This law is yet another instance of the growing trend in paid sick leave legislation sweeping the country.

On February 12, 2015, Philadelphia council members voted 14-2 to approve a bill mandating sick leave to eligible Philadelphia employees. Similar bills had been introduced and won passage twice before, in 2011 and 2013, but Mayor Michael Nutter vetoed them both times. This time, Mayor Nutter signed the "Promoting Healthy Families and Workplaces" chapter into law, which will go into effect on May 13, 2015 (90 days after its passage).

The new sick leave requirements apply to employers with 10 or more employees. Covered employers must permit eligible employees to accrue at least one hour of sick time for every 40 hours worked in Philadelphia, up to a maximum of 40 hours per calendar year. This differs from New York City paid sick leave law, for example, pursuant to which eligible employees accrue at least one hour of sick time for every 30 hours worked.

An eligible employee is defined as someone who performs work within the "geographic boundaries of the City of Philadelphia for at least 40 hours in a year" and specifically excludes independent contractors, seasonal workers, adjunct professors, employees hired for less than six months, interns, pool employees, state and federal employees, and unionized workers working under a collective bargaining agreement. Chapter § 9-4103(3).

Interestingly, as drafted, the accrual occurs only with regard to work done in the City of Philadelphia. Whether and how employers will limit accrual to employees who also work outside the City of Philadelphia is an issue for each employer to address.

Notably, employers who employ fewer than 10 employees for at least 40 weeks in a calendar year are not required to provide their eligible employees with paid sick time under the law, but they will be required to provide the same amount of unpaid sick time.

In determining the number of employees employed by an employer during a given week, an employer must count all full-time, part-time and temporary employees. The law utilizes a different standard for employer eligibility with respect to chain establishments, such that chain establishments are required to provide paid sick leave, regardless of how many employees are employed in a given establishment.

In terms of calculating the accrual of sick time, the law specifically provides that employees who are exempt from the overtime requirements of the Fair Labor Standards Act (FLSA) are assumed to work 40 hours per workweek, unless their normal workweek is less than 40 hours—in which case, sick time will accrue based upon that normal workweek.

Eligible employees will have significant flexibility to use their accrued sick leave under this new law. The sick leave may be used for:

• An employee's mental or physical illness, injury or health condition (including diagnosis, care, treatment or preventive medical care);
• To care for a family member with a mental or physical illness, injury or health condition (including diagnosis, care, treatment or preventive medical care); and
• Missed work time due to domestic abuse, sexual assault or stalking, provided the leave is to allow the employee to obtain medical attention, services from a victim services organization, psychological or other counseling, relocation, or legal services or remedies (including preparing for or participating in legal proceedings) for the employee or the employee's family member.

Sick time will begin to accrue on May 13, 2015, for eligible employees employed on that date. With respect to employees hired thereafter, they will begin to accrue sick time on their first day of employment. Eligible employees may not use their accrued sick time until after the 90th calendar day of their employment, although employers may "loan" sick time to the employees at their discretion.

The law provides that accrued but unused sick time must be carried over to the following calendar year, unless the employer provides an employee with at least 40 hours of sick time at the beginning of each calendar year, suggesting that at no point may an employee be eligible for sick time (including any amount carried over) in excess of 40 hours in a calendar year. Employees are not eligible for payment of accrued but unused sick time under the law when employment ends, regardless of the circumstances. However, employers should clarify this in their policies to avoid confusion, as well as potential wage payment claims.

The law also mandates certain policy and posting obligations.

The law acknowledges that many employers already have paid leave policies and provides that where such policies already make available an amount of paid leave sufficient to meet or exceed the accrual requirements under the new law, the employers are not required to provide additional sick time.

What This Means for Employers

This law is yet another instance of the growing trend in paid sick leave legislation sweeping the country, following other cities such as New York City. Three states—California, Connecticut and Massachusetts—have also enacted paid sick leave legislation.

Philadelphia employers must review their current paid time off and sick leave policies to determine if they currently meet the requirements of the new law, and, if not, they should consider what revisions are necessary to bring the policies into compliance. In particular, policies must address employee eligibility, the amount of accrual and carry over and the circumstances for which sick leave may be used, as well as payment upon cessation of employment. The law also requires employees to be notified that retaliation for use of sick leave is prohibited and that they have a right to file a complaint or bring a civil action for a violation of their rights under the law. More and more employers provide flexibility to employees by offering generic PTO policies. It is vital that these PTO policies be revised to provide that PTO may be taken for the reasons set forth under the sick leave ordinance, spelling out those specific circumstances so that there is no confusion that PTO is available for such use.

Although there is some ambiguity in the law, it appears that employers have both a mandatory posting obligation (a poster will be provided by the Mayor's office or its designee for employer use) and an obligation to provide adequate notice of the terms addressed above in any handbook distributed to employees. Where an employer does not have a handbook, the terms of the sick leave policy should be in writing and distributed to employees. Notice shall be in English, as well as any other language that is the first language spoken by at least 5 percent of an employer's workforce.

Although simplistic on its face, the law appears to create some questions for employers concerning coverage and employee eligibility. For example, the law distinguishes between employers with 10 or more employees and those with fewer than 10 employees. However, for employers with locations both within Philadelphia and in the neighboring communities and employees who work in multiple locations, it is unclear whether those employees count toward the 10-employee threshold. Determining individual employee eligibility may also be cumbersome where an employee is based out of a Philadelphia location, but works remotely, such as out of an employee's home or as a traveling salesperson. Consultation with employment counsel may aid employers in navigating these murky areas.

For Further Information

If you have any questions about this Alert, please contact any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

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