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The city of Portland last month joined Seattle, San Francisco, Washington, D.C. and Connecticut when it passed an ordinance requiring employers to provide paid sick leave to their employees.

Under the ordinance, private businesses with six employees or more must provide up to 40 hours of paid sick leave per year to employees who work at least 240 hours per year in Portland, while businesses employing fewer than six employees in Portland must offer up to 40 hours of unpaid sick leave per year.

Federal, county and local governments are exempt from the ordinance, with the exception of the city of Portland itself. In including city employees under the new law, Mayor Charlie Hales said that Portland is “consciously different in many ways and it’s time the city’s values are reflected in its economic policy as well.”

Effective Jan. 1, 2014, employees will begin accruing one hour of sick time for every 30 hours worked – up to a maximum of 40 hours per year. Employees hired thereafter will begin accruing sick time immediately, but not be able to use their hours for the first 90 days of employment.

While many observers have applauded the new ordinance, some business groups have expressed concern about the cost, logistics and education of business owners. Currently, no money is allocated in the city budget to communicate with business owners about the ordinance. There are also concerns about Portland businesses being disadvantaged compared to others in the state that are not required to pay for sick leave.

Among other things, the ordinance requires covered employers to establish a designated means – such as a designated telephone number – for the employee to use when notifying the employer that sick time is being used. Employees will be required to notify the employer of the need for sick time before the start of the employee’s shift, “or as soon as practicable.” For absences lasting more than three consecutive days, employers may require verification from a health care provider.

Employers that already provide a minimum of 40 hours per calendar year of “paid time off through a PTO policy,” “that can be used under the same provisions” of the ordinance do not have to provide any additional sick leave.

Employees may use sick leave in increments of one hour for the “diagnosis, care or treatment” of a mental or physical illness, injury or health condition being suffered by themselves or a family member. Family members include spouses, domestic partners, parents, children, grandparents, grandchildren and parents-in-law. Sick leave also may be used for issues related to domestic violence, harassment, sexual assault or stalking as defined under Oregon law.

The Oregon Bureau of Labor and Industries or the city will create a notice that employers will be required to post at the worksite.

Many questions remain to be answered concerning enforcement, application and matters such as how benefits will be affected and how the new law applies to unionized workers. Between now and the end of the year, Portland City Council will work with both supporters and opponents of the law to develop rules and regulations to answer those questions.

On the heels of Portland passing its sick leave ordinance, both the U.S. Senate and House of Representatives reintroduced versions of the Healthy Families Act, which would require businesses with 15 or more employees nationwide to provide up to 56 hours of paid sick leave annually.

Employers get relief from agency penalties for stale violations

A statute of limitations is the period of time within which a lawsuit must be filed. After the statute of limitations has run, the party wanting to sue may have lost legal recourse. The “discovery rule” suggests that the statute of limitations clock starts ticking not when the violation occurs, but when it is reasonably discovered.

Agencies that investigate businesses – such as the U.S. Occupational Health and Safety Administration – have long used the discovery rule to assess penalties against businesses for violations that may have happened and been addressed long ago. Generally, the agency uncovers these violations while investigating something else.

A recent U.S. Supreme Court decision, Gabelli v. SEC, held that the discovery rule cannot be used in this way. The court held that a statute of limitations for civil penalties means what it says: The government must file suit seeking civil penalties within the allotted time, and the time for filing is not delayed until the government discovers or reasonably could have discovered the alleged unlawful act.

In making this ruling, the court distinguished between government actions seeking penalties and private actions brought by plaintiffs, noting that the government employs investigators who have the power and duty to seek out violations of law, while private plaintiffs have no such investigatory powers.

In the context of the OSHA violation described above, the statute of limitations is generally six months. The Supreme Court decision means that companies will not have to defend themselves or pay civil penalties for violations that occurred more than six months ago and have long since been remedied.

Howard Rubin is a shareholder in Littler Mendelson’s Portland office. Contact him at 503-221-0309 or [email protected].

Don Stait is Special Counsel in Littler Mendelson’s Portland office. Contact him at 503-221-0309 or [email protected].