Employer Alert: Paid Sick Leave Required

On Nov. 8, 2016, Arizona voters enacted Proposition 206: The Fair Wages and Healthy Families Act, increasing the minimum wage and requiring virtually all employers to provide paid sick leave to their part- and full-time employees. The paid sick leave portion of the Act goes into effect on July 1, 2017. Below are a few key changes that employers need to be aware of, as they either create new policies or make adjustments to their existing policies, to comply with the Act.

Part-Time Employees Are Included

Many employers do not provide part-time employees with paid time off. As of July 1, 2017, all employees, including part-time employees, will accrue paid sick leave at a rate of one hour of paid leave for every 30 hours worked. For employers with 15 or more employees, employees will accrue up to 40 hours per year under the Act. For employers with fewer than 15 employees, employees will accrue up to 24 hours per year under the Act. Employers may choose to provide employees with additional paid time off, but these are minimums required to comply with the Act.

‘Use It or Lose It’ Policies

Employers cannot require employees to “use or lose” their paid sick leave by the end of the year. The Act provides that employers have two choices in how to treat unused paid sick leave at year’s end. Option one is to pay the employee the accrued but unused leave and then advance the full amount of leave to which the employee will be entitled at the start of the next year. Option two is to roll the leave over to the next year.

Circumstances Included in the Act

Although the leave covered by the Act is typically referred to as “paid sick leave,” it is actually much broader than that. Specifically, an employee may use leave under this Act for any of the following reasons:

• The employee’s own physical or mental illness;
• Care for the employee’s family member who has a physical or mental illness;
• Public health emergency; or
• To ameliorate the effects of domestic violence, sexual violence or stalking of the employee or employee’s family member.

Retaliation Presumption

The Act prohibits employers from retaliating against an employee based on the exercise of rights under the Act, which would include using paid sick leave, filing a complaint or participating in an investigation. The Arizona Industrial Commission’s guidance suggests that an employer who takes adverse action against an employee within 90 days of the employee asserting a protected sick leave right (e.g., using a day of paid sick leave) will be presumed to have retaliated against the employee. The employer can rebut this presumption with documentation that the adverse employment action was taken for a non-retaliatory reason, so it will be even more important for employers to carefully document employment decisions.

New Employees

The Act provides that, as of July 1, 2017, all employees will begin accruing paid sick leave. However, employees who start on or after July 1, 2017, cannot begin using any accrued sick time until they have worked with the company for 90 days. In addition, the Act does not require an employer to pay an employee for accrued but unused paid sick leave at termination.

PTO Policies

An employer may use paid time off (PTO) policies so long as they comply with the Act. In addition to the items listed above, PTO policies frequently need modification in other areas. For example, a PTO policy must allow employees to use their PTO in increments as small as one hour (and perhaps less — if an employer allows employees to use leave for other purposes in increments smaller than one hour, it must allow PTO to be exercised in sub-one hour increments, too). The employer also must, depending on the circumstances, allow the use of PTO with little notice. For example, if an employee is sick, the employee likely will not be able to provide much advance notice to the employer, and this must not result in discipline to the employee.

Documentation

Employers often require documentation (e.g., a doctor’s note) every time an employee is absent from work due to illness. The Act, however, provides that documentation may be required only when an employee has used paid sick leave on three or more consecutive work days. (Even then, the employer may ask only for “reasonable” documentation.) Therefore, once the Act goes into effect, an employer may not ask for a doctor’s note or other documentation every time an employee uses paid sick leave.

Jessica Post, a director with Fennemore Craig, practices in the areas of labor and employment, and complex business litigation. She assists companies in employment discrimination, wage and hour, restrictive covenant and trade theft matters. She focuses on employment discrimination and wrongful termination litigation, representing clients before various state and federal courts and administrative agencies.