or more hospital days are excluded from the 6.0 days average. One municipality allows its police officers the option to include unused vacation time in their sick time bank. They also prohibit officers and employees covered by the law (which this report refers to as senior employees) from receiving annual sick leave payments, stating that such supplemental compensation shall be payable only at the time of retirement. [9] Those statutes limit payments for accumulated unused sick leave to $15,000, or the amount accrued as of the effective date of the law if more than $15,000. [24] See In re Town of Hammonton, P.E.R.C. Six municipalities allow the conversion of unused annual sick leave to another form of leave. 11A:6-19.2., Nevertheless, PERC has continued to interpret the statute to reflect the May 21, 2010 effective date, and, in several cases after 2017, has found that the statute preempts the terms of the contract for employees hired after May 21, 2010.[24]. See In re Newark, P.E.R.C. State employees lose vacation that they do not use, while some local governments make annual payments for unused vacation leave and convert unused vacation leave to other kinds of leave that may impose financial burdens on local governments and taxpayers. That amount included $160,000 in pay for sick and vacation leave that was improper because the business administrator should not have been able to receive more than $15,000 in sick leave payment and should not have been permitted to carry over more than one year of vacation. 4A, civil service). For civil service municipalities, an existing law already imposed the same limitations on the accrual of vacation leave as the 2007 vacation leave reforms. Four others provide payment for unused vacation leave. Two laws that were intended to result in widespread systemic reform have largely failed to result in meaningful change in the 60 municipalities OSC surveyed. [1] In its final report issued in December 2005, the Task Force recommended, among other things, that policies be instituted to end sick day manipulation, and that [t]he States cap on sick day payouts of $15,000 must be implemented at all government levels. It should be noted that OSCs review relied substantially on survey responses, as well as municipalities polices, ordinances, and contracts. A limit that also applies to county and local employees hired since 2010. If you retire with any unused sick leave, it is converted into creditable service for your pension calculation. Phil Murphy and will go into . The risks to taxpayers may be substantial because it is possible that local governments will be responsible for large supplemental payments by allowing vacation leave conversion and payments. Ten municipalities require that employees either have a number of years of service or a number of sick days accrued in order to receive an annual sick leave payment. The Legislature also adopted two statutes imposing limitations on the accrual of vacation leave for non-civil service municipalities, N.J.S.A. The following programs are administered in accordance with Civil Service Commission regulations: Supplemental Compensation on Retirement - Eligible retirees are entitled to one half pay for unused accumulated sick time at retirement, up to a maximum of $15,000. The three statutes specifically apply to senior employees but exempt those who were hired in the normal course of employment and approved in a general or routine manner.[10] The 2007 law also specifically exempts a person who holds a professional license or certificate to perform and is performing as a certified health officer, tax assessor, tax collector, municipal planner, chief financial officer, registered municipal clerk, construction code official, licensed uniform subcode inspector, qualified purchasing agent, or certified public works manager.[11], The intent of the Legislature in enacting these reforms was to align local sick leave policy for senior employees with state employee sick leave policy and to reduce the expenses that taxpayers must pay for employee benefits.[12]. Pictured is South Brunswicks public works building. OSC recommends that all municipalities, school districts, authorities, commissions, counties, etc. OSCs recent audit of a municipality that awarded 55 days of vacation to a police chief, and then paid him annual compensation for unused vacation, shows the danger of allowing annual vacation leave payments. It also recommended tasking a state agency with compliance oversight of sick and vacation time and suggested lawmakers should decide whether to keep in place exemptions to the law for certain senior local government workers. [34] These laws generally limit the accrual of vacation leave to the succeeding year only. No. terminal leave or early leave) without regard to when the employee was hired, in violation of N.J.S.A. TRENTON - An investigation by the Office of the State Comptroller (OSC) has revealed that the Borough of Palisades Park paid tens of thousands of dollars each year to employees who had unused sick leave, in violation of state laws passed expressly to stop such costly payouts. It further found that even when caps on such payments were in effect, administrators circumvented them with other contract provisions, making them meaningless. See RCW 41.40.010. The Commission concludes that the Grievant was hired after the effective date of the . 40A:9-10.4. A majority of municipalities have already wasted public funds on payments that violate the 2007 and 2010 laws. 52:15C and N.J.S.A. [17], As with the 2007 law, the intent of the Legislature in enacting the 2010 sick leave reforms was to align local sick leave policy for persons hired after May 21, 2010 with state sick leave policy. of Higher Educ., 91 N.J. 18, 30 (1982); Bethlehem Twp. [36] Atlantic City, P.E.R.C. Sick leave cash outs are deferred compensation for services previously provided. The Legislature should also consider directing one or more state agencies to adopt regulations under the Administrative Procedures Act (APA), N.J.S.A. of Educ. Specific findings regarding whether each of the 60 municipalities complies with the 2007 and 2010 laws are included in Appendix A of this report. [26] The New Jersey Supreme Court has ruled, in the context of litigation involving boards of education, that the Legislatures enactment of the 2010 law did not repeal the already-existing 2007 law and that, therefore, the terms of the two statutes addressing sick leave are enforceable. 87, 2015 NJ PERC LEXIS 126 (2015) (interpreting N.J.S.A. Municipalities are willingly and unlawfully assuming substantial financial obligations that must be paid by todays, tomorrows, and future generations taxpayers.. Phone - 888-320-7377 Email - customer-service.pers@state.or.us Leaves without pay; list dates, if any: 11. . These short-term employees who are far from retirement, and thus should have received nothing, receive payments of thousands of dollars when they resign or are discontinued after a few years of working with a municipality. [2] State of New Jersey Benefits Review Task Force, The Report of the Benefits Review Task Force to Acting Governor Richard J. Codey, at 19-20 (2005), https://www.state.nj.us/benefitsreview/final_report.pdf (hereinafter the Task Force Report). Of the 48 municipalities, 15 explicitly allow payment for accrued sick leave at retirement or death of the employee, but not resignation. The 2007 vacation leave reforms provide that a senior employee of a local government who does not take vacation in a given year because of business demands shall be granted that accrued leave only during the next succeeding year, except when there has been a gubernatorially-declared emergency. 11A:6-3(e), for civil service municipalities, and contrary to the 2010 reforms for employees hired after the effective date. In Barila v. Board of Education of Cliffside Park, the State's Supreme Court held that the unambiguous terms of the collective bargaining agreement between the teachers' union and . 8, 2021 NJ PERC LEXIS 71 (2021) (finding payment of accrued sick leave not permitted upon resignation or transfer for employee hired after May 21, 2010); In re Twp. Also, incentives and bonuses threaten to impose substantial supplemental cost on taxpayers for sick leave. They may face litigation costs if they seek to recoup improper payments and if public employees who were unlawfully promised sick leave payments seek to enforce those promises. OSC found that 29 municipalities, or 48 percent of survey respondents, have contracts or ordinances that allow employees to receive improper sick leave payments annually, without regard for whether the employees were hired prior to May 21, 2010. Read the Earned Sick Leave law Read the final Earned Sick Leave rules The report says East Orange spent more than $1 million for these waivers between 2015 and 2019, and Jersey City's cost was $1.6 million in 2018. OSC further recommends that the Legislature impose accountability measures. Vacation in a year that could not be taken because of a declared state emergency may accrue at the discretion of the employer until a plan is developed to decide if the leave is used or the employee is compensated for it. No. 40A:9-10.3; N.J.S.A. [20] The Legislature noted that the 2010 law would standardize vacation leave benefits with the current law and practice for state employees. Requirements involving transparency would also help protect taxpayers. 18A:30-9.1. was sanctioned by N.J.S.A. Laura Maddenlaura.madden@osc.nj.gov609-912-6125. 13 municipalities permit sick leave payments annually, instead of just at retirement; 22 municipalities have not imposed the $15,000 cap on sick leave payments; 29 municipalities allow for accrued sick leave payments at a time other than retirement (i.e., at resignation or death); and. 40A:9-10.4. Six of the sixteen municipalities include a specific number of days or hours of vacation leave that can accrue, which may be more than one years worth of vacation leave. policies and procedures, employee handbooks, contracts. [30] OSCs report involving the Borough of Palisades Park noted that the business administrator under his contract was due to receive $360,000 for all accrued and accumulated sick, personal, severance and vacation time as of the end of 2019. Forty-one of the 60 towns studied made sick leave payments that ran afoul of those statutes between 2017 and 2021, the comptroller found. On April 20, 2020, in a 4-3 decision, the New Jersey Supreme Court ruled that a teacher's right to be paid for unused sick leave at retirement did not vest until the teacher retired, in accordance with the negotiated agreement between the board and the local union. In addition to documents received in response to the survey and otherwise requested directly from municipalities, OSC obtained documents that were available from other public sources, including the online database of employment contracts maintained by PERC. NJ Division of Local Government Services, supra n.16, LFN 2008-10 (2008). For example, one municipalitys contract allows for payment of 33.3 percent of all accumulated leave, as long as the employee has ten years of service to the municipality. 1 . No. The report used as an example the practices in Palisades Park. The higher contract limits apply even when the employees were hired after May 21, 2010. 11A:6-3(e), nor the 2007 or 2010 laws, and as a result, is subject to negotiation between municipalities and unions. The principal elements of the 2007 law and LFNs 2007-28 and 2008-10 that municipalities must consider in order to evaluate whether their sick leave policies are valid and whether payments may be lawfully made to senior employees include: In 2010, the Legislature enacted legislation to further implement the Joint Committees recommendations regarding sick and vacation leave and to extend the reforms from the 2007 law to a larger universe of public employees. The original goal of subjecting local and state employees to the same policies at retirement has not been achieved. The 57 municipalities that are identified in Appendix A of this report as having policies that violate the 2007 or 2010 laws are hereby directed to develop a corrective action plan that details the steps the municipality has taken and will take to comply with the following recommendations. Based on these findings, it is likely that hundreds of other New Jersey municipalities have made or have committed to make unlawful payments that will cost New Jerseys taxpayers for years to come. The Benefits Review Task Force (the Task Force), created by an executive order issued by Governor Richard Codey in 2005, conducted a comprehensive review of employee benefits for public employees. [23] The court found that because the CNA in force on May 21, 2010 did not expire until December 31, 2012, the exclusion of employees who commenced service during the interim period . Under the Legislature's reforms, senior employees who had already accrued leave worth more than $15,000 when the 2007 law was enacted may retain it. 11A:6-19.2 and N.J.S.A. The State of NJ site may contain optional links, information, services and/or content from other websites operated by third parties that are provided as a convenience, such as Google Translate. Bd. PERC held that the 2010 laws provisions on sick leave apply to all employees hired after May 21, 2010, and the proposed contract provision for allowance of terminal leave for employees hired prior to December 31, 2012 was preempted by statute. Legislators from throughout New Jersey thought they had reformed the states sick leave policies, but the reforms have largely failed with these 60 municipalities and likely many more, acting State Comptroller Kevin Walsh said. Official guidance regarding the earned sick leave law in New Jersey went into effect Jan. 6. South Brunswick was one of 60 towns the State Comptrollers Office surveyed in their investigation into sick leave payouts to public workers in New Jersey. OSC recommends those municipalities proceed as follows: Based on the clear evidence OSC collected from 60 municipalities, it is very likely that the policies of hundreds of other local governments in New Jersey are in violation of the sick and vacation leave provisions of the 2007 and 2010 laws. (N.J. 2010), https://www.njleg.state.nj.us/2010/Bills/AL10/3_.HTM. The user is on notice that neither the State of NJ site nor its operators review any of the services, information and/or content from anything that may be linked to the State of NJ site for any reason. 52:14B-1 to 52:14B-31, that interpret and implement the 2007 and 2010 laws. The review also did not include a full calculation of potential future financial liabilitiesthat is, how much in improperly accrued sick leave each municipality may be responsible for in the future if its policies are not amended. 5.02.18. This report has demonstrated that the Legislatures efforts at comprehensively reforming the sick leave practices of local governments have substantially failed in most of the municipalities reviewed. %%EOF Yes, sick leave payment at retirement may be deferred up to one year after retirement. [25] In instances in which the municipal policies or union contracts limit payments after May 21, 2010, OSC has not evaluated whether those effective dates are based on contracts that were in effect at the time the law was enacted. In these municipalities, the payment-plus-additional-benefits policies skirt the 2010 reforms. 137, 2015 N.J. PERC LEXIS 23, 20-21 (2015). 40A:9-10.4 that municipalities must consider in order to evaluate whether their sick leave policies are valid and whether payments may be lawfully made include: When applied appropriately, these factors lead to the Legislatures goal of cost savings being achieved for employees hired after May 21, 2010 because the municipalities financial exposure for unused sick leave for any employee hired in the past 12 years is a maximum of $15,000. OSC found that fourteen municipalities have caps in place taking effect after the May 21, 2010 date[32]in one case, as much as 5 years after the effective date of the law. Under the 2010 law, payment for accrued leave must be made at retirement only, capped at $15,000, and should not be paid as sick leave disguised as regular income. For the northern New Jersey counties of Bergen, Passaic and Morris, plus most of Essex, the total liability for municipal employees the amount of money currently needed to cover retirement. New Jersey has now become the tenth state to enact a statewide mandatory paid sick leave law. 25, 2020 NJ PERC LEXIS 114 at 10 (2020); In re City of Atlantic City, P.E.R.C. [12] S. 17, 212th Leg. Res. 11A and N.J.A.C. 11A:6-19.2, which applies to local governments that have elected to be in the civil service system, provides that those municipalities shall not pay supplemental compensation to any officer or employee for accumulated unused sick leave in an amount in excess of $15,000. It further provides that any such supplemental compensation shall be payable only at the time of retirement, based on the leave credited on the date of retirement. In 2007, and again in 2010, in an effort to reduce property taxes, the Legislature enacted laws that placed limits on when and how much local government employees may be paid for unused sick leave. They. Chris Christie signed a bill (P.L.2010, c.3) that capped sick leave payouts for municipal, county and school employees at $15,000. 2 of Title 11A, Civil Service, of the New Jersey Statutes, the use of 3 six or more consecutive days of accumulated sick leave within the 4 12-month period preceding the date that employee first becomes 5 eligible for retirement, without a medical necessity verified in 6 writing by a physician, is prohibited. If any such person requires in any school year less than the specified number of days of sick leave with pay allowed, all days of such minimum sick leave not utilized that year shall be accumulative to be used for additional sick leave as needed in subsequent years. In another municipality, certain union employees that resign or retire are entitled to receive a percentage of accumulated sick leave to be taken as early leave with pay (up to 150 days) and entitled to receive a percentage of the balance as a cash payment (up to $13,000). 11A:6-19.2 and N.J.S.A. Others allow for the payment of rollover vacation time under certain conditions, for example, if not used by July 1 of the following year. While the 2007 and 2010 laws do not eliminate all significant payments at retirement, proper implementation of the laws would substantially reduce how much municipalities are required to pay.[30]. Unused sick leave. 18A:30-3.2. If, as of the effective date of the law, a senior employee had accumulated sick leave worth more than $15,000, the employee was allowed to retain that greater amount, but was prohibited from accumulating more than that amount. All employees hired after May 21, 2010 are limited to a maximum $15,000 payment at retirement only. 40A:9-10.4 related to sick leave payments being made at retirement and at no other time is clear. Nine municipalities have contracts with no pre-conditions, except a maximum number of days, for the purchase of annual unused sick leave. The 29 municipalities that use taxpayer funds to provide annual payments to employees hired since May 21, 2010, sometimes directly and other times through inappropriate conversions and credits, are violating the 2010 sick leave reforms and wasting taxpayer money. 163 0 obj <>stream Educ. See State of N.J. Office of the State Comptroller, Investigative Report: An Investigation into the Fiscal Operation of the Borough of Palisades Park, 28-29 (Mar. For example, one municipality allows its firefighters to accrue 240 hours (approximately 30 eight-hour days) of vacation leave year to year. Based on the 60 municipalities OSC reviewed, the goals of the 2007 and 2010 laws involving especially sick leave have not been meaningfully implemented. 18A:30-3.6. The 2010 sick leave reforms extend the same general sick leave policies included in the 2007 law to all other employees of municipalities and other political subdivisions who were hired after the May 21, 2010 effective date of the law. BENCOR's Special Pay Plan is an employer-sponsored retirement plan for full-time employees. In its 2021 report on Palisades Park, OSC found that the borough's Business Administrator was collecting annual sick leave payouts and was entitled to a $360,000 payout when he retired, $160,000 of which was for unlawful sick and vacation leave. See New Jersey Ass'n of Sch. 11A:9-1. 2016-42, 42 N.J.P.E.R. Five municipalities place a cap on sick leave payments but then provide for additional payments or allowances that enable the total compensation to exceed the cap. LFN 2008-10 states that the positions covered by the 2007 law generally include positions that involve executive decision-making or are senior management of the organization whose hiring or appointment requires approval of a governing body. It identifies the following positions as being covered by the 2007 law: LFN 2007-28 also addresses the accrual of vacation leave, restating the statutory requirements that all vacation leave of covered employees must be used in the year it was earned, unless it was not used due to business demands. This leave can then be carried forward to the subsequent year. In enacting the 2007 and 2010 laws, the Legislature sought to protect taxpayers from wasteful and abusive sick leave payments that municipalities and taxpayers struggled to pay. The following items of income are not subject to New Jersey tax. [15] NJ Division of Local Government Services, Implementing Chapter 92 of 2007 The Impact on Local Units, LFN 2007-28 (2007), https://www.nj.gov/dca/divisions/dlgs/lfns/07/2007-28.doc. Nearly half, 29, made such payments annually. Another allows for unlimited accrual due to workload as long as it is approved by the governing body. Admrs v. Schundler, 211 N.J. 535, 556 & 559 (2012) (The legislative history for N.J.S.A. Payments made at those amounts to employees hired after that date would violate the 2010 law. Similarly, one municipality provides payment at retirement for 50 percent of all accumulated sick leave capped at $10,000 but allows 50 percent of the remaining value be used a terminal leave. 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