Sick Pay – The Fair Wages & Healthy Families Act – Part II

Sick Pay

Holidays, vacation days or sick days...

The Fair Wages & Healthy Families Act became law on July 1, 2017

Exceptions to Sick Pay?

Businesses that meet ALL of the following conditions do not have to accrue sick pay :

  • the business has gross revenue of less than $500,000 annually and;
  • accepts cash & checks written on Arizona Banks only (no credit cards), and
  • buys all its supplies solely from Arizona suppliers

Sick Pay Cost to Employers:

Beginning on July 1, 2017, Arizona employees began earning sick pay! Employees accrue 1 hour for every 30 hours worked! That equates to .033 hours per hour worked!

  • If the business has less than 15 employees, employees must accrue 24 hours per year of paid sick time (12 hours in 2017).
  • If the business has more than 15 employees, employees must accrue 40 hours per year of paid sick time (20 hours in 2017).
  • These rules apply only to Arizona employees and the same rules apply whether an employee is full or part-time.

For example, Joe just started working for you in June 2017. It is now August 19th. Joe works 40 hours per week, and your business has 20 employees. Joe has earned 9.33 hours of sick time. If he calls in sick on Monday, August 21st, you will have to pay Joe $160 (8 hour workday). Joe will have 1.33 hours of sick time left. If he calls in sick again on Tuesday, August 22nd, then you will be required to pay Joe an additional $26.60 for the 1.33 hours remaining!

What may employees use paid sick time for?

Under the Act, employees may use earned paid sick time for 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;
  • A public health emergency; and
  • Absence due to domestic violence, sexual violence, or stalking of the employee or employee’s family member.

 

What about PTO Policies?

When an employer’s paid leave policy either meets, or exceeds the Act’s requirements, and an employee uses accrued leave for reasons unrelated to earned paid sick time (such as vacation), is the employer required to provide the employee additional leave for earned paid sick time purposes?

No. The Act provides that an employer with a paid leave policy who makes available an amount of paid leave sufficient to meet the accrual requirements of the Act that may be used for the same purposes and under the same conditions as earned paid sick time is not required to provide additional paid sick time. Therefore, provided that an employer’s equivalent paid leave policy provides paid leave that may be used for the same purposes and under the same conditions enumerated in the Act, it need not offer additional leave when an employee utilizes the available time for purposes other than those listed in the Act.

In other words, if an Employer has a Paid Time Off (PTO) Policy that allows for at least 1 week or more of paid time off, the requirement is satisified. However, it is important to note that with this new law, the Employer must begin accruing time from Day 1 of employment. The old “1 week of vacation after 1 year of service” will not work. The Employee must be allowed 1 hour for every 30 hours worked. Thus, the time must be accrued per paycycle, rather than by anniversary date.

At eeCPA, we have an unlimited scheduled Paid Time Off policy (unique and very motivating for our team!) This policy does suffice to meet the requirements of the Fair Wages & Health Families Act!

 

Carryforward to Next Year!

Must an employer carry forward balances of earned paid sick time at the end of a year to the next year?

The Act provides that Employees may carry over earned sick pay to the following year. Alternatively, in lieu of the carryover, an employer may pay an employee for unused earned paid sick time. Absent statutory or judicial guidance, the Industrial Commission is proposing rules consistent with the following: An employee of an employer with 15 or more employees may carry over to the following year a maximum of 40 hours of unused sick time. An employee of an employer with less than 15 employees may carry over to the following year a maximum of 24 hour of unused sick time.

 

How much earned paid sick time may an employee use in any given year?

If the business has more than 15 employees, employees may only use 40 hours per year.  If the business has less than 15 employees, employees may use only 24 hours per year.

 

Employee Terminations & Sick Pay

If an employee is terminated or resigns, is an employer required to pay out any unused earned paid sick time?

No, employers are not required to pay out unused sick time upon termination. However, it is suggested that the policy of not paying out earned paid sick time be communicated with employees in writing.

For more detailed information, please visit the Industrial Commission of Arizona