In our blog post on May 22, 2015, we discussed traps that unwary employers must avoid when the Earned Sick Time law, or “EST law” for short, becomes effective on July 1. Well, that day is today, meaning all employers must revisit their sick time policies to ensure compliance with the EST law.
On June 19, Attorney General Maura Healey released final regulations for the EST law, including a number of changes that astute employers must take note of. While one should review the final regulations to capture every update, or consult with counsel about best practices, some of the trickier changes and clarifications follow.
- Interaction with State and Federal Leave Laws: The final regulations state that sick time may run concurrently with time off provided by the Family Medical Leave Act, the Massachusetts Parental Leave Act, the Massachusetts Domestic Violence Act, the Small Necessities Leave Act, and other applicable laws whereas the draft regulations stated that sick time could be used in addition to time off allowable under these laws business litigation attorney.
- Travel: The final regulations clarify that sick time may indeed be used for travel to and from an appointment, pharmacy, or other location related to the purpose for which the sick time was taken.
- Accrued Time Limits: Once an employee has accrued 40 hours of earned sick time in one benefit year, he or she does not continue to accrue additional hours regardless of additional hours worked. Further, once an employee banks 40 hours by carrying them over from one year to the next, an employer may opt to delay further accrual until the employee reduces his or her bank of earned sick time below 40 hours.
- Notice Provisions – Employees have a number of notice constraints on their ability to use earned sick time. They may not use earned sick time as an excuse for being late to work without an authorized purpose. Nonetheless, the form of notice an employee must provide for unforeseeable absences will depend on what is reasonable under the circumstances (recognizing that in some situations advanced notice may be unfeasible), and an employer may require notification of the expected duration of multi-day absences when reasonable. Employers would be wise to create a reasonable notification system for ease of use by both employees and management.
- Medical Documentation – Employers may request medical documentation for an employee’s use of earned sick time that: exceeds 24 consecutively scheduled work hours, exceeds 3 consecutive days on which the employee was scheduled to work, occurs within 2 weeks prior to an employee’s final day of work before termination (except in the case of temporary workers), or occurs after 4 unforeseeable/undocumented absences within a 3 month period (3 such absences for employees under aged 17).
- Breaks in Service – The final regulations have a comprehensive “break in service” section describing how employees who separate from their employees, either voluntarily or involuntarily, can use accrued sick time. Following a break in service of up to 4 months, an employee maintains the right to use all unused but earned sick time accrued before the break, but if the break is between 4 – 12 months, the employee can only use such time if he or she has accrued 10 or more hours.
These clarifications to the EST law are but a few of the overall updates to the law’s final regulations. There are many facets for employers to consider beyond the simple notion that employees must be afforded sick time. Employers are encouraged to speak with counsel experienced with employment law and knowledgeable about the EST law’s parameters, especially when updating their employee handbooks or drafting new internal policies compliant with the EST law.
Earlier this year, I posted about whether a policyholder has a right to independent counsel when a possible conflict of interest appears between the carrier and the policyholder. (You can read that post here.) We’re frequently asked that question, because when insurance companies agree to defend a claim, they often send a reservation of rights letter that contains dozens of exclusions and limitations that the carrier says may lead to no coverage later. Such letters understandably cause angst to policyholders, who paid for, and depend upon, protection from liability. Related issue: Policyholders are sometimes unhappy with the defense lawyers that the carriers appoint. I have one claim right now involving a major personal injury claim, for example, in which appointed defense counsel didn’t bother to speak with the policyholder until the morning of a mediation. Not good. And though most defense lawyers are sensitive to their duty of loyalty to the policyholder, it’s just human nature to remember who butters your bread.
An interesting case recently came down in California involving the independent counsel issue. The case, Travelers v. Kaufman & Broad, involved a construction defect lawsuit, in which a general contractor (Kaufman) was named as additional insured under a subcontractor’s (Norcraft) policies. Travelers appointed defense counsel for Kaufman, but Kaufman was unhappy because the law firm had represented parties adverse to Kaufman in other construction defect cases. Kaufman argued that Travelers had failed to provide it with an “immediate, full, complete and conflict-free defense.” (To me, the conflict claim doesn’t make much sense, because the fact that a law firm has represented parties against you in the past isn’t a conflict. If the law firm worked for you, and then represented parties against you, a conflict might exist.)
On the question of whether Travelers had provided an “immediate” defense, Kaufman argued that Travelers had improperly waited four months from the initial tender of claim to appoint defense counsel. Travelers, however, had sent a letter of acknowledgment only two weeks after receiving the claim, requesting a copy of the subcontract between Norcraft and Kaufman. Kaufman didn’t respond until three months later, and only after Travelers had sent a follow-up letter. After receiving the subcontract and confirming additional insured coverage, Travelers appointed defense counsel. The Court wrote: “Since [Travelers] notified [Kaufman] that it had accepted the tender approximately one week after receiving a copy of the subcontract, [Kaufman] cannot demonstrate that [Travelers] failed to provide an immediate defense.”
The Court also rejected Kaufman’s argument as to whether Travelers had provided a “complete” defense. With respect to the reservation of rights, Travelers basically stated that it reserved the right to seek contribution from Kaufman for uncovered claims in connection with settlements or judgments. The Court wrote: “Kaufman does not explain…how these provisions violate Travelers’ duty to provide a complete defense, and the court does not find that they violate the duty on their face.”
Finally, Kaufman argued that Travelers had entered into a secretly negotiated settlement agreement with underlying plaintiffs’ counsel, to resolve the claims covered by the Norcraft subcontract, and then withdrew from the underlying case once those claims were settled. The Court disagreed that the settlement was a problem, writing: “It is undisputed that Travelers had the duty to defend [and] Travelers had the right to control settlement negotiations of the covered claims without Kaufman’s participation. That Travelers settled only the claims that arose out of the work of Norcraft does not make the settlement improper, nor does it indicate that Travelers furthered its own interests, and Kaufman has not shown that it experienced increased defense fees and costs – outside of what it would otherwise have incurred – due to Travelers’ withdrawal from the [underlying] action.”
Although the Court resolved some of the coverage issues, the case went to the jury last month on the question of whether Kaufman had breached the duty to cooperate. (Not sure why the parties or the Court bothered, at this point.) The jury found that Kaufman had failed to cooperate with Travelers, but that Travelers had suffered no damages as a result. (What a waste of legal fees.)
Some takeaways: While reservation of rights letters can be frustrating and unnerving to policyholders, they do not, in and of themselves, prove that the carrier is offering less than a proper defense. Of course, I’m not sure why carriers can’t simply cover themselves by writing: “This defense is provided subject to the limitation that, if facts are later developed showing that a policy exclusion applies, the defense may be withdrawn in whole or in part.” I think it’s the 35 numbered paragraphs of exclusions and limitations that create unease for the policyholder. I have a little more difficult time accepting the Court’s conclusion that the insurance company should be allowed to conclude settlements without at least keeping the policyholder in the loop; here, however, since Kaufman couldn’t show that the settlement of the covered claims unfairly increased its expenses, it was a matter of “no blood, no foul.”
