Arizona Paid Sick Time Update

In Nov. 2016, Arizona voters passed by proposition the “Fair Wages and Healthy Families Act” (the “Act”), which not only increased the state’s minimum wage (currently $14.35/hr.), but also created new requirements regarding paid sick time (“PST”) in Arizona. The Act became effective July 1, 2017.

In many respects, the PST portion of the Act is not a model of clarity.  In an effort to clarify some of the ambiguities, the AZ Industrial Commission has issued regulations and FAQs. See FAQs.  

Courts have also weighed in.  Recently, the AZ Court of Appeals issued a ruling, Papias v. Parker Fasteners (attached), that provides guidance that your organization would be well-advised to heed.  Specifically:  

  • The employer in Papias offered more PST than the Act requires. The Court clarified that when an employer provides more sick time hours than required by the Act, it is still obligated to comply with the rights outlined in the Act on the use of sick time.  Takeaway:  Consider limiting PST to the legally required maximum; if you offer more, the Act’s requirements and rights apply to the additional sick time hours.  
  • The amount of sick time available, taken year-to-date (“YTD”), and sick pay received must be recorded in, or an attachment to, the employee’s regular paycheck.  The Court clarified that an employee’s “regular paycheck” includes physical or electronic paychecks or paystubs and/or an online portal hosted by a payroll processing vendor that posts the required PST data.  Discrepancies between a vendor’s online portal and the employer’s records mean the employer did not meet its notification obligation. In this case, there were discrepancies due to confusion over whether the time was accrued or awarded as a lump sum and whether it was earned on an anniversary or calendar basis.  There was also a dispute whether the employee had access to the PST data on the vendor’s payroll portal.  Takeaway:  Make sure PST data published by the employer or its payroll vendor is regularly audited, and that the calculations are consistent with the employer’s PST policy; also, verify employees have access to the required PST data if posted on a payroll portal.
  • If the employer does not specify in writing the “acceptable means” for an employee to report PST usage, then any informal means the employee uses to communicate an illness, including text messages, is sufficient.  Takeaway:  Your policy should specify to whom when, and the means by which employees should report PST usage.      

I’m happy to assist your organization draft and/or review your PST policy (or PTO policy that encompasses PST) for compliance with the Act.