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Jul 08

Acting State Comptroller Issues Report of Municipal Sick and Vacation Leave Policies

Posted on July 8, 2022 at 11:18 AM by Legislative Staff

The Acting State Comptroller Kevin Walsh issued a report on the Review of Sick and Vacation Leave Policies in New Jersey. The report reviewed the policies, ordinances, contracts, and survey results of 60 municipalities with a population greater than 10,000. The Acting State Comptroller in a press release stated “the overwhelming majority of New Jersey towns it sampled are wasting taxpayer funds by making and agreeing to take excessive sick leave payments to public employees.” However, according to the report, the State Comptroller’s Office did not include an in-depth review of the financial records of the 60 municipalities to determine what payments were actually made. 

The report does acknowledge that Public Employee Relations Commission (PERC) “is the primary entity that has interpreted the vacation leave provisions of the 2010 law. PERC, following longstanding precedent regarding interpretation of laws, 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. 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. 11A:6-3(e), nor the 2007 or 2010 laws, and as a result, is subject to negotiation between municipalities and unions. PERC has also interpreted Civil Service Commission regulations as permitting annual vacation leave payments, stating that the regulations “do not expressly and specifically prohibit an employer from agreeing to give an employee the option of a cash payment for unused but still available vacation days instead.”

The report makes the following recommendations to the 60 municipalities audited:

  • Request a legal review and amend contracts, personnel policies, and ordinances along with an attorney evaluation of “whether recoupment of any improperly spent funds or adjustments to employee leave balances is warranted and appropriate”;
  • Provide transparency and prevent improper payments through an independent auditor or accountant to assess sick leave and vacation accrual systems and controls and make any such assessment public;
  • Develop an effective system of internal controls for all supplemental payments that establish the criteria and processes for awarding, reviewing, and approving the payments.

For all other local governments, the Acting State Comptroller is recommending:

  • All local governments conduct an initial assessment to determine whether their policies are unlawful; and
  • If the 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 amendments to existing leave records that were prepared under unlawful policies.

The report also makes recommendations to the Legislature including imposing accountability measures; requiring multiple levels of written approval within the local government, including by the municipal financial officer, municipal manager, and attorney; and requiring supplemental payment policies to be posted online and publicly available for 30 days before approval by resolution with justification and relevant documentation made available to the public. 

The Acting State Comptroller also notes that the Office of State Comptroller “is required to monitor the implementation of its recommendations and report promptly to the Governor, the President of the Senate, and the Speaker of the General Assembly if a local government refuses to cooperate in the development of a corrective or remediation plan or to comply with a plan.”

We are planning to do a briefing on municipal sick and vacation leave policies and the recent State Comptroller Report on Thursday, July 14 at 12 noon with the League's Labor Relations Counsel Joe Hannon, Esq, Partner at Genova Burns and League's Labor Consultant Matt Watkins. Register for the free briefing today. 

 Contact: Lori Buckelew, Assistant Executive Director,, 609-695-3481, x112