As I mentioned yesterday, I’m taking a good look this week at Connecticut’s new Paid Sick Leave Law, which goes into effect January 1, 2012. Yesterday, I commented on afundamental problem with the law (and its recently issued guidance) withrespect to figuring out if an amusement or tourism employee even qualifies forpaid sick leave in the first place. Today, though, I want to look at an issue that will uniquely and significantly impact seasonal employers in our industry: the Magic Number 680.
By now, most employers are probably aware of the significance of this figure. In case you are not, however, it is one of two threshold "hours-worked" requirements that an employee has to meet before he or she is entitled to use paid sick leave. It sounds simple and straightforward enough: an employee is not entitled to use any paid sick leave until 1) he or she has worked a minimum of 680 hours for an employer and 2) the employee has worked an average of ten hours per week in the preceding calendar quarter. We’ll get to that second one in a few minutes, but for now, I want to concentrate on the first - specifically a facet of the 680-hour rule that is easy to miss and is going to impact seasonal employers and their bottom line in a big way starting in the summer of 2013. The Connecticut Department of Labor sums it up nicely: the “680 hour requirement is a one time requirement. Once service workers meet the 680 hours, they never have to meet it again for the same employer.” This has potentially huge implications for seasonal operations, not in 2012, but in 2013.
The issue arises from Section 4(c) of the new law which states that
Any termination of a service worker’s employment by an employer, whether voluntary or involuntary, shall be construed as a ‘break in service.’ Should any service worker subsequently be rehired following a break in service, the service worker shall
(1) begin to accrue sick leave in accordance with section 2 of this act, and
(2) shall not be entitled to any unused hours of paid sick leave that had been accrued prior to the service worker’s break in service unless agreed to by the employer.
Section 2 of the Act contains the two threshold hours-worked requirements mentioned above (680 total hours / 10 hours per week average in the last calendar quarter). But what is easy to miss is that following a “break in service” an employee does not have to work another 680 hours to start using paid sick leave. Rather, if the employee had previously worked 680 hours before leaving his or her employment, that employee has forever satisfied this requirement for this employer. Similarly, if the employee only worked 300 hours before leaving initially, upon returning, the employee need only work 380 more hours to satisfy the hours threshold.
To see the potential impact of this rule in operation, consider first a year-round fast food restaurant or retail store. It might employ a hundred employees (probably less in many cases) and, of those, some will quit before ever working more than 680 hours and some will stay for many more than 680 hours. Turnover generally proceeds in drips and drabs – maybe two or three terminations and two or three new hires a month (maybe less in a bad economy). And when terminated employees leave, for the most part there is no intent to return – either because they don’t want to or because their employer won’t let them. That’s the way most year-round employers in the service industry work. For those employers, therefore, the one-time 680-hour threshold is really nothing to get worked up over. There will always be a good mix between employees who have sick time and those that do not. Moreover, barring a store closure, there is no looming end date by which all of these employees will be terminated en masse. Finally, the break in service provisions will not be an issue with respect to the vast majority of employees who, once they leave, will never be on the payroll again.
By now, it should be obvious, though, how this rule could impact seasonal employers. For those, the “normal” situation described above is exactly reversed, and the sheer numbers are far greater. Rather than having a hundred employees, even a modestly large seasonal operation might have five hundred or a thousand. Most will be hired at or near the same time, and almost all will be terminated at the same time at the end of the season. Moreover, a very large percentage of those employees fully intend to return to the job next year. So, in 2013, instead of starting over with 500-1000 employees all of whom have to work 680 hours to get their paid sick leave, seasonal employers will be faced with 250-500 returning employees (assuming a 50% return rate) who will have either already reached the 680 minimum or who are close to it. What this adds up to is this: Whereas in 2012, most seasonal employers will probably not pay a dime of sick leave to seasonal employees, in 2013, a large percentage of the seasonal workforce could be entitled to paid sick leave at the busiest time of the season (sick leave that must be used before the end of the year or it is forfeited forever) and consequently employers will undoubtedly find their labor costs significantly increasing as a result.
Adding to the burden, the new law has no limitation on how long a break in service may last. Under the Act, if a seasonal worker works all season in 2012, satisfies the 680 hour requirement, then leaves and returns to work in 2016, 2026, or 2066, the 680 hour requirement is still satisfied. Presumably, therefore, employers (seasonal and year-round alike) will be required to keep records of the hours every one of their former employees worked, well, forever. After all, assuming the employee is still alive and not incapacitated, the possibility exists that every employee will someday return from a “break in service” and will be entitled to pick up right where they left off. It seems highly unlikely to me that the Legislature expects the employee to know how many hours he or she worked on their first go-round. I’m willing to bet the State of Connecticut expects employers to know this information. For seasonal employers with a huge annual influx of employees in May and a mass exodus of these same employees in October, this could be hugely burdensome.
So is there an bright side here? Maybe. First, while the 680-hour rule is a one-time requirement, seasonal employees don’t also carry over unused sick time from the previous season. So, no one will start the season with a week of sick time already under their belt. Accrual of sick days will reset every year. That should make budgeting somewhat easier for employers.
Second, let’s not forget about the other threshold requirement, i.e. that an employee has to work an average of 10 hours per week in the preceding calendar quarter to be entitled to use paid sick leave. That requirement does reset after a break in service so seasonal employees will still need to satisfy that before using sick time. However, let’s be honest here, that is not much of a requirement to meet. Assuming that most seasonal employees in Connecticut begin work in April or May, working an average of 10 hours a week in the Second Quarter (April – June) is not very difficult. Just working weekends or a day or two a week will probably be enough to satisfy that requirement. Which means that come July and August – the busiest months of the year for seasonal operations in this industry – a lot of seasonal employees will have paid sick time coming their way – sick time that is “use it or lose it.” Anyone think no one will use it?
Coming next time ... My final thoughts on this new legislation: “Of Documentation and Discipline”