Arizona Sick Leave Law: What Employers Must Know about Fair Wages and Healthy Families Act

Voters In Arizona Passed a Statewide Sick Leave Initiative

On November 8, 2016, voters in Arizona and Washington State passed a ballot initiative for a statewide sick leave law and annual increases for minimum wage. The new Arizona law, the Fair Wages and Healthy Families Act,  takes effect on July 1, 2017.

This gives businesses little time to prepare for the new laws, especially as several aspects of the law were defined later by Arizona’s Department of Labor. The purpose of this article is to provide a clear guide for employers who have employees that work full or part time within the state of Arizona.

Minimum Wage Schedule

Minimum wage is scheduled to increase over the next 4 years at a predetermined rate. Thereafter, minimum wage will increase based on the Cost of Living each year.

The minimum wage increased on January 1, 2017 to $10.00 an hour and increases again in 2018 to $10.50. In 2019 it increases to $11.00 and $12.00 in 2020. Tipped employees also got a minimum wage boost that increases to $7.00 in 2017 and raises each year afterwards.

Date of Increase New Minimum Wage
January 1, 2017 $10.00  – $7.00 for tipped employees
January 1, 2018 $10.50  – $7.50 for tipped employees
January 1, 2019 $11.00  – $8.00 for tipped employees
January 1, 2020 $12.00  – $9.00 for tipped employees
Every year going forward Based on the Cost of Living

Important Dates for Compliance

On July 1, 2017 the Minimum wage and Healthy Families Act will take effect. Employers must be prepared with employment policies that conform to the act. Even if a business already provides paid leave, they must add important verbiage to their employee handbook and notify employees of their rights under the Act. It is vital that business have the right time and attendance and record keeping software and processes in place to comply with the Act.  

Overview of the Sick Leave law and Covered Employees

Arizona law covers nearly all businesses including small employers. Employers who have 15 or more employees are required to provide up to 40 hours of sick leave each year to their employees. Small employers, those with less than 15 employees are required to provide up to 24 hours of sick leave a year. Employees earn sick leave at the rate of 1 hour for every 30 hours worked.

Full-time, part-time, and temporary employees are all covered under the law and will earn sick leave based on hours worked.

Exclusions to the Fair Wages and Healthy Families Act

Small businesses may have an out of providing mandatory sick leave. If the business makes less than $500,000 a year and does not participate in interstate commerce, then the business is exempt from the Sick Leave Law. It is important to note that businesses that sell anything across state lines, including through a website, or who purchase anything across state lines from a supplier can be considered to participate in interstate commerce. Therefore, only the very smallest and isolated businesses are exempt from this law.

Also exempt are Federal Government Employees and the State of Arizona Employees. Some union employees with a collective bargaining agreement are also exempt.

Allowable Uses for Paid Sick Time

Employees are allowed to take sick time leave for both themselves and for a family member who has an allowable reason for sick leave. Paid sick leave can be used for illness, injury, or a health condition. This includes physical or mental injury, illness, or health condition. It also includes time to get a diagnosis, preventative care, or treatment. Employees whose place of business are closed due to a public health emergency can use sick time. Employees can also use sick leave when a child’s school or place of care has been closed due to a public health emergency. If the employee, or family member’s “presence in the community may jeopardize the health of others”  due to a suspected or exposure to a communicable disease. Lastly, included is the paid sick time law, is a safety clause for victims of domestic violence, sexual assault or stalking. The leave can be used to address psychological, physical, or the legal effects.

  • Mental or physical illness, injury health condition: including diagnosis, treatment, or preventative care
  • Place of business, or child’s school or place of care is closed for a public health emergency
  • If the employee, or family member has had exposure to a communicable disease or is suspected to have a communicable disease
  • Victims of domestic violence, sexual assault, or stalking: To seek legal redress, mental, psychological or physical help as a result of the domestic violence, sexual assault or stalking.
    • Medical Attention to help recover
    • Services from a domestic violence or sexual violence or victims service organization
    • Physiological or other counselling
    • Relocation or securing an existing home
    • Legal services including civil or criminal proceedings

Family Member Definitions

Acceptable family relationships include a spouse or domestic partner, grandparent, grandchild, in loco parentis, siblings and  children. Children include biological, adopted, foster, legal ward, step, or in loco parentis. Additionally, any other affinity where the closeness is the equivalent to a family relationship.

  • Spouse or Domestic Partner
  • Child: regardless of age. Biological, adopted, foster, child of a domestic partner, in loco parentis, legal ward, or step.
  • Parent: biological, foster, step parent, legal guardian of employee when a minor, parent in law, in loco parentis
  • Grandparent
  • Grandchild
  • Sibling
  • Any other close affinity or blood relationship akin to a family relationship

Accrual of Safe and Sick Time

Businesses can use a calendar year, fiscal year, or any other consecutive 12 month period, such as from hire date, to calculate sick leave. However, employers must notify employees of the year being used for sick leave accrual.

Employees start accruing sick leave on the first date of employment, if hired after July 1, 2017. However, new employees can be restricted from using accrued sick time until they have been employed for at least 90 days. Employees hired before the implementation of the new Sick Leave Laws don’t have a probationary period.

Exempt employees are assumed to work at a rate of 40 hours a week and will earn sick leave at that rate. Non-exempt employees continue to earn sick leave during overtime hours worked.

Grace Period for Small and New Businesses

The Arizona Paid Sick Leave Act doesn’t provide a grace period for small businesses. The only allowance for small businesses, under 15 employees, is that employers must provide up to 24 hours of sick leave a year instead of 40.

Sick Leave Bank and Minimum Usage

Employers must allow sick leave to be used with a minimum usage of 1 hour, but can’t require larger increments than 1 hour. If employers payroll allowed for smaller increments of sick leave use then sick leave must be used in those increments down to 6 minute increments.

Additionally, if an employee is separated from employment and has unused, accrued sick leave, the employer must maintain records of the sick leave. If the employee reinstates with the same employer within 9 months, then the employee must be given back all previously earned, but unused sick leave. Further, that employe is not subject to a grace or waiting period before being eligible to use the sick leave. Employers are not required to pay out unused sick leave upon termination.

Front Loading

The Arizona Sick Leave Law doesn’t provide additional benefits for businesses who front load sick leave. However, businesses are allowed to front load sick leave at the beginning of the year. If a business wants to avoid carrying over unused, accrued sick leave to the following calendar year then the employer must pay out the remaining unused sick leave and front load an entire year’s of sick leave at the beginning of the year.

If the employer doesn’t want to pay out unused sick leave, then the unused sick leave must be rolled over to the following year. However, even if an employee roles the full amount of sick leave to the following year, the employee can still be capped at 40 hours of sick leave usage for that year. Rolling sick leave over mainly provides a way for employees to use sick leave at the beginning of the year before additional sick leave has accrued.

Coordinating with Paid Time Off Policies

The Arizona Sick Leave statute allows for employers that provide the minimum  requirements through a higher rate of sick leave or paid time off without adding more sick leave. However, it is important for employers to still update their employment policies and handbooks to include employee rights concerning sick leave. Employers should address borrowing paid sick time, treatement of paid sick time upon employment termination, and policies regarding requesting sick time. If these policies are not updated and spelled out, then employers that already provide time off could still find themselves out of compliance with the new Arizona law.

Reasonable Documentation and Notification of Sick Leave Rights

Employers must notify employees of their legal rights for paid sick time. Additionally, employers must notify employees with their paychecks what their paid sick leave accrual is and the amount of their used sick leave for the year. The notice must also include the amount of pay for paid sick leave the employee has been paid during the year.

Employers are also required to post notice of employee’s rights to Paid Sick Leave before July 1, 2017. The notice must be in a conspicuous place where employees can easily access the information.  

Requesting Paid Time Off

Employers need to have a policy around how employees ask for time off. When possible, the notice must include the expected amount of time off the employee will use. If the leave is foreseeable, such as preventative care, the employee should make reasonable effort to schedule sick leave in a time that has a lesser impact on the employer. Employers are required to have a policy in place around notice of unforeseeable leave, but it should not be burdensome to the employee.

Documentation of Sick Leave Usage

Employers are allowed to request documentation that paid sick leave was used in accordance with the law if more than three consecutive days of sick leave were used. Reasonable documentation includes a note signed by a health care provider. In the case of domestic violence, sexual assault or stalking, then alternative forms of documentation are acceptable. These include police reports, protective order, or signed statement from the employee or another individual that confirms the employee was a victim. Employers can never require employees to disclose the details or specifics about the nature of the health condition or domestic violence, sexual violence, or stalking.

Anti Retaliation

The Act protects employees against retaliation for asserting their rights under the Sick leave Law or for attempting to assert their rights or asking questions about their rights under the law. Employees cannot be penalized for using sick leave time and those absences cannot be counted against the employee for disciplinary purposes. If employers take action against an employee within 90 days of an employee exercising their rights, the employer must have a clear and convincing evidence that action was taken for other reasons.

Fines and Remedies provided by the Sick and Safe Time Ordinance

Employers found to violate the Minimum Wage and Healthy Families Act will receive a fine of a minimum of $250 for the first violation. Subsequent violations are a minimum of $1,000. Additionally, the business can be subject to additional monitoring and inspections. Additionally, employers will have to repay employees for sick pay denied, including interest, and an additional amount of twice the withheld wages. The minimum additional penalty is $150 each day. The courts can determine additional amounts to deter future violations. Additionally, employees can seek civil redress for violations of the act. Penalties and fines are subject to be increased in the future. Lastly, local entities can use the violations of the act to determine if the company should receive public contracts, licenses, or financial assistance.

Notification and Records

Companies are required to provide employees with several forms of notifications. Employers must post notice of the Paid Sick Leave Law in the workplace. Employers must also notify employees of the company’s name, address, and telephone number in writing upon hire. Employees must also be given written notification of their rights under the Fair Wages and Healthy Families Act. Lastly, employers must ,maintain payroll and timekeeping records that track earned paid sick leave hours and must report the  accrued, used hours, and amount paid for sick leave that year to the employee in every payroll.

Employers are required to maintain records of sick leave usage, accrual, hours worked, and amount paid for sick leave for employees for a minimum of four years. Failure to maintain accurate records can mean a violation of the Sick Leave laws and may cost businesses money in fines and penalties and cause a reputation risk for the company.  

Let SwipeClock Help

Businesses who have employees in Arizona may have to comply with multiple employment laws that overlap each other. Additionally, these businesses have to also comply with Federal Overtime Laws, the Family Leave Medical Act and any other national or local laws that are enacted. SwipeClock provides a comprehensive array of workforce management and time tracking tools that can help businesses to more easily stay in compliance with local and national laws. Records are effortlessly kept for years and accrual is automatically tracked and reported to employees according the state and city laws. Additionally, with geo-timekeeping clocks, businesses can effortlessly track time worked in specific cities to ensure compliance.

About SwipeClock

SwipeClock is a leading provider of cloud-based integrated workforce management solutions that include automated time and attendance, advanced scheduling, and leave management capabilities. The company’s products, including TimeWorks Plus, Time Simplicity, and Workforce Management Clock enable employers to manage their most important and expensive asset-employees-by transforming labor from a cost of doing business to a competitive advantage. SwipeClock’s workforce management solutions are sold through over 850 partners that empower more than 26,000 businesses to lower labor costs, comply with regulatory mandates, and maximize their profits. For more information, please visit www.swipeclock.com.

Resources

Arizona Healthy Families Act 

FAQ about the Act 

Written by Annemaria Duran. Last updated Feb 15, 2017

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