Arizona employers have less than two months to prepare for the new paid sick time provisions that will go into effect on July 1st, 2017. Arizona voters passed the Arizona Fair Wages and Healthy Families Act, or Prop 206, in November of 2016.  Prop 206 has two important provisions: 1) raising the state’s minimum wage to $10.00 per hour, which went into effect in January; and 2) mandatory paid sick time effective July 1.  Arizona is one of only eight states to mandate paid sick time.

On May 5, the Industrial Commission of Arizona (ICA) released a Notice of Proposed Rulemaking that contains a draft of the paid sick time regulations. A copy of the draft regulations can be found here. This Notice also opens up the process for the public to submit comments on the proposed regulation until June 5th. The proposed regulation gives the public clarification and clues about how what the final law will mandate.

The following summarizes the proposed regulation’s key provisions:

Accrual of Paid Sick Time

Pursuant to the proposed regulation, for every 30 hours worked, an employee will accrue one hour of paid sick time. For employers with 15 or more employees, the accrual of paid sick time is capped at 40 hours per year for each employee, and employers with 14 or fewer employees are capped at 24 hours per year.

What Sick Time Can be Used For

Sick time can be used for:

  • Medical care or mental/physical illness, injury, or health condition;
  • A public health emergency; or
  • Absence due to domestic violence, sexual violence, abuse or stalking.

This also applies to the care of a family member for the causes listed above.

Unused, Accrued Paid Sick Time

Accrued, unused paid sick time carries over to the following year; however, employees may not use that carried-over time to exceed their 40 or 24-hour annual caps. The law also allows employers to pay out unused, accrued paid sick time at the end of the year if they provide the employee with a bank of 40 or 24 accrued hours of sick time for the following year, depending on the employer’s size.

Recordkeeping and Notice Requirements

Employers must post the ICA’s model sick leave poster in a conspicuous place that employees will see. There is a “small employer” exception to the posting requirement for those businesses that gross less than $500,000 in annual revenue.  Employers are also required to keep payroll records that include, among other things, daily hours worked, accrued sick time and how much sick time the employee has used. Employers must maintain these records for the prior four years.

The paid sick time rules are nuanced and will require many changes on behalf of Arizona employers.  Some complications include how this law applies to independent contractors and employees who earn tips or varied pay rates, and penalties for violations of the law.  For more information on Prop 206 and how it will affect you, Davis Miles and Payday HCM are co-hosting a Prop 206 Q&A session presented by Scott Gibson  Emma Jo Chalverus on Wednesday, June 7th at 11:30 a.m. at Davis Miles McGuire Gardner, PLLC. For more information on the session, please visit this link.

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