In November 2016, Arizonans passed Proposition 206. This proposition, entitled the “Fair Wages and Healthy Families Act,” not only increased the state’s minimum wage, but also created new requirements regarding paid sick time in Arizona. This article details the changes regarding paid sick time and the steps employers should be taking before July 1, 2017.

Overview of the Paid Sick Time Requirements

Before the passage of Proposition 206, Arizona did not require employers to provide paid sick time to employees. However, Proposition 206 establishes new requirements regarding (1) paid sick time accrual, (2) permissible uses of paid sick time, (3) how to handle unused paid sick time, and (4) notice to employees regarding paid sick time. These requirements apply to private employers and political subdivisions of the state and become effective July 1, 2017.

Accrual. Under Proposition 206, employers must provide employees with paid sick time. Employees must accrue at least one hour of paid sick time per 30 hours worked. Employers with 15 or more employees must allow employees to accrue, and use, up to 40 hours of paid sick time per year. Employers with less than 15 employees must allow employees to accrue, and use, up to 24 hours of paid sick time per year.

Permissible Uses. Employers must allow employees to use paid sick time for the following purposes:

• mental or physical illness;

•  care for a family member who has a mental or physical illness;

• a public health emergency; and

• to address issues related to domestic violence.

Employees do not need to provide prior notice to the employer if the leave is “not foreseeable” unless the employer has implemented a written policy setting forth how notice should be provided. If the leave is foreseeable, then employees must “make a good faith effort” to provide notice. If possible, employees must make a “reasonable effort” to avoid “unduly disrupting the operation of the employer” when scheduling paid sick time. Employers may not require an employee to find a replacement as a condition of using paid sick time, retaliate against an employee for use of paid sick time, or count paid sick time absences against an employee.

Unused Paid Sick Time. Proposition 206 provides employers two options regarding unused paid sick time. First, employers may allow unused paid sick time to carry over. If an employer allows paid sick time to carry over, employees are still only entitled to use the amount of time required by the statute unless the employer sets a higher limit. Second, if an employer does not allow for paid sick time to be carried over, then the employer must pay employees for unused paid sick time at the end of the year and provide the employee with an amount of paid sick time that is available for the employee’s immediate use at the beginning of the subsequent year. Employers are not required to pay out the unused paid sick time of employees who have been terminated, have resigned, or have retired, unless the employer has a policy or practice of doing so.

Notice to Employees. Proposition 206 requires employers to provide certain notices to employees. Among other things, employers must provide a summary of each employee’s paid sick time on or with each regular paycheck. The summary must include (1) the amount of earned paid sick time available for the employee, (2) the amount of earned paid sick time taken by the employee to date that year, and (3) the amount of pay the employee has received as earned paid sick time.

Next Steps for Employers

Employers should immediately take steps to ensure compliance with Arizona’s new law. To comply with this law, employers should consider taking the following steps.

• Revise Policies. Employers should review current policies to determine whether they are adequate.  Many existing policies, including “use it or lose it” policies or policies that do not permit accrual of paid sick time until an employee has been employed for a specified period of time, will not comply with the new law.  If current policies are inadequate, employers and/or their legal counsel should revise existing policies or draft new policies to be implemented by July 1.

• Provide Notice. Employers should become familiar with the notice requirements. Among other requirements, the Industrial Commission will require a new posting to accompany other required workplace posters.

• Payroll and Recordkeeping Requirements. Employers should coordinate with their payroll companies or internal payroll personnel about how paid sick time will be tracked and reported, and be prepared for the additional recordkeeping requirements imposed by the law.