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Presented by: Leigh Anne Ciccarelli
The Arizona Fair Wages and Healthy Families Act and Paid Sick Time – What Does It Mean For Your Organization? Presented by: Leigh Anne Ciccarelli
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Objectives Nation-Wide Context
Overview of AZ Paid Sick Time law; the basics and hidden surprises Notice and Posting Requirements Implementation Considerations – New v. Existing Banks – “PTO” vs. Separate Sick and Vacation Banks
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States/Cities with Mandatory Paid Sick Leave
California Vermont Emeryville, California New Jersey (lots of cities…) Oakland, California Seattle, Washington San Francisco, California Tacoma, Washington Connecticut New York, New York Massachusetts Montgomery County, Maryland Oregon Portland, Oregon District of Columbia
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Overview of AZ Paid Sick Leave Law
Accrual Rates PST accrues at a rate of no less than one hour for every 30 hours actually worked For FLSA “exempt” employees’ accrual, statute assumes the EE works 40 hours per week If an exempt employee’s normal workweek is less than 40 hours, PST accrues based on the actual number of hours worked in normal workweek
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Overview of AZ Paid Sick Leave Law
Accrual and Use Caps For employers with more than 15 employees, maximum accrual and use of 40 hours of PST per year, unless a higher limit is set by employer For employers with less than 15 employees, maximum accrual and use of 24 hours of PST per year unless a higher limit is set by employer
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How do I determine my employee count?
Number of employees on the payroll for some portion of a day for twenty (20) calendar weeks in the current or preceding year Weeks do not have to be consecutive, any 20 weeks in the current or preceding year with more than 15 employees on the payroll will count All full time, part time, and temporary employees are counted
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Use of Paid Sick Time General Rule: An employee may use earned PST as it is accrued, subject to applicable use caps. In the smaller of either hourly increments or “the smallest increment that the employer’s payroll system uses to account for absences or use of other time.” Typical PST increment is hourly While all employees must begin to accrue PST under the Act on July 1, 2017 or their date of hire, whichever is later, an employer may require that employees hired after July 1, 2017 wait 90 days from their DOH before they can use accrued PST.
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Uses of Paid Sick Leave An employee’s own mental or physical illness, injury or health condition, or the employee’s need to seek medical diagnosis, treatment, or preventative care; A family member’s mental or physical illness, injury or health condition, or the family member’s need to seek medical diagnosis, treatment, or preventative care; Closure of the employee’s workplace due to a public health emergency, or an employee’s need to care for a child whose school or place of care has been closed due to a public health emergency;
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Uses of Paid Sick leave (cont.)
When an employee or employee’s family member’s “presence in the community may jeopardize the health of others” due to exposure or suspected exposure to a communicable disease; and Absences due to domestic violence (such as counseling or court matters), sexual violence, abuse, or stalking of an employee or employee’s family member, as these terms are defined in the statute, if the leave is to address “the psychological, physical, or legal effects on the employee or the employee’s family member”
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PST Family Member Defined
Much broader definition than under the FMLA: A spouse or legally registered domestic partner A grandparent (or person who stood in loco parentis of an employee or his or her spouse or domestic partner) Grandchild Sibling A biological child, adopted child, foster child, stepchild, of the employee or the employee’s spouse or domestic partner, regardless of age A child to whom the employee or employee’s spouse or domestic partner stands or stood in loco parentis, regardless of age Any other individual related by blood or affinity “whose close relationship is the equivalent of a family relationship”
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PST Carryover An employee must be permitted to carry over unused, accrued PST to the “following year” It is unclear whether carryover must be indefinite, i.e. an employee can carry over multiple years of accrued, unused PST for several years, thereby accumulating a bank in excess of 40, 80, or 120 hours Forthcoming regulations may address this or impose a “carryover cap” Regardless, hours carried over cannot be used in excess of the annual use cap (24 or 40 hours)
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PST Borrowing An employer may permit an EE to borrow from subsequent year if it chooses Be careful: there is no provision in the statute speaking to an employer’s ability to recover borrowed PST if the employee in question separates from employment before he or she actually accrues the borrowed PST At a minimum, ensure you are complying with A.R.S. § (requiring prior written authorization or a genuine dispute as to any recoupment amount) if you decide to recoup such borrowed PST from employees’ wages In the absence of legislative guidance on this issue, recoupment is not without risk
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Requesting PST Use Request for PST “may be made orally, in writing, by electronic means or by any other means acceptable to the employer” If possible, a leave request must include the expected duration of the leave If leave is foreseeable, employees must make a “good faith effort” to give an employer advance notice and schedule their absences in a way that lessens the impact on the employers’ business (much like FMLA leave) For unforeseeable leave, employers may require that employees give prior notice of the leave if the notice requirements are clearly set forth in writing and that written description is disseminated to the employee (but don’t be too strict!)
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Verifying Paid Sick Time
Employer may request “reasonable documentation” of the purpose of PST leave only where 3 or more consecutive days off are requested Take Note: No doctor’s note may be requested for single-day absences! An employer may not require that an employee specify the relevant health condition or the details of domestic violence, sexual violence, abuse or stalking
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End of Calendar Year Payout Option
An employer may exercise the option to pay out unused, accrued PST to employees at the end of the year (as opposed to carryover), BUT: The employee must then be given a “full” bank of accrued hours available for the employee’s immediate use at the beginning of the next year As unused, accrued PST that is carried over is subject to annual use caps, and unused accrued PST need not be paid out upon termination, there is little incentive for employers to exercise this payout option in light of the “payout penalty” above
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End of Calendar Year Payout Option
For those wondering: “Why would an employer ever choose this option…?”
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Notice and Posting Requirements
Pay Statements (or in a notice provided with employee paychecks) must include: The amount of the employee’s accrued PST The amount of PST used by the employee to date that year The amount of pay an employee has received as earned PST • Written/Posted Notice must include: Employer’s business name, address, and telephone number Employees’ entitlement to earn PST and the rate at which employees will accrue PST; The terms of use of PST as provided by the Act; That retaliation against employees requesting or using PST is prohibited; Details of the employees’ right to file a complaint if PST use is unlawfully denied or retaliated against; and The contact information for the Commission where questions about rights and responsibilities under the Act can be answered.
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Notice and Posting Requirements (Cont.)
• Written notices must be distributed on the effective date, or given at time of hire, if later • Posting must be made and notice must be given in English, Spanish, and “any language that is deemed appropriate by the commission.” • Links to sample notices can be found on the Arizona Industrial Commission website:
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Anti-discrimination Provision
The FWHFA prohibits discrimination and retaliation for requesting or using PST, or any other exercise of rights provided by the Act. As with the FMLA, any PST day counts as a protected absence and cannot be used or counted toward any disciplinary or other adverse action – No more “no fault” attendance policies! Presumption that any adverse employment action taken within 90 days of an EE’s exercise of PST rights is retaliatory, unless there is “clear and convincing” evidence otherwise – Document, document, document!
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Implementation Issues: What To Do With Existing Sick Time or PTO Banks?
Proceed with caution! The statute is silent on whether an employee’s already- accrued PST as of July 1, 2017 may be counted toward his or her statutory cap of 40 (or 24, depending on the size of the employer) hours per year for 2017 Given the Act’s purpose and the fact that employers with existing compliant practices are not required to “offer additional benefits,” it may be that such time could be counted toward the cap At a minimum, employees should be permitted to retain any accrued time in their banks as of July 1, 2017, as these banks may be considered “wages” Regulations may address this issue…
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Implementation Issues: Should I Keep my Current PTO Plan?
Pros If prior benefit can be reworked in minor ways to comply with applicable law, can result in no cost increase (same cost) Culturally, may be easier to implement operational or process changes because people already know/expect to use benefit offered Avoids common issue with implementing new PST bank: in order to remain cost neutral, is likely to be perceived as “taking away” existing days
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Implementation Issues: Should I Keep my Current PTO Plan? (cont.)
Cons Existing banks often do not meet rate of accrual requirements Existing banks may not cover all employees Existing banks may far exceed the amount of paid sick time that is required under the statute, and efforts to limit existing banks face potential legality issues and implementation issues (such as ability to accurately track and report)
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Separate Sick/Vacation Banks
General Considerations Mid to high concerns re: employee abuse Mid to high concerns re: cost of sick leave in wages and business disruption May be preferable with substantial employee population who received PTO/vacation previously
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Separate Sick/Vacation Banks (cont.)
Pros Limit risk of making all paid time off “regulated” under paid sick leave laws More conservative approach in terms of carry-over Limit disruption of sick leave program (i.e., limit ability to take job-protected leave with little or no notice) Limit opportunity for attendance abuse by limiting amount of paid time off that may be used for vacation/personal days
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Separate Sick/Vacation Banks (cont.)
Cons May require a culture shift for employees accustomed to PTO May encourage use of more time off to preserve vacation days Limits employee flexibility in taking short-notice leaves
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Any Questions?
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Thank you!
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