Jessica Post, director, Fennemore Craig

On Nov. 8, 2016, Arizona voters enacted Proposition 206: The Fair Wages and Healthy Families Act, increasing the minimum wage and requiring virtually all employers to provide paid sick leave to their part-time and full-time employees. The paid sick leave portion of the Act goes into effect on July 1, 2017.

Here are the top ten things businesses need to know to comply with the Act’s requirement to provide paid sick leave starting July 1, 2017.

1. The Act covers all employees, including part-time, full-time, seasonal and temporary employees.

2. Beginning on July 1, 2017, all employees must accrue paid sick leave at a rate of one hour of paid sick leave for every 30 hours worked. This is the minimum required to comply with the Act. For employers with 15 or more employees, their employees must be able to accrue 40 hours of paid sick leave per year. For employers with fewer than 15 employees, their employees must be able to accrue 24 hours of paid sick leave per year.

3. Employers are not required to payout accrued, but unused, paid sick leave at the termination of an employee’s employment.

4. Employers cannot have “use it or lose it” policies requiring employees to use or lose their paid sick leave by the end of the year. The Act provides that employers have two choices for how to treat unused paid sick leave at year’s end. Option 1 is to pay the employee the accrued, but unused, leave and then advance the full amount of leave to which the employee will be entitled at the start of the next year. Option 2 is to carry the leave over to the next year.

5. Employees must be able to use paid sick leave in increments of one hour or less (if the employer allows employees to use other leaves in increments of less than hour.)

6. The Act does not cover only illnesses. Although the leave covered by the Act is typically referred to as “paid sick leave,” it is actually much broader than that. Specifically, an employee may use leave under this Act for any of the following reasons:
• The employee’s own physical or mental illness
• Care for the employee’s family member who has a physical or mental illness
• Public health emergency
• To ameliorate the effects of domestic violence, sexual violence, or stalking of the employee or employee’s family member.

7. The Act specifically states that employers may use paid time off “PTO” policies so long as they comply with the Act. So for example, a PTO policy must allow employees to use PTO in increments of one hour and also allow employees to accrue 40 or 24 hours of PTO in a 12-month period, depending on the size of the employer.

8. The Act prohibits employers from retaliating against an employee based on the exercise of rights under the Act, which would include using paid sick leave, filing a complaint, or participating in an investigation. In addition, the Act includes a rebuttable presumption that an employer who takes adverse action against an employee within 90 days of the employee asserting a protected sick leave right (e.g., using a day of paid sick leave) will be presumed to have retaliated against the employee. The employer can rebut this presumption with documentation that the adverse employment action was taken for a non-retaliatory reason.

9. For all employees hired after July 1, 2017, the employer may limit their ability to use any accrued paid sick leave until they have worked for 90 days.

10. The Act requires employers to provide employees with the following information on their paychecks or on an attachment included with their paycheck:
1. The current paid sick leave balance
2. The amount of paid sick leave that has been used to date
3. The monetary value of the paid sick leave used to date

– Jessica Post is a director at Fennemore Craig and practices in the area of employment and labor. For any questions you may have, please contact Jessica at jpost@fclaw.com or 602-916-5418.

Posted by Josh Coddington