On July 1, 2017, Arizona employers were officially 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 time compliance with The Fair Wages and Healthy Families Act, which incorporates updates from the proposed rules found on the Arizona Industrial Commission's website.
1. Confirm Benefit Accrual Rules Meet or Exceed Arizona's Minimum Requirements
Audit your employee handbook, payroll, timekeeping, and HR systems to ensure your accrual rules meet the Arizona's minimum requirements.
Employees must earn at least 1 hour of paid sick time for every 30 hours worked up to 40 hours a year (Employers with 14 or fewer employees may cap yearly accrual and use at 24 hours). 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.
2. Confirm Hourly Rate Payment Rules for Arizona Sick Time
Make sure earned sick time used is paid out at the employee's hourly pay rate will never be less than the minimum wage (no tip credit may be applied) and that your systems and processes respect the following guidelines:
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For employees with a 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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For employees with 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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For salaried employees. The wages an employee earns during each pay period covered by the salary divided by the number of hours agreed to be worked during each pay period,
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For employees 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 streamline processing, ensure consistent pay practices, and eliminate manual calculations and processes. Especially 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 systems to avoid any mistakes or unintentional oversights.
Refer to the updated earn sick time FAQ posted by the Industrial Commission of Arizona for more detail 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
Post a copy of the Industrial Commission’s model earned paid sick time notice (English and Spanish are Available) at each work location OR confirm your all in one compliance posters have the notice. 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
Time off approvers 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.
5. BONUS: Dive Deeper into Arizona Sick Time Compliance
Once you've covered the basics, check out our complete guide to Arizona sick time. And if you need help with sick leave your employees accrue and use? Inflection HR's cloud based time and labor solution can solve your challenges and interface directly with your current payroll solution.
