Effective since July 1, 2017, Arizona employers are required to provide paid and protected sick leave to all employees, including part-time, temporary, and seasonal employees. This 4-step compliance check-up will ensure you've left nothing to chance when it comes to Arizona sick leave law compliance with The Fair Wages and Healthy Families Act, which incorporates updates from the proposed rules found on the Arizona Industrial Commission (ICA) website.
1. Confirm If Benefit Accrual Rules Meet or Exceed Arizona's Minimum Requirements
Audit and review your employee handbook, payroll, timekeeping, and HR systems to ensure your accrual rules meet Arizona's minimum requirements:
- Employers with 15 or More Employees: Must earn at least 1 hour of paid sick time for every 30 hours worked up to 40 hours a year
- Employers with Less Than 15 or More Employees: Must earn at least 1 hour of paid sick time for every 30 hours worked up to 24 hours or more a year
Note that unused sick time will carry over into the new year, OR Employees earn a front-loaded amount of 40 hours that is available for immediate use. Be sure your managers fully understand how to manage rollover PTO if carrying over.
2. Confirm Hourly Rate Payment Rules for Arizona Sick Leave
Make sure earned sick time used is paid out at the employee's hourly pay rate, which cannot be less than the Arizona minimum wage (no tip credit may be applied), and that your systems and processes respect the following guidelines for these compensation types:
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Single Hourly Rate: The same hourly rate that the employee would have earned for the period of time in which earned paid sick time is used, but in no case less than minimum wage. Example. If an employee’s hourly rate is $15 per hour, the employer would be required to pay the employee $15 for each hour of earned paid sick time used.
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Multiple Hourly Rates: The hourly rate the employee would have earned, if known, for each hour of earned paid sick time used. If this is not known, an employer should use the weighted average of all hourly rates of pay during the previous pay period.
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Salaried: The wages an employee earns during each pay period are divided by the number of hours agreed to be worked during each pay period.
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Paid on a Commission, Piece-Rate, or Fee-for-Service Basis: The hourly rate of pay previously agreed upon by the employer and the employee as: (1) a minimum hourly rate for work performed; or (2) an hourly rate for payment of earned paid sick time
OR
The wages that the employee would have been paid, if known, for the period of time in which earned paid sick time is used, divided by the number of hours of earned paid sick time used.
OR
A reasonable estimation of the commission, piece-rate, or fee-for-service compensation that the employee would have been paid for the period of time in which the earned paid sick time is used, divided by the number of hours of earned paid sick time used.
OR
The hourly average of all commission, piece-rate, or fee-for-service compensation that the employee earned during the previous 90 days.
When possible, you should build automatic pay rules into your payroll and timekeeping system(s) to not only guarantee compliance but also streamline processing, ensure consistent pay practices, and eliminate manual calculations and processes. This is especially helpful if you pay multiple rates of pay per hour, salaried employees, commission, piece-rate, or fee-for-service basis.
These rules should be built into your timekeeping and / or payroll solutions to avoid any mistakes or unintentional oversights.
Refer to the Arizona Earned Paid Sick Time FAQ posted by the ICA for more details and examples on proper hourly rate of pay calculations.
3. Confirm Communication to Employees
Confirm your pay statement is updated each regular pay cycle to provide employees with up-to-date information on:
- The amount of earned paid sick time available to the employee
- The amount of earned paid sick time taken by the employee to date in the year
- The amount of pay time the employee has received as earned paid sick time
Additionally, employers are required to post an Earned Paid Sick Time notice at each work location. A labor law poster service can help employers ensure their poster is up to date with the latest version annually. You can also request Spanish versions if needed.
If applicable, remind employees to review and sign off on updated policies, and post announcements on your intranets and employee portals to ensure they're aware of changes and understand how to request earned sick time.
4. Train Time Off Approvers
Those in charge of approving time off should be trained on leave request policy, how to record unforeseeable earned sick leave, and understand what earned sick leave can be used for. Make sure that all approvers understand that they may not require proof of the need for leave until an employee has missed three or more consecutive workdays, nor can they request or require documentation provide details about the condition or situation that led to the need for leave.
To ensure your company is prepared to handle Arizona sick leave requests, your business should be equipped with a thorough Arizona sick leave policy that aligns with the compliance requirements of the law.
5. BONUS: Dive Deeper into Arizona Leave Law Compliance
Once you've covered the basics, check out the complete guide to Arizona sick time. If you need help with managing the sick leave your employees accrue and use, consider reviewing best practices to enhance your PTO policy and leveraging a cloud-based leave management solution that can solve your challenges and keep track of employee absences and PTO accruals.
If your business needs help navigating Arizona sick leave compliance or simply employee absence management, contact us today.
