July 6, 2017 | BizRun Team
Arizona employers are about to be hit with another HR-related requirement, following the mandatory increase in minimum wage that was implemented at the start of the year. The second part of Proposition 206, also called the Minimum Wage and Paid Time Off Initiative, went into effect on July 1 and makes Arizona employers subject to providing mandatory paid sick time benefits.
Many Arizona employers voluntarily offer some form of paid sick time already. But as of July 1, nearly every business in Arizona, with few exceptions, is required to do so. The new law requires paid sick time benefits be offered not just to full-time employees, but to part-time, seasonal and temporary workers as well. It also requires that employees be allowed to use their earned paid sick time benefits to care for family members, not just themselves.
How Paid Sick Time is Accrued
Your company’s accrual rate for paid sick leave depends on your total number of employees. If you have fewer than 15 employees, you must provide at least 24 hours of paid sick time per year. If you have more than 15 employees, you must provide a minimum of 40 hours annually per employee. When determining what your company is required to do, bear in mind that your headcount total must reflect all types of employees, not just full-time.
Accrual starts on the day an employee is hired (or July 1, whichever is later). Paid sick time is earned at a rate of one hour for every 30 hours worked, until the required minimum is met.
Employees can take their paid sick time in increments as small as your PTO tracking system allows. For example, if you’re willing to track in half-hour increments, an employee could take 2.5 hours off for a doctor’s appointment instead of 3 hours or a half day.
Employees are eligible to use their accrued time off as soon as it’s earned. However, you can choose to require employees hired after July 1, 2017, to wait 90 days before actually using their time off benefits. And while it isn’t expressly stated, you have the option to “loan” sick time to an employee before it’s accrued if you choose.
How Paid Sick Time Can Be Used
Just as the reasons employees can take FMLA time off are expanding and becoming more flexible, so too are the reasons Arizona employees can take earned paid sick leave. Employees are entitled to use this benefit for any of the following reasons:
- Physical or mental illness
- Public health emergency
- Ongoing treatment (dental checkup, wellness exam)
- Absence due to domestic or sexual violence, or being the victim of stalking
- Caring for a family member with any of the above needs
Family members covered under the act include:
Children – biological, adopted, foster, stepchildren, children of a domestic partner and legal wards, regardless of age
- Parents – biological, adopted, foster, stepparent or legal guardian of an employee or an employee’s spouse or domestic partner
- Spouses – legally married spouse or domestic partner as recognized by any state or political subdivision
- Grandparents, grandchildren or siblings (biological, adopted, foster or step) of the employee or the employee’s spouse or domestic partner
Employees are not required to submit evidence of any of the above reasons to take the time off. But an employer can request proof or documentation if an employee is absent for three consecutive days or longer.
Is your Arizona business affected by Proposition 206?
As mentioned, nearly all private employers in Arizona are required to adhere to this mandatory paid sick leave policy. However, some small businesses, defined as having gross revenues under $500,000 and that are not engaged in interstate commerce or the production of goods for interstate commerce, are exempt from the requirement.
State and federal employees, most of whom already receive paid sick time benefits, are also exempt. As are solopreneurs or sole proprietors with no other employees.
If you have even one other employee (full-time or otherwise) beside yourself, you are required to provide earned paid sick time under Proposition 206. To be sure you’re in compliance, seek the advice of a trusted legal advisor.
Complying with the Paid Time Off Initiative
The new act is fairly straightforward, but there are a few gray areas that require interpretation. For example, the act does not specify how employers should calculate the hourly wage rate for earned paid sick time when an employee’s pay rate varies. It’s up to you as the employer to determine.
It also isn’t clear if earned but unused paid sick leave must be carried over from one year into the next. Depending upon your interpretation and company values, you might pay out the unused time at the end of the year or allow employees to rollover all or a portion of the unused time to the following year.
Other areas of the initiative are black and white. For example, both businesses and nonprofits are required to keep records of accrued time for each employee, as well as maintain those records for four years. Not meeting these requirements can incur penalties and fees, so it’s important to comply from the start.
Arizona’s Minimum Wage and Paid Time Off Initiative is designed to protect employees and ensure that they aren’t penalized or disadvantaged if they or their family members have medical or personal needs to attend to.
You may already be offering your staff accrued paid time off, in which case, as long as you meet the minimum required accrual based on your business size, your burden should be pretty light. Other than posting the law in a visible place for your employees to see – which is required – you should feel minimal impact.
If you haven’t been accruing time off for your employees, you’ll be in for some additional work. But before you build some complicated spreadsheet or develop an elaborate manual process, consider HR software that can easily track and accrue time off for you, like BizRun.