Pfeiffer on Sick Leave Payout Abuse

October 12, 2022

A proposed bill would crack down on New Jersey towns abusing unused sick time and vacation payouts to employees following a report that found a “staggering” amount of municipalities violated state law.

The bill comes after a report by New Jersey acting State Comptroller Kevin D. Walsh that found nearly all 60 towns his office surveyed violated some part of statewide reforms approved in 2007 and 2010 that capped how much a town could pay its employees at retirement.

The 2007 and 2010 laws were created to address what was “rightfully perceived” as large payouts by local governments, said Marc Pfeiffer, assistant director of the Bloustein Center for Local Government Research at Rutgers.

“While the Legislature attempted to end one specific practice, it didn’t take into account that labor unions wouldn’t just sit by and watch a negotiated benefit disappear,” Pfeiffer said. “Management and labor came up with alternative approaches that were not specifically barred by the law, which is coming up now a decade later.”

The bill, sponsored by assemblymen Roy Freiman, D-Somerset, and Paul Moriarty, D-Gloucester, was approved 3-0 in the committee with two abstentions. It is now being sent to the Assembly State and Local Government Committee. There is currently no legislation related to this in the Senate. The bill would need to pass both chambers of the Legislature before making its way to Gov. Phil Murphy’s desk.

If the bill is approved, the challenge will be negotiating changes in a labor contract, Pfeiffer said. “I would expect [unions] to find some way to replace it that could take any number of forms. They’re only limited to the specifics of the law and the creativity of labor management.”  

The financial penalties that towns could face will also be difficult to enforce, according to Pfeiffer, with the different ways the benefit could appear in same shape or form.

“It will create a significant burden on a state agency that monitors over 1,000 local governments for compliance,” he said. “The Comptroller was right in raising the issue, but solutions are a lot more complicated than they initially appear.” 10/12/22

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