[16] NJ Division of Local Government Services, supra n.16, LFN 2008-10 (2008). *sS]zt&`y/]a4*UmKo6_. And 80% of towns surveyed allowed sick leave payouts when employees resigned, died, or were fired. Four municipalities allow the accrual beyond the following year based on business necessity. Clarification by the Legislature regarding these issues may be appropriate. It further found that even when caps on such payments were in effect, administrators circumvented them with other contract provisions, making them meaningless. Municipalities must, however, evaluate whether employees are subject to either or both the 2007 and 2010 laws because the Legislature intended for both statutes to be implemented. This law applies to almost all employees in New Jersey. If it appears that the 2007 and 2010 laws have been violated through annual or excess payments, an attorney and an independent auditor or accountant should be engaged to report on the extent of violations and to prepare a corrective action plan, including amendment to existing leave records that were prepared under unlawful policies. 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. The following items of income are not subject to New Jersey tax. 11A:6-19.2 and N.J.S.A. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Sick leave that accrued in 2010 for an employee who was earning $50,000 may be paid day-for-day in 25 years based on a $200,000 salary. 11A:6-19.2 and N.J.S.A. 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. 18A:30-9. Nikita Biryukov most recently covered state government and politics for the New Jersey Globe. 2016-42, 42 N.J.P.E.R. PERC has held that the conversion of vacation leave to another form of leave that does not expire and may be carried indefinitely is not prohibited by N.J.S.A. The Legislature could require multiple levels of written approval within the local government, including by the municipal financial officer, municipal manager, and attorney. OSCs report and analysis make clear that municipalities are wasting, and committing to waste, public funds on sick leave payments that either currently violate or will violate the 2007 and 2010 laws. As a result, even after enactment of the 2007 and 2010 laws, many municipalities may still make substantial lawful payments to those employees of potentially hundreds of thousands of dollars per employee. In order to ensure compliance with the laws and ensure that employees do not improperly rely on policies or contract provisions that are unlawful, municipalities should reflect the terms of the 2007 and 2010 laws in their ordinances, employee handbooks, personnel policies, and contracts. Payment will be taxable in the tax year received. For example, one municipality allows its firefighters to accrue 240 hours (approximately 30 eight-hour days) of vacation leave year to year. The higher contract limits apply even when the employees were hired after May 21, 2010. DEIJ Policy | Ethics Policy | Privacy Policy. Dr. Jones had 900 hours of sick accrued as of May 1, 2001. NJ Division of Local Government Services, supra n.16, LFN 2008-10 (2008). [4] The committee found that [s]ick leave is not part of a general compensation plan and that [m]any school districts and municipal governments throughout the State grant and allow employees to accumulate significant amounts of sick, vacation, and other forms of paid leave and receive cash compensation for unused leave annually during employment and retirement.[5], To address its concerns, the committee recommended legislation be enacted to limit sick leave compensation and the carryover of vacation time in a way that would standardize supplemental compensation for accumulated sick leave for all public employees at different levels of government in the state. Laura Maddenlaura.madden@osc.nj.gov609-912-6125. For example, the Borough's Business Administrator collected unlawful sick leave payouts of nearly $10,000 in 2018 and 2019 and was entitled to a $360,000 payout when he retired - including a $160,000 in unlawful sick and vacation leave payouts. Based on these findings, it is likely that hundreds of other New Jersey municipalities have made or have committed to make unlawful payments that will cost New Jerseys taxpayers for years to come. [23] See In re City of Atlantic City, No. 40A:9-10.4. ^$(IulwyYi=3~$p_!5uHx*Z%%C \FE\&,*KF(9|.$,d,6`8F@@]D[u9pk/NYc]CX3[,iN(8)tZ:^~qVxJ~\h}g.+8O {`1 Specifically, of the sixty municipalities OSC reviewed, three municipalities allow for conversion of vacation time to other leave that can accrue for more than one year. of Educ., P.E.R.C. ofMount Holly, P.E.R.C. Div. In those cases, because the value of the sick leave payment is based on the number of days at the employees salary level, the sick leave payment could exceed $15,000. No. EDISON - Months after he was suspended, former Fire Chief Brian Latham officially retired late last year, with a severance agreement that paid him $260,507.43 for unused vacation and sick . Earned Sick Leave Is the Law in New Jersey Employers of all sizes must provide full-time, part-time, and temporary employees with up to 40 hours of earned sick leave per year so they can care for themselves or a loved one. This report identified 57 municipalities with policies and contracts that violate the sick leave provisions of the 2007 and 2010 laws and 17 municipalities with policies and contracts that violate the vacation leave provisions of the 2007 and 2010 laws. of Higher Educ., 91 N.J. 18, 30 (1982); Bethlehem Twp. The 2007 and 2010 laws were adopted to save taxpayers from costly leave benefits payments to public workers that go far beyond their normal wages. The laws apply to New Jerseys 565 municipalities, 600 school districts, and 21 counties, as well as hundreds of other local entities like water, sewer, and parking authorities. One half of the value of your unused sick leave balance (Tier 1 & Tier 2) Lump-sum payment for Comp Time paid out (Tier 1 & Tier 2) Vacation payout (Tier 1 only) Contact PERS for additional information on plan definitions, benefit calculations, forms and more. This suggests that the Legislature did not intend to allow bonuses and incentives tied to sick leave and that such compensation is inconsistent with the reforms. When you retire, you may receive a payout of your unused sick and annual leave. For civil service municipalities, an existing law already imposed the same limitations on the accrual of vacation leave as the 2007 vacation leave reforms. v. Bethlehem Twp. The statement accompanying the law noted that the law would implement the Joint Committees recommendation regarding sick leave, stating that it would bring supplemental compensation for accumulated unused sick leave in line with the current law and practice for State employees, thus standardizing this benefit for public employees serving at different levels of government in the State.[18], The 2010 law also extends the one-year cap on carryover of vacation leave to all employees of non-civil service municipalities and school districts. Published: Feb . 15-63, 2015 N.J. PERC LEXIS at 20-1 (2015). However, if you file a resident return, you must report the total amount of nontaxable interest on the "Tax exempt interest" Line of your return: The portion of a distribution from a New Jersey Qualified Investment Funds; and Nine municipalities have contracts with no pre-conditions, except a maximum number of days, for the purchase of annual unused sick leave. Upon a qualifying retirement, an employee may qualify for a sick leave payment. Similar provisions were adopted for municipalities, counties, and other non-state entities involved in the civil service system, N.J.S.A. In order to prevent future improper payments, municipalities that failed to comply with the 2007 and 2010 laws have a duty to correct their leave records to prevent unlawful payments from actually happening. Mayors and council members who want to lower property taxes are missing an opportunity to do so. 11A:6-19.2 and N.J.S.A. This review shows widespread non-compliance with the 2007 sick leave reforms. 3, 212th Leg. 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. . Whether an employee quits, is laid off, or is fired, employers are not required by law to pay out accrued vacation time. The 53-page document, released Jan. 6, attempts to answer employers' questions and . For the purposes of this review, OSC requested that municipalities provide information concerning sick leave policies and contracts that were in effect from 2017 through 2021. Agency Recordkeeping Requirements Sure, you don't have to give your employees paid time off. No. The Fair Labor Standards Act (FLSA), which sets regulations for wages and overtime, does not mandate payment for unused vacation time. 40A:9-10.4. "There are regularly payments of $100,000 or almost $200,000; in our Palisades Park report, we calculated that the unlawful sick leave and vacation for one employee was $160,000," said Kevin Walsh, the acting state comptroller. Four municipalities offer incentives for employees who use less than a set number of sick leave days annuallyeither increasing the number of unused days or the value the unused days for which they can be paid. Eight municipalities have contracts that on their face authorize sick leave payments that exceed the $15,000 cap. [31] In this report, terminal leave, or early leave, is where an employee received payroll checks prior to retirement, without attending work. OSC makes the following recommendations (1) to the municipalities whose policies and contracts that were found to be deficient; (2) to other local governments; and (3) to the Legislature. No. 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. Enforcing the law would have resulted in a 30% reduction in his retirement payout. Non-civil service municipalities are those that have not adopted the provisions of Title 11A. 124 0 obj <> endobj Because the vacation accrual provisions of the 2010 law, and the prior civil service statute, are not comprehensive or explicit as to vacation leave conversion, or annual payment, such conversion or payment has been found to be negotiable. No court or other adjudicative entity has ruled on whether something less than a financial payment, such as receiving extra vacation days, constitutes supplemental compensation that would violate N.J.S.A. 18A:30-3.5and18A:30-3.6. The Legislature could require supplemental payment policies to be posted online and require supplemental payments to be publicly noticed for 30 days and then approved by resolution of the council, with justifications and relevant documentation made available to the public. Section 124.39. That goal has not been achieved in the large majority of municipalities OSC reviewed. 40A:9-10.4, and school boards, N.J.S.A. Municipalities failed to distinguish between employees who are subject and are not subject to the 2007 law. The comptroller's survey found: 80% are letting employees cash out their sick time when they resign or change jobs. First, a majority of the surveyed municipalities have already made payments that violate the 2007 and 2010 laws. The Legislature also limited how long and how much vacation leave employees may accumulate. Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. OSC further recommends that the Legislature amend and supplement the 2007 and 2010 laws to more effectively prevent excessive supplemental payments to local government employees as a way to reduce the burden of property taxes. Leaves without pay; list dates, if any: 11. . Likewise, no municipality incorporated the guidance provided in LFNs 2007-28 and 2008-10 in an ordinance or employee handbook.[27]. The principal elements of N.J.S.A. OSC found that for senior employees covered by the 2007 law: The chart in Appendix B summarizes the findings involving these 41 municipalities. The opinion was unpublished and is thus non-precedential. However, other employees may not receive more. Some public employees in New Jersey have been getting big payouts for unused sick time when they retire. The 2010 law did not supplant the 2007 law, although the two laws may overlap.[26]. None of the municipalities reviewed by OSC designated in an ordinance or employee handbook provision which senior employees or titles are subject to the sick leave provisions of the 2007 law. It should be noted that OSCs review relied substantially on survey responses, as well as municipalities polices, ordinances, and contracts. (N.J. 2010), https://www.njleg.state.nj.us/2010/Bills/AL10/3_.HTM. $1B in unused leave time looms over N.J. towns. 2016-42, 2015 NJ PERC LEXIS at 126 (finding the statute preempts the contract terms for those hired after May 21, 2010). Employees wishing to defer payment should complete a Sick Leave Payment at Retirement - Deferral form. The statutory-based, untenured chief administrative officer of the organization, such as: Business Administrator; County Administrator; or Municipal or County Manager; or Municipal or County Administrator appointed under the authority of a local ordinance; or similar positions. Annual payments to employees covered by the law are not permitted. 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. 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. 137, 2015 N.J. PERC LEXIS 23 (2015). 11A:6-3(e), for civil service municipalities, and contrary to the 2010 reforms for employees hired after the effective date. In 2010, the Legislature passed and Gov. The provision does not impact the terms in any collective negotiations agreement (CNA) with a relevant provision in force on that effective date. A majority of the municipalities reviewed comply fully with the vacation leave requirements of the 2007 and 2010 laws, but many still do not. 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. Our stories may be republished online or in print under Creative Commons licence CC BY-NC-ND 4.0. [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. PERC, following longstanding precedent regarding interpretation of laws,[35] has concluded that the vacation leave statutes do not bar the conversion of vacation leave into other forms of leave and do not bar financial compensation for unused vacation. 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. No. 18A:30-3.6); In re Twp. The steps provided above for the municipalities whose contracts and policies have been found to be deficient should be followed by local governments that identify unlawful components in their policies and contracts or weaknesses in their internal controls. In addition, almost all municipalities have, through their policies and contracts, agreed to make payments in the future that will violate the 2007 and 2010 laws. 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. Similarly, in 2006, the State Commission of Investigation (SCI), an independent fact-finding agency charged with investigating waste, fraud, and abuse in government, issued a report focused on compensation and benefits received by public school administrators. A-3817-14T2, 2017 N.J. Super. 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. Deferred comp accounts have certain tax advantages as outlined in Section 457(b) of the IRS tax code. Over two-thirds of the municipalities OSC reviewed have entered into contracts and maintained policies that allow for payments to senior employees that violate the 2007 law. 52:14B-1 to 52:14B-31, that interpret and implement the 2007 and 2010 laws. New Jersey Monitor provides fair and tough reporting on the issues affecting New Jersey, from political corruption to education to criminal and social justice. Violations of the requirements to cap payments at $15,000 expose municipalities and taxpayers to substantial one-time payments of hundreds of thousands of dollars decades into the future. 40A:9-10.4 related to sick leave payments being made at retirement and at no other time is clear. [34] These laws generally limit the accrual of vacation leave to the succeeding year only. The 2007 law applies to senior employees, such as municipal managers and department heads. (N.J. 2010), https://www.njleg.state.nj.us/2010/Bills/AL10/3_.HTM. For example, one municipality caps accrued sick leave payments at $7,500 for employees across multiple contracts but two contracts only apply the cap to employees hired after January 1, 2013 and another applies only to those hired after January 31, 2014. The findings identified in this report lead OSC to the conclusion that municipal officials are either unaware of the 2007 and 2010 reforms or are consciously disregarding them. [28] The failure of the municipalities to acknowledge the 2007 law leads senior employees, who are likely already paid the most, to continue to be eligible to receive payments that the Legislature intended to ban. [36] Atlantic City, P.E.R.C. Public workers who retire with less than $7,500 in unused sick pay would receive payments over a five-year period to cover the cost of health care coverage or medical expenses, according to the. Employees may accumulate to lower property taxes are missing an opportunity to do so stories may republished... 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