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. The Legislature also limited how long and how much vacation leave employees may accumulate. The laws apply to New Jersey’s 565 municipalities, 600 school districts, and 21 counties, as well as hundreds of other local entities like water, sewer, and parking authorities.
The 2007 law applies to senior employees, such as municipal managers and department heads. The 2010 law extends the limitations imposed by the 2007 law to any employee hired after May 21, 2010, regardless of title or position. Senior employees who had already accrued leave worth more than $15,000 when the 2007 law was enacted may retain it, but other employees covered by the two laws may not receive more than $15,000 for accrued sick leave and may receive that payment only at retirement – not annually and not when they switch jobs. The laws also prohibit employees from carrying over more than one year’s worth of vacation leave.
Notably, the laws do not apply to most employees hired prior to May 21, 2010. 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. Those costly ongoing payments show what the 2007 and 2010 laws are intended to prevent over time.
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