With recent attention focused on several states enacting paid family and medical leave laws, two states and one locality have moved ahead with a different type of paid leave: paid time off for any reason.
Maine, Nevada, and Bernalillo County (New Mexico) have enacted legislation that allows for paid time off (PTO) for any reason, granting workers the ability to be away from work.
Maine Set the Bar for PTO Law
Maine became the first state in the country to enact a PTO law on May 28, 2019, requiring employers to allow employees to use earned paid leave for any reason. While the law started as a bill in the legislature seeking to implement a paid sick and family leave program, LD 369 (An Act Authorizing Earned Employee Leave) was amended into a law that provides paid leave for any reason.
The law is effective Jan. 1, 2021.
An overview of the law is as follows:
- Covered employers: The Act uses the definition of employer from the Maine Unemployment Compensations Law. Any employer with more than 10 employees in the usual and regular course of business for more than 120 days per calendar year will be required to allow employees to earn paid leave.
- Eligible employees: An employee is defined as “a person engaged in employment.” The term “employment” follows the Maine Unemployment Compensation law’s definition, with an exception for individuals employed in a seasonal industry, agricultural labor, certain commission-only employees, direct sellers, and hairdressers or tattoo artists with booth rental agreements.
- Accrual: Employees must be allowed to earn one hour of paid leave for every 40 hours worked, up to a maximum of 40 hours per year.
- Rate of pay: Employers must pay an employee for used paid leave at a rate that is at least the same “base rate of pay” that the employee received immediately before using the earned leave.
- Waiting period: While accrual begins at the start of employment, employers can impose a 120-day waiting period on when new hires can begin using their accrued paid leave.
- Employee notice to use PTO: Employees must provide their supervisor with reasonable notice of their intent to use paid leave. An exception to this notice standard exists for emergencies, illnesses or other sudden needs. In addition, employers can require that employees schedule their paid leave in such a way that prevents undue hardship on the employer as reasonably determined by the employer.
The law does lack specificity in several areas, including carryover policy, minimum increment of use, employer posting obligations, and record-keeping. The Act also provides no guidance concerning what “base rate” means. While the Act does leave many unanswered questions for employers, it does direct the Maine Department of Labor to adopt regulations to implement and enforce the Act. It is anticipated that these regulations might provide additional details.
Nevada Adopts Its Own PTO Law
With Gov. Steve Sisolak signing SB 312 on June 12, 2019, Nevada became the second state with a PTO law. The law amends the Nevada Revised Statutes (NRS) Section 608 governing private employers.
An overview of the law is as follows, and Nevada PTO leave requirements are effective Jan. 1, 2020:
- Covered employers: The PTO leave requirements apply to private employers who have 50 or more employees in private employment in the state. It does not apply to an employer who, pursuant to a contract, policy, collective bargaining, or other agreement, provides employees with a policy for paid leave or a policy for paid time off to all scheduled employees at a rate equivalent to this law. There will be a grace period for new employers, allowing them to be exempt for the first two years of operation.
- Eligible employees: The PTO leave requirements do not define “employee,” but provides that temporary, seasonal, and on-call employees are not covered under the law.
- Accrual: Employees are entitled to accrue paid leave at the rate of at least 0.01923 hours for each hour of work performed. Employers may award the PTO on an accrual basis or provide employees the total number of hours of paid leave that the employee is entitled to accrue in a benefit year (e.g. 40 hours) on the first day of each benefit year.
- Rate of pay: Employers must pay an employee for used paid leave at a rate that is at least the same base rate of pay that the employee received immediately before using the earned leave.
- Carryover: If employees accrue paid leave, employers must permit employees to carry over up to a maximum of 40 hours of paid leave to the following benefit year. The PTO leave requirements, however, do not require employers to permit carryover if the employer frontloads paid leave at the start of the year.
- Minimum increment of use: Although an employer may set a minimum increment of paid leave that an employee may use at any one time, such increment cannot exceed four hours.
- Waiting period: An employer must allow an employee to use paid leave beginning on the 90th calendar day of the employee’s employment.
- Employee notice to use PTO: Employees requesting use of PTO must give notice to their employer as soon as practicable. When providing notice, the employee is not required to provide a reason to the employer for the use of the PTO.
- Posting: The PTO leave requirements require the state to create a poster and employers are required to post it in the workplace. The poster is available in English and Spanish.
- Recordkeeping: An employer must maintain a record of the receipt or accrual and use of PTO for each employee for a one-year period and, upon request, shall make those records available for inspection by the Labor Commissioner.
While the Nevada Office of the Labor Commissioner has not yet published regulations or information beyond the required posting, it has included information about SB 312 in its 2019 Updated Legislation Training materials.
Bernalillo County Has First Local Mandatory PTO Law
Similar to Maine, the Bernalillo County Board of Commissions originally intended to draft a paid sick leave program, but when it passed the Employee Wellness Act on Aug. 20, 2019, the ordinance became the first local mandatory PTO law.
The law is effective July 1, 2020, and an overview is as follows:
- Covered employers: Employers that must apply for a county business registration with at least two employees and a physical premise in the county's unincorporated limits will be subject to the Act. Additionally, a new local business with its principal office or place of business in the county's unincorporated limits is exempt for the first 12 months of operation. (The ordinance does not cover employers located in incorporated communities such as Albuquerque, Los Ranchos de Albuquerque, and Tijeras.)
- Eligible employees: To be covered, an employee must work at least 56 hours in a year in the county's unincorporated limits, regardless of whether they are a full-time, part-time, seasonal, or temporary employee. However, the ordinance contains enumerated exceptions to the definition.
- Accrual: Earned PTO begins to accrue on an employee’s 90th day of employment or on the law's effective date, whichever is later. Employees must accrue one hour of earned PTO for every 32 hours worked. The law sets out a three-year phase in period. Beginning July 1, 2020, the permitted annual accrual cap is set at 24 hours, but will increase 16 hours per year – to 40 hours – beginning July 1, 2021, and to 56 hours beginning July 1, 2022. Employers can provide all earned PTO at the beginning of the year. An employer may, but is not obligated to, loan earned paid time off to an employee in advance of accrual or eligibility by such employee.
- Rate of pay: Employers must pay earned PTO at the same hourly rate and with the same benefits, including health care benefits, employees normally earn.
- Carryover: Unused accrued earned PTO shall be carried over to the following year, but employees shall not carry over more than the total annual amount available to accrue, unless the employer’s policy provides otherwise.
- Minimum increment of use: This is not addressed in the law.
- Waiting period: An employee shall not be entitled to use accrued earned PTO until the employee has worked 56 hours in a year. Additionally, unless employers allow leave use earlier, employees cannot use earned PTO until the 90th calendar day following the first date of employment or the ordinance's effective date, whichever is later.
- Employee notice to use PTO: Employers must permit employees to use earned PTO accrued for any reason. When employment begins, employers must instruct employees on the manner in which leave use requests must be made (orally, in writing, electronically, or by other means acceptable to the employer). Generally, employers must allow earned PTO use if they receive a use request from an employee or a family member, caretaker, or medical professional acting on the employee’s behalf, which, if possible, must include the absence's duration. If leave use is foreseeable (e.g., scheduled medical appointments), employees must provide notice as soon as practicable and, if possible, schedule use in a manner that does not unduly disrupt the employer's operations. However, notice cannot be required if an employee uses leave for an emergency or an illness.
- Employers may comply with this notice requirement by conspicuously displaying a poster at their place of business with the required information in both English and Spanish. On or before the effective date of the ordinance, the county will make available on its website a summary notice to employees in English and Spanish.
- Record-keeping: For at least four years in addition to the current calendar year, employers must track and record earned PTO accrued or used each pay period in any format they choose. If an employer does not keep records, the county or a judge can use employees' accurate and contemporaneously maintained records of work time, or their reasonable estimates of hours worked, to establish liability.
While no one can predict what the future holds, these developments could signal a trend in legislation that would allow for paid leave for any reason, as opposed to the paid leave for family and medical reasons exclusively. In light of the Maine, Nevada and Bernalillo County’s legislation, employers with employees in these jurisdictions should evaluate how it might impact their business. Additional information might become available on the websites for the Maine Department of Labor, Nevada Office of the Labor Commissioner, and Bernalillo County.
Paychex can also provide additional support to help your business with its HR needs, including helping keep you up to date on federal and state regulations that affect compliance.