Paid Leave Soon to be Required in Nevada

On June 12, 2019, Nevada Gov. Steve Sisolak sign into law SB 312, which will require, for the first time, that Nevada private-sector employers provide employees with up to 40 hours of paid leave per benefit year. 

Although originally styled as "sick leave" legislation, the final bill as enrolled requires that paid leave be made available to employees to be used for any reason. With limited exceptions, employers with 50 or more employees must provide paid leave to their employees in proportion to the number of hours worked. The bill makes no exception for part-time employees. The legislation becomes effective on Jan. 1, 2020.

The Basics

Although Nevada employers have previously been under no legal obligation to provide leave, paid or unpaid, many have long held policies providing vacation, sick leave or paid time off to full-time employees.  Under SB 312, private employers with 50 or more employees in Nevada must now provide each employee with "at least 0.01923 hours of paid leave for each hour of work performed" in a "benefit year," which the bill defines simply as "a 365-day period."  The bill does not distinguish between full- and part-time employees in this regard. 

Under the statutory formula, an employee who works 40 hours a week for a full year is entitled to approximately 40 hours of paid leave, which the employee may take without providing a reason for the leave to his or her employer.  

The legislation also prohibits an employer from requiring employees using leave to find a replacement worker. Employees must provide their employer notice of their use of paid leave "as soon as practicable." The law also allows employers to require that employees use paid leave in a minimum time increment, not to exceed four hours. Finally, the bill prohibits employers from retaliating against employees for using paid leave.

Leave Accrual

Under the bill, employers have the option of granting paid leave hours on an accrual basis or by frontloading the hours on the first day of the benefit year.  Using the accrual method, employees will accrue paid leave over the course of the benefit year in accordance with the statutory formula.  Alternatively, under the frontloading method, employers may provide employees with all the paid leave they are expected to accrue throughout the year on the first day of the benefit year.  Employers electing to frontload should be cautious, however, as SB 312 does not address what happens in the event an employer using this method underestimates an employee's leave accrual for the benefit year.  SB 312 permits employers to impose a waiting period before new employees may use leave by requiring employers to allow new employees to use paid leave beginning on the 90th calendar day of employment. 

While SB 312 does not expressly allow employers to cap the amount of paid leave an employee may accrue, it does allow them to cap an employee's use of paid leave at 40 hours in a benefit year. The bill further provides that employers that elect an accrual system may limit the amount of accrued leave that may be carried over from year to year to a maximum of 40 hours per benefit year. Additionally, SB 312 arguably permits employers that frontload leave on the first day of the benefit year to have a "use or it lose it" policy, as it makes no mention of year-to-year carryover under such a system. 

Separation from Employment

Notably, SB 312 makes clear that employers may, but are not required to, pay an employee for any unused paid leave upon separation from employment. That said, if the employee is rehired within 90 days after separation, any previously unused paid leave must be reinstated, provided the separation was not the result of a voluntary resignation.

Rate of Compensation

SB 312 requires employers to compensate employees for paid leave "on the same payday as the hours taken are normally paid" and "at the rate of pay at which the employee is compensated at the time such leave is taken." 

In the case of employees paid by the hour, the rate of pay is calculated by the employee's hourly rate. The rate of pay for employees paid on a non-hourly basis, such as by salary, commission or piece rate, must be calculated by dividing the employee's total wages earned during the immediately preceding 90 days by the number of hours worked during that period. The calculation of total wages includes nondiscretionary bonuses earned by the employee. However, an employer need not include bonuses earned at the sole discretion of the employer, overtime pay, hazardous-duty pay, holiday pay or tips.

Reporting Requirements and Records

SB. 312 imposes certain reporting requirements on employers. First, it provides that employers must "maintain a record of the receipt or accrual and use of paid leave" for a period of at least one year, which must be made available to the state labor commissioner upon request.  Second, employers must "provide to each employee on each payday an accounting of the hours of paid leave available for use by that employee."  Employers may provide the accounting through the system used to pay their employees.

Enforcement

SB 312 empowers the labor commissioner to enforce its provisions. Employers that violate the paid leave law are subject to administrative penalties and any other remedies available to the labor commissioner. In addition, the labor commissioner may refer violations to a district attorney or the attorney general for prosecution. 

Under the bill, any employer that violates the legislation may be guilty of a misdemeanor. The bill does not expressly create a private right of action for employees to enforce its provisions.

Exemptions

The new paid leave requirements stated in SB 312 do not apply to certain employers. To begin with, employers with fewer than 50 employees in Nevada need not comply with the new legislation. Further, the bill also exempts employers from its requirements during the first two years of operation of their business. Finally, SB 312 expressly states that its provisions do not apply to an employer if, "pursuant to a contract, policy, collective bargaining agreement or other agreement," the employer provides paid leave in an amount equivalent to at least 0.01923 hours of leave per hour of work performed. Unfortunately, the meaning of this last exemption is not altogether clear.  Comments contained in the minutes of the Senate Committee on Commerce and Labor indicate the exemption was intended to apply to employers that provide at least 40 hours of paid leave under a collective bargaining agreement. Whether or not this exemption also applies to other employers that offer employees more than the minimum paid leave under the statutory formula is somewhat less clear. Employers contemplating using this exemption should consult legal counsel.

Unanswered Questions

The language of SB 312 raises a number of questions. To begin with, SB 312 specifically exempts temporary, seasonal, and on-call employees from paid leave benefits, but the bill offers no definitions for those terms. 

In addition, while SB 312 requires employees to give notice of their use of paid leave "as soon as practicable," the bill does not provide any guidelines to assist employers in determining what "practicable" notice means.  In addition, by its terms, SB 312 applies only to private employers with 50 or more employees. The legislation, however, provides no guidance on determining what constitutes 50 employees. Are only employees who are eligible for leave under the bill counted? In other words, does it exclude temporary, seasonal, and on-call employees? Must an employer have 50 or more employees for a minimum period during the year for the law to apply? Or is one day sufficient? Finally, what constitutes notice "as soon as practicable" and is an employee's failure to give notice as soon as practicable acceptable grounds for denying paid leave? 

Next Steps

SB 312 will take effect on Jan. 1, 2020. All Nevada employers with 50 or more employees should review their current paid leave policies for compliance. Those without leave policies should begin planning to implement a compliant policy. Given the myriad uncertainties in the legislation, employers would be well advised to consult employment counsel in reviewing and implementing such policies.

Rick Roskelley and Neil Baker are attorneys with Littler in Las Vegas. © 2019 Littler. All rights reserved. Reposted with permission.