1. 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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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.

8. 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;

9. 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”

10. 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”

11. 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)

12. 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

13. 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!)

14. 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

15. 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

16. End of Calendar Year Payout Option
For those wondering: “Why would an employer ever choose this option…?”

17. 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.

18. 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:

19. 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!

20. 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…

21. 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

22. 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)

23. 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

24. 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

25. 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

26. Any Questions?

27. Thank you!