees can use accrued sick leave under the law.
• Employers may require verification of the need for leave (such as a doctor's note) only after an employee is absent for three consecutive days that the employee was required to work.
• If an employee is rehired by the same employer within twelve months after the date the employee separates from employment, the employer must reinstate the employee's accrued, unused paid sick leave.

Administrative Challenges for Employers

Whether employers will be offering paid sick leave for the first time or are modifying existing policies, there are some key challenges under the law that all employers should be aware of:

• Use of PTO plans: A Paid Time Off ("PTO") program will meet the requirement to offer paid sick leave as long as the PTO policy meets or exceeds all requirements of the law, including the rate of accrual and the carryover requirement. If the program complies with the law, employers are not required to offer additional sick leave on top of PTO, even if the employee uses all PTO for non-sick leave purposes.
  
  Employers who offer more PTO than is required by the sick leave law may choose to designate a portion of PTO for use under the state sick leave law. The employer must track the accrual and usage of this designated portion of PTO separately. If the employer does not do so, the entire PTO leave balance must comply with the law, including the rules regarding verification of absences only after three days, increments of use, and retaliation.
• Frontloading: Employers may choose to frontload sick leave by offering employees a set amount of sick hours at the beginning of each year. However, accrual and use must still be tracked. Employers must provide additional sick leave to employees who work more hours than expected and accrue more sick leave than was frontloaded.
  
  The employer must have a written policy addressing requirements for use of frontloaded paid sick leave.
• Waivers: Unlike the Seattle ordinance, the state law does not allow employees represented by a union to waive the sick leave provisions. Employers with a unionized workforce must ensure that their sick leave policy fully complies with the state law and, to the extent there are conflicts, the state law controls
• Requiring verification of illness: The law allows employers to require verification for absences exceeding three scheduled days the employee was required to work, but the employer must have a written policy outlining the verification requirements. Furthermore, if the employee believes that obtaining the requested documentation would result in an unreasonable burden or expense, the employee must be allowed to provide a written or verbal justification explaining why the employee cannot comply with the verification request. The employer must then make a reasonable effort to identify alternative ways for the employee to meet the verification requirement.
  
  The law is silent regarding whether employers can require documentation for suspected leave abuse. This is different from the Seattle PSST ordinance, which has a verification exception for a "pattern or instance of abuse." The Department of Labor and Industries (L&I) has stated that "An employer may not require verification for use of paid sick leave for absences less than three days under the language of the statute." Employers may require verification of absences sooner if allowed under other federal, state, or local laws (such as the Family and Medical Leave Act or the Americans with Disabilities Act).
• Increments of sick leave use: Employees may take leave in the same increment that hours worked for compensation purposes is tracked, unless the employer obtains a variance. For example, if an employer uses a time clock system that tracks hours worked to the minute, the employer must allow employees to use sick leave in the same increment. For good cause, employers may seek a variance from the Department of Labor and Industries upon a showing that complying with the requirement is infeasible and that granting a variance would not harm the health, safety, or welfare of employees.
• Policy for employee to give notice of need for leave: Employers are required to have a policy outlining the requirements for employees to give reasonable notice for the use of paid sick leave. For foreseeable leave, the employer may require at least ten days' notice or as early as "practicable." For unforeseeable leave, the employee must provide notice "as soon as possible" before the start of the shift, unless it is "not practicable" to do so.
• Different requirements under city ordinances: The state law does not preempt Washington cities from enacting local ordinances regarding paid sick leave which require richer benefits than the state law. Employers with operations in Seattle and certain hospitality and transportation employers in SeaTac must modify policies to comply with both the state law and applicable city law(s) to the extent those laws offer greater protections than the state law or contain other requirements. For example, the Seattle ordinance provides for a faster accrual rate for employees of large employers (1 hour of sick leave per 30 hours worked) and those employers must continue to comply with the faster accrual rate.
  
  On the other hand, where city ordinances allow employers to impose greater restrictions, such restrictions may not be imposed where they conflict with state law. For example, Seattle's ordinance allows a cap on use and a longer waiting period for new employees, both of which do not comply with the state law and must be removed from sick leave policies.
  
  The Tacoma City Council recently passed an ordinance intended to bring its sick leave law in alignment with the state law, and further information is expected in the coming months.
  
  More information on these changes is available here.
  
  Spokane's ordinance was drafted to sunset upon the effective date of the state law, so Spokane employers only need to ensure compliance with the provisions of the state law.
  
  Employers should note that although the state law only applies to non-exempt employees, the Tacoma and Seattle laws apply to all employees (including exempt employees).

Practice Tips: What Should Employers Do Now

• All current employees must receive notice about the law by March 1, 2018. L&I is developing sample notices that may be used, or employers may create their own notice. The notice must include the employee's entitlement to paid sick leave, the rate at which the employee will accrue paid sick leave, the authorized purposes under which paid sick leave may be used, and that retaliation by the employer is prohibited.
• Revise any employee handbooks or sick leave policies to ensure compliance with the new sick leave law. Employers may choose to have one policy for all of Washington – providing the most generous aspects of the sick leave requirements that apply to their workforce – or have separate policies for each City with its own requirements.
• Employers who currently frontload sick leave or offer PTO programs should ensure that appropriate language is included in the policy to meet the technical requirements of the law, including accrual and carryover rates.
• Employers should ensure that their payroll system will appropriately track accrual and use of paid sick leave and provide employees with notice of their sick leave balance (at least monthly).
• Employers – particularly those with multi-state or statewide workforces – are encouraged to contact legal counsel to ensure sick leave policies are compliant with applicable local and state requirements.