Nevada followed in the footsteps of Maine last week and enacted legislation that requires large private-sector employers to provide paid leave that can be used for any purpose. Senate Bill No. 312’s provisions go into effect on January 1, 2020.
Paid Leave Entitlement
Nevada’s paid leave law requires employers with 50 or more employees to provide eligible employees with 0.01923 hours of paid leave for each hour worked in a benefit year, which is defined as a “365-day period.” If you do the math, this means that an employee who works 40 hours per week for one year is entitled to approximately 40 hours of paid leave.
Part-time employees accrue paid leave pursuant to the same formula. But temporary, seasonal, and on-call workers are excluded from coverage.
Interestingly, under the law, not only can the leave be taken for any purpose, but the employee taking leave is excused from providing his or her employer with a reason for the requested leave. An employee requesting leave is still required to provide the employer with notice of his or her intent to use the paid leave as soon as practicable.
Restrictions on Paid Leave
While the new law empowers employees to take paid time off for any reason, the legislation permits employers to impose a number of restrictions on leave usage. Nevada employers may:
- Require that employees use paid leave in a minimum time increment – but the increment imposed cannot exceed 4 hours;
- Mandate a waiting period that prohibits leave usage for up to 90 days following employees’ date of hire;
- Limit employees’ paid leave usage to 40 hours in a benefit year, regardless of the amount of paid leave the employee has available;
- Cap the amount of accrued paid leave that employees can carry over to a new benefit year at 40 hours; and
- Decline to pay out employees for any unused, accrued paid leave upon separation from the organization.
Use of Alternative Leave Programs
Employers that already have a paid leave program or policy in place that meets or exceeds the law’s requirements – or choose to implement one prior to January 1, 2020 – are not required to adhere to the established accrual rate or impose the leave usage restrictions specified in the law. However, the employer’s leave program (including one set forth in a collective bargaining agreement) must provide at least an equivalent amount of paid time off that may be used “for the same purposes and under the same conditions” described in the law.
Employers may forgo the accrual system entirely and use an up-front (a.k.a. front-loaded) paid time off system if preferred. Under this method, an employer provides an employee’s full entitlement of paid leave at the outset of the benefit year and does not require accrual prior to usage. This system can be easier for employers from an administrative perspective, but could ultimately result in a bigger headache if an employee works more hours than expected and is shorted paid leave as compared to the formula established by the Nevada legislature.
The Pay in Paid Leave
Employers must compensate an employee for paid leave at the rate the employee is earning at the time the employee takes the leave. This may be a simple determination for hourly employees with a single rate of pay. But if the employee is, for example, salaried, commissioned, a piece rate worker, or subject to different pay rates, a specific calculation must be performed. The compensation for paid leave must be determined by dividing the employee’s total wages earned (including non-discretionary bonuses) during the preceding 90 days by the number of hours worked during that same period. Note that employers may exclude from the calculation overtime compensation, tips, pay for holidays not worked, and discretionary incentive payments.
The paid leave must be paid out on the regularly scheduled payday, as if the employee had actually worked those hours.
Compliance for Employers
Senate Bill No. 312 requires that Nevada employers post a bulletin in the workplace describing the paid leave benefits afforded by the law. The Nevada Labor Commissioner is tasked with preparing such a bulletin and making it available to businesses online.
While the law does not require employers to provide notice of its provisions in a direct communication, employers that establish a new paid leave policy or modify an existing program to comply with the law would be well-advised to provide employees with a written copy in advance of the January 1, 2020 effective date.
Consequences for failure to comply with the law are significant – a violation is considered a misdemeanor and carries up to a $5,000 penalty.