Don’t Get Ill Over Earned Paid Sick Time

Careful compliance will avoid hefty penalties

by Alejandro Pérez

Earned Paid Sick Time is a surprisingly complex law that requires exacting compliance. Failure to adhere to its requirements can expose a business to serious liability. But, it’s nothing to get sick over. Careful planning and thoughtful policies will help avoid potential litigation.

I review employee handbooks on a routine basis. One thing I find most employers get wrong is their Earned Paid Sick Time policy. Passed in 2017, Earned Paid Sick Time (EPST) contains some intricacies that can prove quite costly for employers who fail to adhere to its requirements. This article provides a basic overview of EPST and some best practices.

The Basics

Under EPST, employees accrue one hour of sick time for every 30 hours worked. The number of hours an employee accrues depends on the employer’s size. For employers with fewer than 14 employees, accrual caps at 24 hours per year. For employers with 15 or more employees, the cap is set at 40 hours per year.

The statute exempts certain employers from compliance: small employers who are not engaged in interstate commerce and whose gross annual revenues is less than $500,000; federal government employees; and State of Arizona employees.

Employers must allow employees to carry over unused sick time to the next calendar year. Usage, however, is capped at 40 and 24 hours annually, based on the employer’s size. Alternatively, employers may choose to pay out any unused sick time at year’s end and avoid carrying over hours. Employers choosing this option must frontload the full amount of annual leave required at the beginning of the next year.

Employers must also maintain accurate records of leave for a period of four years and make the records available upon reasonable request. Failure to do so creates a rebuttable presumption the employer has violated the law.

When Can an Employee Use EPST?

One of the most misunderstood components of the statute are the liberal uses available for EPST. These include diagnosis, care or treatment of mental or physical illness, injury or health condition, or preventive medical care of an employee or family member; specified purposes related to the employee’s or employee’s family member’s domestic or sexual violence, abuse or stalking; and certain legal reasons.

Under EPST, employees must make a good faith effort to provide advance notice prior to taking leave and provide the expected duration of the leave, if possible. For unforeseeable leave, employers may require notice if contained in a written policy disseminated to employees. Requests may be made orally, in writing, electronically or by other means acceptable to the employer. Leave can also be utilized in smaller hourly increments or for the smallest amount the employer’s payroll system uses to account for use of time.

No Retaliation

Retaliation is strictly prohibited. Any adverse action taken within 90 days of an employee’s protected activity raises a presumption of retaliation, which may be rebutted by evidence of permissible reasons for the action. Employers are also forbidden from imposing any policy that results in discipline for use of EPST.

The penalties and remedies available under the law are hefty. As such, employers should ensure their policies and practices in relation to EPST comply with the law. Penalties for recordkeeping, notice and policy violations include $250 for the first violation and at least $1,000 for each subsequent violation. Additionally, the employer may be subjected to special monitoring and inspection.

For retaliation, employers are liable for at least $150 for each day the violation continued or until a final judgment is rendered.

Best Practices

Given the significant penalties for making an error in relation to sick time, employers should immediately:

  • Review their policies to ensure compliance.
  • Review current FMLA/ADA policies to ensure they are consistent with the law.
  • Train managers on EPST, as well as on FMLA and ADA requirements.
  • Implement consistent documentation and recordkeeping processes.

Given the law’s complexities, employers who pool all time off may want to separate paid time off into separate earned paid sick time and vacation buckets. Doing so avoids confusion and potential claims.

Now is a perfect time for employers to review their handbooks and policies — specifically, their EPST policies.

Alejandro Pérez is a labor and employment partner a Jaburg Wilk. Fully bilingual, Pérez represents employers in employment matters. Pérez also provides advice and counsel on employment decisions; drafts and reviews policies and manuals; conducts sensitive workplace investigations; and conducts training on various employment law topics, as well as leadership and diversity and inclusion.

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