29

August, 2022

Unlimited Time Off Presents Hidden Challenges for Employers

I have increasingly been fielding inquiries from organizations that are looking to implement some version of unlimited time off for their employees. They saw that employees continued to be productive while working remotely during the pandemic, and they want to give them the flexibility to take time off as/when needed – provided the work still gets done. The motives behind these policies are commendable, but the challenge lies in their implementation.

Consider Scope as to Legally Required Time Off
Employers currently face a myriad of paid leave requirements, which vary by state and locality. These laws may mandate paid time for sick leave, domestic violence victims, care of family members, voting, jury service, witness duty, blood donation, bone marrow donation, attending school meetings and activities, public health emergencies, bereavement, or for no specific reason at all. When considering an unlimited time off policy, employers need to determine whether the policy is intended to cover some or all of these paid time off legal requirements.

Employers are also required in various locations to provide a range of unpaid time off, which may include family and medical leave, pregnancy disability leave, military leave, family military leave, leave for first responders, leave for crime victims, and lengthier leave for jury service. Some states offer partial compensation through state-regulated programs for certain periods of unpaid leave. In most circumstances, even the biggest proponents of unlimited paid time off do not intend to pay for the time used during most or all of these leave periods, particularly not for legally required leaves that can extend for months at a time. The scope of the unlimited time off policy in relation to legally required leaves needs to be determined in advance so that policies can be properly drafted.

Is This Just for the Employee’s Self-Care, or Family Too?
Also when considering scope, employers should determine whether they want unlimited paid time to be available for care of family members. Employers may intend for the unlimited paid time to cover employees who are themselves ill or injured, even for extended periods of time, and they can cap their payroll exposure by requiring qualifying employees to apply for short-term and long-term disability benefits for more extended absences. However, most paid sick leave laws are not limited to leave for the employee’s own illness or injury. The sick leave laws extend to family members – often spanning multiple generations and even individuals who are “like” family but with no blood or marital relationship.

Granting unlimited paid time off to care for family members can quickly leave an employer in an awkward situation of trying to balance its broad policy offering, the statutory protections that cover at least part of the leave time, and the need to have the employee get work done. Some employers address this by carving out care of family from their “unlimited” time off policies. They may choose to grant only the legally required leave for care of these individuals, or may provide a benefit that is more generous than the law, but less than “unlimited.” Other employers reframe the unlimited time off policy as intended for discretionary and personal reasons, akin to a combination of vacation, personal days and flexible holidays, and maintain a separate, statutory-compliant paid sick and safe leave policy that caps the amount of time employees can use for their own or a family member’s illness, injury or related medical or safety reasons.

Consider Approvals and Documentation
The temptation and appeal of an unlimited policy is to be free from all the legal mandates related to time off policies. Senior leaders just want employees to be “responsible adults,” take the time they need and make sure they do their jobs.

The reality is that reasonable minds will differ as to when an employee is acting responsibly when determining when and for how long to take off from work. “Unlimited” time does not relieve managers of the responsibility to manage their employees.

While requesting medical or other documentation in support of a time off request may seem superfluous if the time off is “unlimited,” such documentation can be critical to ensure that, when time is being taken for legally protected reasons, it is given appropriate consideration. And when time is being taken “just because,” managers should have greater flexibility to advise employees if the scheduling of that time off would be contrary to business needs, and delay or deny those requests.

Spell It All Out in Writing
An unlimited paid time off policy must address all the above considerations and the parameters that the employer has chosen to set with regard to the scope, use, timing, and ancillary requirements under its policy. To the extent that paid or unpaid leave laws may require specific language or provisions to be included, that too should be folded into the unlimited time off policy – if the leave law is intended to be satisfied through the unlimited paid time off policy. And if the legally protected leave is being carved out as an exception to “unlimited” paid time off, then that needs to be made clear in the written policies as well.

Finally, in those locations where paid sick leave and other specific time off accruals and usage need to be reflected on pay stubs or elsewhere, employers should consult with legal counsel and their payroll provider as to where and how accruals should be reflected. Some jurisdictions have held that no accruals need to be posted when a policy grants unlimited time, while other jurisdictions have been less clear on how that notice requirement is to be satisfied.

Keep Perspective
Legislators mean well when they adopt new paid and unpaid leave requirements. But these laws are often written from the perspective of protecting employees from miserly employers. They can feel unduly constricting to generous employers that want to give employees time to relax and manage their personal obligations, but do not want to run afoul of the law.

Some version of “unlimited” time off is achievable even in the most regulated localities. The policies just need to be thought through in advance, in the context of applicable leave laws, and drafted to cover the relevant parameters. This is one of those situations in which it would be prudent to seek guidance from legal counsel.

By Tracey I. Levy

Facebooktwitterredditpinterestlinkedinmail
16

June, 2022

Beyond Job Postings, New York State Pay Transparency Laws Would Create a Foundation for Massive Employee Pay Data and Pay History Collection

Two bills passed by both houses of the New York State legislature and currently awaiting submission to the governor for signature add a new, and significant, dimension to the range of pay transparency laws that are proliferating around the country.  Starting from the most public version of pay transparency requirements in the context of individual job postings, these laws impose substantial data retention and reporting requirements that may have widespread implications for future assessment of the equitableness of employers’ pay practices.

Pay Transparency in Job Postings

The first pending New York State law follows the model of New York City and Colorado in that it will require employers to disclose in their job postings the proposed wage or range of wages that would be paid for an advertised job, promotion or transfer opportunity.  The law will prohibit employers from refusing to interview, hire, promote, employ, or otherwise retaliate against an applicant or employee for that individual’s exercise of rights under the pay transparency law.

Where the law is more expansive than others is in two respects.  First, it additionally requires employers to include the job description in their posting or advertisement, if a description exists.  Second, and building on that requirement, the law expressly requires employers to retain:

  • a history of the compensation ranges for each job, promotion or transfer opportunity; and
  • the job descriptions for those positions.

While the pay transparency law will not require employers to report or otherwise collectively disclose that compensation history, another law passed by the state legislature and pending the governor’s signature will, if adopted, expand employee compensation reporting requirements for employers.

Equal Pay Disclosures – State Contractors

Described as relating to equal pay disclosure for state contractors, this second pending law will require contractors to submit reports that include a summary of their “workforce pay averages” (a term not defined by the legislation), which are to be calculated by job category, gender, race and ethnicity, and also report the percentage difference between pay averages in each category.  Businesses with 100 or fewer employees would be exempt from the pay disclosure reporting requirement.

The pending law makes clear that it does not mean to impose a mere paperwork exercise.  Rather, various state government leaders are to receive annual reports related to the information gleaned from the reports.  All the reports are required to be available to the public for inspection and copying, redacting only individual employee names and social security numbers that may have been included.  Further, all government agencies that have retained government contractors are required, “where practicable, feasible and appropriate,” to assess the equal pay practices of contractors submitting bids or proposals to be awarded a state contract.

Implications if New York State’s Pay Transparency Initiatives Become Law

There are substantial, and valid, considerations motivating this drive toward greater wage transparency, as we have discussed in past blog articles and in an interview I did with Dr. Ruth Gotian for Forbes.com.  And there also is reason to question whether these laws will actually achieve their intended objective of wage parity.  Will arming applicants and employees with more information be sufficient to overcome differences in negotiating style (that often correlate with gender and racial differences, whether that be attributable to natural proclivities, defensive techniques developed in response to unconscious bias, or other factors)?

If signed into law, these new legislative requirements pull employers into the center of a massive experiment.  Historical data that employers are required to gather and retain provides a ready source of new information that plaintiffs’ lawyers can likely obtain through discovery and utilize in support of legal claims.  And it is not a far leap to anticipate subsequent legislation that requires employers to publicly report, publish or analyze the data that they will soon be required to collect and retain.  The proposed equal pay disclosure law for state contractors already exemplifies that approach.

Pay transparency laws, particularly in a state like New York where employees have a protected right to discuss salary information with one another, will invite probing questions from existing employees who suddenly learn they are far lower on the pay scale than they had realized.  Already HR colleagues have reported that they are fielding these types of inquiries as to rationale and pressure to boost pay for certain employees.  Employers that have not holistically evaluated their compensation philosophy, methodology and baseline data, and those employers that do not currently have well-defined roles that align with detailed job descriptions and salary bands, may face serious employee relations issues, or worse, under pay transparency mandates.

In New York State, the earliest any of these laws will take effect is November 1, 2022.  Perhaps a pay audit and equity analysis as a summer project?

By Tracey I. Levy

Facebooktwitterredditpinterestlinkedinmail
27

April, 2022

Maine as National Example Disappoints Employers with Newest Law on Paid Time Off

By Tracey I. Levy

A plethora of paid leave laws currently plague multi-jurisdiction employers and they seem to multiply with each passing year. The concept of paid sick leave, which originated in San Francisco in 2007, has spread to 16 states and at least 25 localities across the country.

Sick Leave Isn’t Just for Being Sick, And Other Complications

“Sick” leave as defined by many of these laws is a far cry from typical employer policies in that usage often extends beyond an employee’s own illness and injury to include:

  • routine well visits for medical care;
  • care of an employee’s family member (in the broadest sense);
  • “safe” time for victims of domestic violence, sexual assault or similar crimes; and
  • coverage when a school, childcare center or place of employment is closed due to a public health emergency.

Particularly challenging for employers are the differences between the laws, in terms of leave time granted, permitted uses, accruals, carryover and requisite notice. So while the laws consistently state that an employer can maintain its own sick leave policy provided it meets all the elements of the legally-mandated sick leave, the varying requirements collectively make it nearly impossible to have one fully-compliant one-size-fits-all policy.

Maine Approached It Differently

Enter Maine with its paid personal leave law. It was refreshing in its simplicity.  Rather than adding an ever more expansive list of reasons why employees could use paid leave, the Maine law says the reason is irrelevant.  If you have more than 10 employees, full-time, part-time or otherwise, then you must provide them with up to 40 hours of paid leave, per year, for any purpose, provided they give reasonable notice. While there surely are employers of that size who do not already provide 5 days of paid time off per year, a great many provide that much or more. For those with existing paid time off policies, tailoring those policies to comply with the new Maine law should be relatively easy.

The only element of the law that deviates from typical employer practice (but aligns with most of the paid sick leave laws), is that employees need to be able to carryover up to 40 hours of accrued, unused paid leave from one calendar year to the next. When not subject to legal mandates, private sector employers typically restrict carryover of paid time off to a fixed number of days and require that the carryover days be used within a duration of three to six months into the new year. Employers may incur a cost when carryover is mandated, in that accrued days may need to be reflected as a pending liability in their business records.  Employers are therefore disinclined to allow too much in the way of carryover. While the Maine carryover mandate may require employers to modify their vacation or other paid time off policies, overall the law is simpler than the approach taken in other states and localities.

And Then Maine Complicated Things

But now, things have changed a bit.  Maine’s governor just signed a new law, which takes effect January 1, 2023, that amends the state’s wage statute to require employers to pay out employees for accrued, unused vacation upon termination.  Other states, like Massachusetts, Rhode Island and Illinois, have similar legal requirements, which thereby discourage employers from granting vacation time in a lump sum at the outset of the year, and deny employees the flexibility that comes with front-loaded vacation time.

Lesson for Legislators

Adopting ever more prescriptive paid time off laws sows confusion and impedes uniformity in approach for multi-jurisdiction employers.  As Maine demonstrated with its 2021 paid personal leave law, states can achieve the overarching goal of granting employees the assurance of paid days off to manage their personal lives, while minimizing the strictures that impede employers’ ability to draft consistent policies and manage their workforce.

Facebooktwitterredditpinterestlinkedinmail
4

April, 2022

NYC Wage Transparency Law Has Its Limits Under NYC Guidance

By Tracey I. Levy

New guidance issued by the New York City Commission of Human Rights expounds on both the breadth, and the limitations, of the city’s new wage transparency law.  The law, which we discussed in our prior blog article, requires employers posting for a position in New York City to state in their job posting the minimum and maximum salary for the position.  This requirement is currently scheduled to take effect May 15, 2022, but there is a pending legislative proposal under consideration in the City Council to delay the effective date.

Update: a May 12, 2022 amendment to the law delays the effective date to November 1.

Breadth in Applicability

The wage transparency law covers employers with four or more employees or one domestic worker.  When counting “employees,” business owners, employees, interns and independent contractors must all be considered, as long as at least one of them works in New York City.  Employment agencies are also covered.  There is an exception for temp firms seeking applicants to join their pool of available workers, but the law provides that the employers who work with those temp firms must follow the new wage transparency law.

The law also extends to every form of advertisement or job posting – whether internal or external, printed or electronic, published or circulated.  And it covers any type of job – whether a new position, a promotion or a transfer.  Employers need not advertise for a position in order to hire, but if they do post or advertise in any way then the guidance states that they must comply with the law.

Limitations in Wage Information to Be Disclosed

Significantly, though, the wage transparency law is about disclosure of base pay only.  Whether defined as an hourly wage or a fixed salary, that dollar value must be disclosed.  The guidance makes clear that employers are not required to disclose, for example, either in specific or general terms, any bonuses, commissions, tips, stock, overtime pay, or other forms of compensation that may apply to the position.  Compensation structures that will thereby experience little impact from the new law include:

  • sales jobs paying largely on a commission basis;
  • mid-level and higher positions in industries such as financial services for which the bulk of compensation is in the form of discretionary bonuses; and
  • positions at tech firms and other start-ups that offer stock option awards as a significant component of their overall compensation plan.

New York City’s new law also does not require disclosure of wage supplements, such as paid time off, or benefits, including insurance or pension plan contributions.  In this regard the law differs from its closest counterpart in Colorado, where employers are required to include in their job postings a general description of any bonuses and the nature of benefits provided.

The law further has its limitations – and the guidance is not particularly helpful – in regard to the wage range to be posted.  Where the pay is fixed, perhaps at or slightly above minimum wage, meeting this requirement is as simple as posting “$15 per hour.”  Where there is more flexibility or variability, depending on factors such as the candidate’s prior skills and experience or meeting the candidate’s stated salary expectations, New York City employers are directed to post a wage range based on the employer’s honest belief as of the time of the job posting as to the range of pay it would offer to a successful applicant.

States with similar wage transparency laws, most notably neighboring Connecticut, have defined benchmarks for employers to use in defining the wage range.  These may be an applicable pay scale, the amount budgeted for the position, or the actual range of wages for those employees currently holding comparable positions.  The New York City law, and this new guidance, are both silent on that point.  Nothing in the law or the guidance states that an employer cannot hire someone at a wage that is above or below the posted range, but there also is nothing in the law or guidance that assures an employer it can make those hiring decisions.

Employers that hire, transfer or promote candidates into roles at wage rates that fall outside the posted range must therefore be prepared to demonstrate the bona fides of their original wage range estimate, as reflected in the job posting.  These employers also should be prepared to explain why/how the wage they ultimately agreed to pay was not foreseeable at the time of the job posting.

Facebooktwitterredditpinterestlinkedinmail
30

January, 2022

Persistent Pay Inequity Drives Legal Mandates for Employers to Publicly Post Wages Being Offered

By Tracey I. Levy and Alexandra Lapes

Five or six years ago, in speaking with a start-up client about social media policies and wage transparency, the client explained they made available to all on their intranet a spreadsheet with salary information for the company’s entire management team.  While that practice remains extraordinary even in 2022, a new report from The Conference Board and Emsi Burning Glass highlights a growing trend toward greater wage transparency.  Among the key findings from Emsi Burning Glass’s analysis of job openings reportedly posted on nearly 40,000 separate sources, including job portals and employers’ career sites, was that:

  • more than 12 percent of all such postings in fall 2021 included salary data; and
  • nearly 16 percent of all noncollege occupations in fall 2021 included salary data.

That is about a 65 percent increase in wage transparency in just 2 ½ years – since April 2019.

The Conference Board/Emsi Burning Glass report attributes much of the increase to the current competitive labor market, where wage transparency is just one of numerous proactive steps that organizations are taking to attract applicants.  State and local legislatures – notably including New York City and Connecticut – will be further fueling that trend, as new laws take effect that require wage range disclosures in the hiring process.

Pre-Existing Landscape of Wage Transparency Laws

The earliest of these laws date back to California in 2018.  The California version, as well as those passed in the subsequent two years in Washington, Maryland, and Toledo and Cincinnati, Ohio, require an employer to disclose the wage range for a position upon the applicant’s request.  Colorado took transparency to a new level in 2021, and it requires private employers to affirmatively state the wage rate or range with any job posting for a position to be performed in Colorado or remotely from another location.  Connecticut and New York City have taken Colorado’s lead, with new wage transparency laws passed just in the last seven months.

Disclosing Wage Range for Connecticut Job Postings

Effective as of October 1, 2021, Connecticut employers must provide job applicants with the wage range for the position to which the applicant is applying, even if the applicant does not inquire.  The law states that this information must be disclosed either when requested or, if no request is made, then no later than the time a job offer is made.   Connecticut further requires employers to provide this type of wage range information to current employees:

  • who change positions with the employer; or
  • at an employee’s first request.

The “wage range” to be disclosed is defined as the range of wages an employer anticipates relying on when setting wages for a position, and may include reference to:

  • any applicable pay scale;
  • a previously determined range of wages for the position;
  • the actual range of wages for those employees currently holding comparable positions; or
  • the employer’s budgeted amount for the position.

Notably, recent guidance issued by the Connecticut Labor Department clarified that the law extends to anyone who applies for a job with a Connecticut employer, even if the employee is working remotely from another state.

NYC Requires Similar Disclosure, with Less Guidance

Beginning May 14, 2022, New York City employers with at least four employees (inclusive of contractors and employed family members), may not post job listings without stating the minimum and maximum salary for the position.   Failing to include this wage range information is deemed an unlawful discriminatory practice, and the requirement extends beyond job advertisements to posted promotion and transfer opportunities.  The law states only that the wage range may include the lowest to the highest salary the employer believes in good faith at the time of the posting it would pay for the advertised job, promotion or transfer opportunity.  We anticipate that, closer to the effective date, the city will provide additional guidance regarding the appropriate measure of the wage range.

A Growing Trend

Nevada and Rhode Island have similarly passed wage transparency laws in the past year.  Both states have staked a middle ground on when such information must be disclosed, but each prioritizes a different group.  Nevada requires that wage range information be automatically provided to each job applicant who is interviewed, but only given to employees if they request the information in the context of a promotion or transfer.   Rhode Island requires that wage range information be given to job applicants if they request it and prior to discussing compensation, but requires that employees automatically be provided the wage range at time of hire, when the employee moves into a new position, and whenever the employee requests it.

Similar legislation  is currently making its way through the committee review process in New York State.  As currently drafted it would mandate disclosure of the wage range both for the internal or external posting of each job opportunity, and upon an employee’s request.  A bill pending in Massachusetts would take the more modest approach of requiring disclosure only upon the applicant’s or employee’s request.  While we are not currently aware of any similar bills pending in New Jersey, the state has taken strong legislative action in the past several years to mandate pay equity, and we anticipate that a wage transparency bill may be forthcoming.

Reconciling Theory and Reality

The desire to counter pay inequity, which persists particularly for women, people of color, and those at the intersectionality of those two characteristics, drives this legislative mandate of wage range transparency, as stated in the preamble to many of these new laws.  The theory is that equipping workers with greater information will enable them to better negotiate their pay.

A recent article in Money magazine calls that theory into question, citing the experience of Buffer, a tech start-up.  Not unlike our client from five years ago (which was not Buffer), Buffer had gained some notoriety for publishing a public spreadsheet, beginning back in 2013, that included the salaries for its entire workforce.  According to the article, the company later began analyzing its pay practices and found a gender pay gap of 15 percent in 2019.  This is just slightly better than the 18 percent pay gap reported by the Bureau of Labor Statistics both in 2019 and 2020.  The article continues by noting that it was only through additional, affirmative measures taken by the company that Buffer said it was able to reduce the pay gap to 5.5 percent in 2021 – pay transparency alone, even over multiple years, had not made a difference.

Where that Leaves Employers in the Tri-State Area

Currently, employers in Connecticut have an existing obligation under the recent wage transparency law to update their job posting practices and include wage range information.  New York City employers must prepare for the May 14, 2022 effective date of the city’s pay transparency requirement.  Employers in the rest of New York State and in New Jersey should anticipate that they likely are just a few years away from having to meet similar requirements.

Moving beyond mere legal compliance, employers that are committed to pay equity should take a fresh look at their pay practices.  In the past, being a better negotiator or coming in with a higher base from a prior job were accepted explanations for differences in compensation among otherwise equally qualified employees with different protected characteristics.  The impetus behind the newest pay transparency laws suggests that there is less legislative acceptance of that explanation.  Consistent with the Emsi Burning Glass report, in this time of the “great resignation” and a ready flight of talent seeking better opportunities, employers may want to consider a different analysis and approach to their pay practices.

Facebooktwitterredditpinterestlinkedinmail
Back to Top