The city of Philadelphia has taken an unprecedented step toward regulating the private employment of domestic workers, with the Philadelphia City Council's_ _unanimous passage of the Domestic Worker Bill of Rights, which is expected to be signed into law by Mayor Jim Kenney. The bill, which is scheduled to take effect in May 2020, provides labor protections for an estimated 16,000 domestic workers within the city, defined as those who work in residence for the purposes of caring for a child, serving as a companion or caretaker for a sick convalescing, elderly or a person with a disability; housekeeping or house cleaning; cooking; providing food or butler service; parking cars; cleaning laundry; gardening; personal organizing, or for any other domestic service.
The bill, as passed, applies to all employers of domestic workers in the city of Philadelphia, ranging from households and families that may employ only one domestic worker (such as a babysitter or maid) to corporations that provide domestic workers for others, such as janitorial services and caterers. However, the bill does carve out exemptions for businesses operating primarily out of a residence, such as a home daycare business, as well as those employing home health care workers paid through Medicaid, Medicare or other public funds.
The Domestic Worker Bill of Rights affords a host of protections for employees who work more than five hours per month for their employers, including guaranteed meal and rest breaks, sick leave, and paid time off. The bill further mandates that employers establish a written contract for the services of their domestic employees that sets out basic terms and conditions of employment. In the absence of a written contract, the employer and employee will be presumed to operate under a default agreement that will be drafted by the city (the default agreement and its terms are not included in the legislation). Employers will also be required to give domestic workers two weeks' notice of termination, or four weeks' notice in the case of a live-in employee, except in instances where the employee commits "significant misconduct." However, the ordinance does not define "significant misconduct." Failure to comply with the Domestic Worker Bill of Rights can result in a $2,000 fine per violation, and retaliation against an employee who files a complaint with the newly created Domestic Workers Task Force could lead to additional penalties.
Perhaps the most groundbreaking aspect of the bill is an employer-funded portable benefits system for domestic employees. Calls for portable benefits have gathered momentum in recent years based on a growing trend known as the "gig economy," where individuals work as contractors with flexible schedules, often for more than one employer at a time. Owing to their temporary status, "gig" employees often do not have access to employer-provided benefits.
Under the bill's new system, employers will make contributions to a centralized Paid Leave Time program set up by the city. From that fund, workers will earn one hour of paid time off per 40 hours worked, with a cap of 40 hours of paid time off per year. Upon leaving their employers, employees can preserve these accrued benefits. Though the new law is scheduled to take effect in May 2020, the portable benefits system is expected to take longer to implement as the city will need to select a contractor to manage it.
While workers' advocates have lauded the Domestic Worker Bill of Rights as a landmark piece of legislation, several uncertainties remain surrounding its execution. For example, employers will need to know how the city defines "significant misconduct" such that an employee can be terminated without notice. In addition, the city will need to establish and publish the proposed "default agreement" so that domestic workers and employers will know what terms will apply absent a written contract.
Given that enforcement of the Domestic Worker Bill of Rights is expected to begin in six months, corporations, individuals and families employing covered workers should use this time to plan for compliance by May 1, 2020. In particular, employers should strongly consider doing the following:
Ensure that all domestic workers are covered by a written employment contract setting forth the material terms of the arrangement, including job duties, rates of pay, pay days, weekly schedules, rest and meal breaks, benefits, paid and unpaid leave, and employment at-will status. Failure to do so will lead to application of the city's to be drafted "default agreement," which likely will be more employee-friendly than most employers would prefer.
Budget ahead for funding that will be needed to contribute to the city's Paid Time Leave accounts. The city has not quantified how much an employer will have to contribute, but it has been reported that the Mayor's Office of Labor estimates that overall compliance with the bill will amount to a 2.5% increase in costs to the employer.
Ensure that any termination (unless for "significant misconduct") of a domestic worker in the city after May 1, 2020, provides the worker with at least two weeks (or four weeks in the case of a live-in employee) of advance, written notice of his or her last day. If an employer is unsure whether the conduct would constitute "significant misconduct," eliminating the need for advance notice, we recommend consulting with employment counsel.