O’Scanlon Responds to NJ Comptroller’s Report on Unlawful Sick Leave Payouts in 57 Municipalities

Calls for education and consequences for those who fail to comply

The Office of the State Comptroller (OSC) released an investigative report on July 7 revealing that 57 of the 60 municipalities it surveyed were not following state laws limiting sick leave payments. Senator Declan O’Scanlon sent a letter to Comptroller Kevin Walsh in February 2021 requesting that his office conduct a broader investigation after it uncovered that the law was being flagrantly flaunted in at least one municipality. O’Scanlon praised the Comptroller for his taking up the cause and for the meticulous report.

“I’m glad we had a hand in initiating this broader study. The most recent report by the Comptroller clearly shows that 95 percent of the municipalities that were surveyed were not following New Jersey’s laws limiting sick and vacation leave payments,” said O’Scanlon (R-13). “Although I am thankful that a detailed review took place, these results are stunning and clearly demonstrate that limiting payouts by law isn’t enough—we also need to be diligent in educating local officials and enforcing the law to protect property taxpayers by making sure municipalities comply. Reforms don’t work unless they are enacted. Leaving precious property tax savings on the table is a slap in the face to taxpayers. And these costs are potentially significant in many municipalities.”

In the past, sick leave payouts for New Jersey’s public employees reached an unsustainable level, placing an extreme burden on taxpayers and leading to the enactment of P.L.2010, c.3. That law places a $15,000 cap on sick leave payouts for public employees hired after May 21, 2010 and prohibits those payouts from being provided at any time other than at an employee’s retirement.

In February 2021, O’Scanlon sent a letter to Walsh requesting the full services of the Office of the State Comptroller to conduct a thorough review of sick leave policies and practices for municipal employees in New Jersey. The request was in response to numerous complaints that public employees in certain towns in Bergen County were receiving sick leave payouts on an annual basis and in excess of the $15,000 cap. After a thorough investigation, the Comptroller released a report in March 2021 that highlighted widespread violations in Palisades Park—a borough in Bergen County with a population of 20,000 residents.

“I was a sponsor of the laws that were blatantly violated last year in Palisades Park. And unfortunately, the latest report from the Comptroller has demonstrated that this egregious behavior is not limited to a small borough in Bergen County—it is far more pervasive,” added O’Scanlon. “Incidentally, these laws received much fanfare when they were passed and these kinds of violations should have been hard to miss for anyone who was actually paying attention. Our challenge now is figuring out how to make sure this stops. People need to understand that it is the job of government officials to be up to date on what our laws are. It ought to be the responsibility of municipal attorneys, labor attorneys, and auditors to ensure their municipalities are complying with the laws we passed.”

“We’ve had conversations with the League of Municipalities, and they are actively educating local officials. We’re hopeful that they will send a letter out to all 564 municipalities to help ensure further education.”

The OSC’s report found that 80 percent of municipalities it reviewed have policies or contracts that allow payments of accrued sick leave upon resignation or termination; 60 percent have policies that allow for sick leave payments that exceed the cap of $15,000; and 48 percent of survey respondents have contracts or ordinances that allow employees to receive improper sick leave payments annually, without regard for when employees were hired. All of these findings violate state law.

“Perhaps the most alarming aspect of the report is how widespread the behavior truly is,” added O’Scanlon. “This is clearly a statewide problem that has most likely cost taxpayers many millions of dollars over the last several years. I am grateful to Comptroller Walsh for his cooperation, and I am glad that his office was able to uncover the truth and shed some light on this conduct which, at the very least, is lazy and incompetent—and in the case where the law is being intentionally ignored—reprehensible.”

If you have any tips of suspected government mismanagement or fraud, you can always report them anonymously to Office of the State Comptroller by calling 1-855-OSC-TIPS (1-855-672-8744) or by emailing comptrollertips@osc.nj.gov.