Important Tips for Complying with Prop 206 Requirements by July 1, 2017

prop 206

Members: We are sharing the following information from ASA member and attorney Julie Pace to help you and your company be prepared for the new requirements under the “Arizona Fair Wages and Healthy Families Act” aka Proposition 206. It is mandatory that ALL employers in the state be prepared to comply. If your company uses a PEO or payroll company, please be sure that they understand the new requirements and are prepared to assist you accordingly.

On or before July 1, 2017, employers are required to provide all current employees with notice of their rights under the new Arizona paid sick time law, the Arizona Fair Wages and Healthy Families Act. All employees hired after July 1, 2017, must be provided the notice at the time of hire. The Industrial Commission of Arizona has stated that the Earned Paid Sick Time poster satisfies the notice requirement. Therefore, employers may post the poster in a conspicuous place, along with the other labor law posters.

In addition to the notice/posting requirement, employers are required to provide information about the amount of  paid sick time (or paid time off, if the employer has a compliant paid time off policy) awarded with each paycheck. The paycheck, or a separate document provided with the paycheck, must include:

(1)   The amount of earned paid sick time or PTO available;

(2)   The amount of earned paid sick time or PTO taken year-to-date; and

(3)   The amount of pay employee has received as earned paid sick time or PTO.

Employers should ensure that their payroll system is prepared for the new requirements of earned paid sick time.

Couple of quick tips:

  1. Avoid using terms accrual or accrued or earned as part of language in policies or on paycheck. Instead, consider using PTO or Sick as the words to denote the time available or used without any reference to accrued.
  2. Consider updating your policies as use it lose it if your company does not want to potentially have to pay out sick or PTO when an employee separates employment or be subject to treble wage claim regarding it.
  3. Consider adding to your policy that newly hire employees cannot take any leave until after the first ninety (90) days of employment.
  4. A properly worded PTO policy may offer more advantages to a company than vacation and sick leave policies.  If you want to move to a PTO plan, consider phasing into a PTO policy either this year or next year if insufficient time to fully implement and evaluate a PTO plan.
  5. Consider a cap on PTO or sick time rollover pursuant to current proposed and eventually final ICA regulations.
  6. Companies do NOT need to award in a lump sum at time of hire or on July 1 the 40 hours of sick or PTO to comply with the new law.  It can be pro-rated weekly based on hours actually worked and applying the formula up to the cap of  hours to be awarded.  Companies can use anniversary, calendar year or 12 month time period from July 1 to July 1 or any other twelve month period.

The Industrial Commission of Arizona will be issuing revised regulations for comment and will likely issue more frequently asked questions.  Employers should stay up to date with any new guidance or regulations from the Industrial Commission.

Many people and companies –even payroll services, lawyers and HR professionals– are not understanding this law correctly.  Some companies are providing too much in benefits, not using the right word choice, using word choice that could subject them to liability and claims, and generally misunderstanding what the law does and does not do.  Please be cautious to be informed and get assistance with knowledgeable legal counsel before implementing on July 1.  There are many nuances regarding this law.  Thank you for paying attention to these important issues.

Julie Pace’s practice handles employment law, handbooks, drug and alcohol policies, I-9 and E-Verify compliance, OSHA, independent contractor and alleged misclassification issues with DES and other government agencies, and defends claims of sexual harassment, employment discrimination, retaliation, whistleblower, and wrongful discharge, and against charges by the EEOC or ACRD. She handles matters involving OSHA, ICE, OFCCP, DOL, NLRB, ADA, FMLA, ERISA, ACA, Davis-Bacon, FAR, SCA, government contracts, and wage and hour laws. She regularly provides training to companies and assists with investigations. Julie can be reached at 602.322.4046 or jpace@cavanaghlaw.com

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