On November 8, 2016, Proposition 206: The Fair Wages and Healthy Families Act passed, receiving nearly 60% of votes. There are two parts to Prop 206; the first is a minimum wage increase, and the second is mandatory employer-provided sick leave.
Minimum Wage Increase
On January 1, Arizona’s minimum wage increased to $10.00 an hour, which was highly publicized by the media. The minimum wage will continue to increase every year, up to $12.00 per hour on January 1, 2020. Beyond 2020, there will be annual increases based on cost of living, as measured by the consumer price index. Simultaneously, Flagstaff voters passed Proposition 414, which requires Flagstaff employers to pay a higher minimum wage than that mandated by the State of Arizona. On July 1, 2017 the Flagstaff minimum wage will be raised to $12.00 per hour, and will have annual increases to $15.00 per hour by 2021.
Paid Sick Leave
The less publicized part of Prop 206 is the requirement for private and municipal employers to provide paid sick leave to all employees beginning July 1, 2017. Under Prop 206, all employees must accrue paid sick time at a minimum rate of one (1) hour of paid sick time per every thirty (30) hours worked (not confined to a work week or pay period). Employers with less than fifteen (15) employees must provide and allow the use of twenty-four (24) hours of paid sick time per year, while employers with fifteen (15) or more employees must provide and allow the use of forty (40) hours of paid sick time a year.
Under Prop 206, earned paid sick time may be used by employees for the following reasons:
- Employee’s own physical or mental illness;
- Care for employee’s family member who has a physical or mental illness;
- Public health emergency;
- Absence due to domestic violence, sexual violence, or stalking of employee or employee’s family member
Implementing mandatory paid sick time may present challenges to employers given the many nuances of Proposition 206, including:
- Part-time and temporary workers are considered “employees”
- Employers must post a notice in the workplace that outlines employees’ rights and protections under Prop 206
- Employers are required to retain payroll records for four (4) years
- Employers must also provide employees either in or on an attachment to the employee’s paycheck: (1) the amount of earned paid sick time available to the employee, (2) the amount of earned paid sick time taken by the employee to date in the year, and (3) the amount of pay the employee has received as earned paid sick time
- Employers can require reasonable documentation from an employee after three (3) or more consecutive work days of paid sick time used
- Employees may use earned paid sick time as soon as it is accrued; however, an employer may require an employee hired after July 1, 2017 to wait ninety (90) calendar days after the start of employment before using accrued earned paid sick time
- Employers can include accrual and usage caps on paid sick time in accordance with the mandatory requirements
- Paid sick time can be used in hourly increments or the smallest increment of employer’s payroll system used to account for absences or use of time, whichever is smaller
- Employers cannot require employees seeking to use earned paid sick time to find a replacement worker to cover the employee’s absence
- Employers cannot count the use of paid sick time as an absence that leads to discipline or termination
- Employers are not required to pay out unused paid sick time upon termination
Given the complexities of the new mandatory sick leave, BeachFleischman recommends that employers begin reviewing their time off plans and policies now in preparation for the July 1 deadline.
This article is not intended to be a comprehensive overview of Proposition 206. For more detailed information on Proposition 206, we recommend visiting the Industrial Commission of Arizona website, or contact the BeachFleischman HR Consulting team for assistance.