MA Sick Time Law

Remote Quality BookkeepingBusiness Management, Podcast

Franchise Bookkeeping

 

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Episode Summary

This podcast is about the implementation of the new MA sick time law that took effect July 1, 2015. The law has made business owner’s lives tougher because not only are they now required to offer this benefit, they must now track and properly report who is accruing and taking sick time no matter how many employees they have.   Full details about the MA Sick time Law can be found at the Office of the Attorney General, however, a brief synopsis of some of the main points is as follows:

  • Sick time is accrued for ALL EMPLOYEES.
  • Eligible after 90 days of employment but accrues from day 1.
  • 30 hours worked = 1 hour of sick time
  • Sick time is unpaid for under 11 employees, paid for 11 employees and over.
  • Paid sick time is their standard hourly rate for most employees but must be at least minimum wage for employees not making the hourly minimum (tipped employees).
  • Employees may take sick time up to 24 hours of consecutive sick time without requiring a doctors note for proof of illness.
  • Putting a process in place for how an employee calls out sick can protect both the company and the individual in the case of policy abuse.
  • Employee handbooks and job descriptions need to be updated.
  • Employer can NOT require the employee to find coverage for their shift before allowing the time off.
  • Time accrued is NOT paid upon termination.

MA Sick Time Law

 

In this episode, we’re going to discuss the Mass sick time law. Why don’t you give a little overview of what that means and what that is?

RQB | MA Sick time Law

RQB | MA Sick time Law: Essentially tracking and requiring sick times to be given to employees.

Absolutely. The Massachusetts sick time law is essentially tracking and requiring sick times to be given to employees. We’re looking at essentially dividing what typically is labeled as PTO, it’s a different category. Normally, people have vacation policies outside of sick time policies as well. What a lot of people don’t understand is that while vacation is not mandatory, of course sick time in Massachusetts now is. Some pretty brief rundowns of what you’re looking at. This is eligible after 90 days of employment. The way that it works is it works on an accrual basis. Every 30 hours that an employee works, whether they’re salary or whether they’re an hourly employee, they’re entitled to one hour of sick time.

We have a cut off depending on what level of employee count you have. If you have one to ten employees, you’re looking at unpaid sick time, meaning they’re allowed to take the sick time if needed, as long as they’ve accrued it. However, you do not have to pay them for it since you are considered a self small employer. Anybody with eleven or more employees, we’re looking at paid sick time. The way that it’s paid is at least minimum wage for employees like restaurant employees where they’re making tips. Instead of the three dollars an hour, we’re looking at a ten dollar an hour sick time. For somebody else, we’re looking at at least their hourly wage or if you’re a salary employee, their average hourly ratio per week.

Got you. That being said, I’m assuming that a lot of people have misconceptions about things. Just hearing that alone and not knowing pretty much anything about Mass sick time law, I bet you that there’s a lot of people that think just because they have let’s say six employees, that they’re still entitled to pay benefits. What are some common misconceptions in this sick regulations?

As always, when they’re rolling out a law like this, especially as it’s being edited and it’s being edited now, there are a lot of misconceptions. The first one that I think is probably the big one is the eligibility for the law. Like I mentioned, if you have one employee, you need to be tracking this information. Whether your payroll provider is doing it or the software that you’re using for your payroll needs to be tracking this regardless of how many employees you have. If you’re paying one person that’s not an owner, you need to be tracking it.

Because no matter what, someone still is going to accrue sick time regardless of the company’s size. It’s all going to depend on paid or unpaid.

Absolutely, 100%. That’s really the distinction, whether it’s paid or unpaid. Couple of the misconceptions is … Listen, the tracking is going to be so important for this. I don’t know if you know this, the Department of Labor and OSHA, they’re hiring more auditors. This is one of the things that they’re targeting. The tracking is very important and the other reason it’s so important is because you do actually have time carrying over for the sick time from year to year. The way that that works is very simple.

RQB | MA Sick time Law

MA Sick time Law: Let’s say I accrued 20 hours of sick time this year in 2016, when I go into 2017 and I haven’t used that 20 hours, it’s still going to be with me.

Let’s say I accrued 20 hours of sick time this year in 2016, when I go into 2017 and I haven’t used that 20 hours, it’s still going to be with me. However, what you will see is that it will go away the following year. You’re not going to keep this permanently. Even if the employee is accruing a ton of sick time hours, I did the math out the other day, if you have an employee that’s a full time employee, 40 hours a week, 52 weeks a year, you’re looking at close to 52 hours of sick time that they accrue. The max that an employee’s ever going to be allowed to take is 40 hours a year. Regardless of how much they’ve accrued, even if they have 100 accrued sick hours, the most they’re ever going to take is 40 hours a year.

Luckily, also it’s not paid on termination of the employee so it’s use it or lose it. It’s not like vacation time where a lot of vacation policies will have people being paid for the vacation time that they haven’t taken as an employee when they leave. You don’t have to do that in this case.

Sick time does not count. There is no buy out at the end. If you leave, you do not get paid that accrued time?

Correct. Which is one of the big reasons why a lot of people are now splitting their PTO between, hey, you get a week of vacation. You can either, hey, take your vacation or take your sick time, one or the other.

Basically, you’re trying to say, “Hey, you have …” Like you said, you only have 40 hours you can use. Let’s say you’ve accumulated 60, they’re like, “Hey, why don’t you take 20 plus hours out of your sick time so you don’t lose it later on?” Otherwise, it’s pointless if you end up … You’re going to lose this money.

Correct. Exactly. One of the biggest things that I can say honestly is that this law has the biggest impact on the policy that each business. When this law came in place, all of my clients that I work with, I made sure that they updated their handbooks, their employee handbooks. I made sure they updated their job descriptions for each position at their place. I made sure they updated their policies and put a real restrictive way of having the employee contact the employer to notify that their taking their time off. There are ways of trying to stop the abuse of the law, which a lot of people are fearful of.

The biggest thing that I can think of right now is that your handbook and your job descriptions are going to be your biggest advocate when dealing with something like this. If you don’t have an updated handbook and job descriptions and if you get into that legal grey area, as everybody knows, the government typically sides with the employee. Unfortunately. Another really big misconception that people are having is around what they’re doing with their PTO policy. A lot of the times I hear that, “My vacation time covers me in this law.” It technically can, however what you need to do is you need to make sure you have a proper policy in place.

RQB | MA Sick time Law

MA Sick time Law: Your handbook and your job descriptions are going to be your biggest advocate

What a lot of my clients right now are doing is they’re saying, “Hey listen, I already gave you a week of vacation time because you earned it. This Massachusetts sick time is independent of that vacation time I’m giving you. However, I write them together and let you know that at the beginning of every year, you have that 40 hours. That 40 hours, you can either designated as sick time or vacation time but your total is never going to go over 40.” That’s an argument that you can make if you have that policy in place in your handbook.

If I try and make that policy acknowledgement something that’s done after the fact, after I’m in litigation or after I have a confrontation with an employee, 99% of the time, it’s not going to go your way.

Basically you’re saying is spell it out. Make sure that when you hire somebody new, or even your existing employees, make sure that the handbook is revised and make sure that it spells out clearly what those hours are, how to use them, what they are and basically everything that can be broken down. Spell it out as simple and as plain as possible.

Exactly. The handbook is going to be your advocate in this space. I think of a handbook, an employee handbook as almost like a lease of a position at a company. If you were renting an apartment to somebody and you are a landlord, you’re going to have them sign a lease. I think of an employee handbook as a lease on a job position at a company. It’s a way of protecting the company from any ramification.

That’s never a bad thing. Speaking of the companies, now does this vary by industry? Is that going to affect the new law any different way?

Let’s take things like aliens out of the conversation because they have their whole other set of rules that they live by. However, I will say that the biggest impacts that you’re going to see are industries that have lots of lower paid hourly employees. The biggest ones that I can think of are two off the top of my head. Restaurant and retail. These people are making three bucks an hour as a server or minimum wage ten bucks an hour as a retail employee. A lot of the time, restaurants and retail will have either verbal policies or precedent in which I’m an employee and I want to call out sick and the only way that I can do that is if I find somebody to replace my shift. They can no longer require them to do that. The onus is on the employer to find a replacement and not the employee.

Wow, really?

It is. The other thing that you can do however is let’s say that employee that called out did find a replacement. They went out of their way, they are good employee, they found a replacement and they swap shifts with somebody in the same week. If they’re swapping shifts, you can avoid docking them their sick time because in this case they’re essentially swapping shifts. They’re not essentially taking time away from the business. That’s a big one as well where a lot of people, especially restaurants are one of those, “Hey, if you’re sick, I don’t want you here but you need to find somebody to cover shift.” You can’t do that.

RQB | MA Sick time Law

MA Sick time Law: One of the big things that they’re going to probably want to do is ask for a doctor’s note.

The other thing that I think is a big thing, because a lot of business owners are concerned about the abuse of this law. One of the big things that they’re going to probably want to do is ask for a doctor’s note. Unfortunately, this law, an employee can miss 24 consecutive hours of work without requiring a doctor’s note. Whether they have six hour shifts, eight hour shifts, two hour shifts or one 24 hour shift, that 24 hour span can be a week, two weeks, whatever. They can’t require a doctor’s note to take that time until they hit that 24 hour threshold. The other thing that I think is really funny is the wording of this law, I’ve actually sat down and read it, is very gray in a lot of places. One of my favorite things is the quote where the employee must make a “reasonable attempt to notify the employer of absence”. If you think of it, what does that mean?

I texted you, dude. I texted.

Exactly. One of the things, once again, we circle back to the handbook. If you’re putting in a call out policy in place, “Hey, you have to call this one number. If this one person doesn’t answer, you leave a message on this one mailbox.” I’m putting a policy in place around this calling out so when an employee abuses this and says, “I told Joe Schmoe to tell you that I wasn’t coming in today. Didn’t he do it?” You now have the ability to say, “This is now a disciplinary problem because I have a policy in place surrounding the sick time. I’m not denying you the sick time, you just need to do it in the right way.” That’s another thing that will help prevent the abuse as well.

Always cover your butts in writing. Never do a hearsay thing.

Absolutely, 100%. You’d be really really shocked, the crazy statistic right now directly from the Department of Labor in 2016 is that seven out of ten small businesses are out of compliance in some way. Whether that the OSHA laws, Department of Labor, pay practices, you name it. Just be aware, small business owners, they’re going to target you a lot more because they know that’s where the easy money is.

Actually the government does seem to have it out for the small businesses. It’s pretty sad that it comes to a point that the small businesses are the one that has so much pressure put on them like that when they’re really the backbone of this country.

Absolutely, 100%.

It’s so confusing. Like you said, just the way that these things are worded, the technical lawyeristic jargon that’s in there. It’s so difficult I feel for the average person to be able to read one of those and actually understand every little bit of that. We’re not in tune with that wording. They just go on this long drawn out contracts and we’re just supposed to somehow interpret that the right way. When we don’t, boom, we’re the ones that get fined.

Honestly, it’s completely unrealistic for the government to expect a small business owner to one, continue to run their business and two, to keep up with everything that’s changing. Regardless of your political leanings, during the eight years of George W. Bush, there were fifteen laws that directly impacted small business past in the eight years. The past seven under the Obama administration, there’s been close to 1000.

Wow.

It’s almost impossible for them to keep up with this. In fact, I would say it is impossible for business owners to keep up with all these changes. I’ve met with ones that are very active and doing their research and doing the right thing. Unfortunately, when you get to a certain point, it just becomes overwhelming, which is why you’ll see a lot of them turning to human resource outsourcing or at least having other people do their handbooks and keep them up to date because it’s a full time job now.

How do you run a business and also keep up with thousands of new laws? You’re asking way too much from one person.

Exactly. Listen, a lot of these are family businesses. I have a lot of the five, six employee company where it’s all family members or wives of family members, etc. where a lot of them will ignore a lot of it. That’s something that is not allowed anymore. They don’t care that you’re a family business. They want to see that your documentation processes are correct, they want to see that you’re tracking the right thing regardless of how likely it would be for let’s say my brother who’s working for me to start yelling at me about sick time. It’s more that they want the tracking and they want the information.

Hoping that you screw up and they get to fine you for something.

RQB | MA Sick time Law

MA Sick time Law: This is an easy policy that most people are not aware of and they’re not properly doing what they need to.

Absolutely. Listen, this is what I call low hanging fruits because this is an easy policy that most people are not aware of and they’re not properly doing what they need to because they don’t think that it affects them. I think one of the biggest things that I say is, listen, this low hanging fruit is no longer easy for you to get fined on one thing. When they come in and they find something easy like this to get you on, they’re going to continue to dig and dig and dig. It’s going to be even worse.

The thing that’s even crazier is we used to have a little bit of a separation of the different state departments, Department of Labor, OSHA, Department of Revenue, whatever. They all used to be individual silos. Now, what we’re finding is all these agencies are talking to each other a lot more frequently. Let’s say you have an OSHA violation that OSHA comes in and audits you for. You’re a lot more likely to be audited by the other agencies because they know that obviously if there’s something wrong in one segment, there’s probably something wrong in the others as well.

They’re collaborating, while you’re sitting there hoping that you don’t get caught in what you’re doing, and they’re just talking behind your back like little high school clique groups. The next thing you know, you’re going to be under the microscope because like you said, once one of them finds a violation and tells their friends, they’re all thinking, “Hmm, if they’re going to skip on that, let’s see what we can’t find huh?” Boom, surprise audit and next thing you know you’re …

You’re absolutely correct. A lot of the misconception is, like I said, they hire 1400 new auditors in the northeast last year. They can knock on doors and walk in to your business. They’re not required to notify you that they’re coming by, they’re not required to setup an appointment, they’re on the street. The reason they’re on the street is because they know that there’s money there for the government so they’re going to go get it.

That being said, is there any other important regulations, any other important facts that maybe people should know or at least what do you think somebody should take away from this listening?

I think that what most of the people that I meet with are taking away from it is that it’s getting harder and harder to do “the right thing” in the small business world right now because there are so many requirements that are in place. I suggest to most of the people that I meet with, whether they work with me or whether work with someone else, that they start to look at what I consider supplemental services for their businesses. Whether it’s through their payroll provider, through an HR outsourcing, through a lawyer, through something. Somebody that has your back to help you with these regulations and for you to be able to offload that responsibility on somebody else for them to keep up with it and only notify you when you really need to do something is where people are headed right now. It’s where the industry is headed.

Keep that professional in your pocket.

Exactly. To have a professional in your pockets is such a great deterrent for a lot of these agencies.

Jacob, thank you very much for this information. Hopefully, for all of our Massachusetts business owners, this will be useful information for them to make sure that they try to at least keep themselves within regulations. Like I said, hopefully, we can keep the government out of somebody’s hardworking pockets. I thank you again for being on.

 

 

More About Our Guest

Jacob Stebbins, a business economics graduate from Rutgers University, has been working with small to mid-sized businesses for the past seven years. Most recently, however, he has adapted a client-focused role at Automatic Data Processing (ADP). The uniqueness of the role has allowed him to become well versed in customizing Human Capital Management solutions for different sized businesses. He has worked with the one-man startup, all the way to the 300 employee company, and found solutions that fit each respectively. Each business deserves the attention of a real one-to-one relationship.