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The Arizona Fair Wages and Healthy Families Act Provides The Arizona Fair Wages and Healthy Families Act Provides

The Arizona Fair Wages and Healthy Families Act Provides - PowerPoint Presentation

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The Arizona Fair Wages and Healthy Families Act Provides - PPT Presentation

Minimum Wage Increases and Paid Sick Time What Does This Mean For Your Organization June 2 2017 Presented By Melissa Shingles Attorney Littler Mendelson PC Phoenix MShingleslittlercom ID: 596899

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Slide1

The Arizona Fair Wages and Healthy Families Act Provides Minimum Wage Increases and Paid Sick Time – What Does This Mean For Your Organization?

June 2, 2017Slide2

Presented By

Melissa Shingles

Attorney

Littler Mendelson, P.C.PhoenixMShingles@littler.com 602.474.3610 

Sarah WattAttorneyLittler Mendelson, P.C.PhoenixSWatt@littler.com 602.474.3641Slide3
Slide4

Nation-Wide ContextPST Rules and BasicsOverview of Hidden Surprises of the ActImplementation Considerations

New v. Existing Banks

“PTO” vs. Separate Sick and

Vacation BanksAgendaSlide5

Enacted on November 8, 2016Also known as the Fair Wages and Healthy Families Act (“

FWHFA”)

Amends

 the Arizona Minimum Wage Act (“AMWA”) to provide for incremental increases to the minimum wage for Arizona workers beginning on January 1, 2017 with an increase to $10.00/hour Requires that, beginning July 1, 2017, all Arizona workers shall accrue, and have the legal right to use, a minimum amount of “Paid Sick Time” benefits each yearOverview of AZ Prop 206 (Or the new A.R.S. § § 23-363 & 23-364)Slide6

Key Provisions of the ActSlide7

Effective DateMinimum WageMinimum Wage – Tipped

January 1,

2017

$10.00 per hour$7.00 per hour plus tipsJanuary 1, 2018$10.50 per hour$7.50 per hour plus tipsJanuary 1, 2019$11.00 per hour$8.00 per hour plus tipsJanuary 1, 2020$12.00 per hour$9.00 per hour plus tipsJanuary 1, 2021+Annual cost of living adjustmentsMinimum WageSlide8

PST accrues at a rate of no less than one hour for every 30 hours actually workedFor FLSA “exempt” EEs’ accrual, the statute assumes the EE works 40 hours per weekIf an exempt employee’s normal workweek is less than 40 hours, his or her PST accrues based on the actual number of hours worked in that normal workweekAccrual and Use Caps

For employers with ≥15

employees,

maximum accrual and use of 40 hours of PST per year, unless a higher limit selected by employer  For employers with <15 employees, maximum accrual and use of 24 hours of PST per year, unless a higher limit selected by employerPST Accrual and UseSlide9

Number of EEs on the payroll in any state for some portion of a day for twenty (20) calendar weeks in the current or preceding year

Weeks do not have to be consecutive, any 20 weeks

in the current or preceding year with ≥ 15 employees

on the payroll will countAll full time, part time, and temporary employees anywhere are countedOnly Arizona employees are entitled to PSTDetermining Employee CountSlide10

Paid Sick Time UseGeneral Rule of Thumb: An employee may use earned PST as it is accrued, subject to applicable use caps.  In the smaller of either hourly increments or “the smallest increment that the employer’s payroll system uses to account for absences or use of other time.” 

Typical PST increment is hourly

While

all EEs must begin to accrue PST under the Act on July 1, 2017 or their date of hire, whichever is later, an employer may require that EEs hired after July 1, 2017 wait 90 days from their DOH before they can use accrued PST.Slide11

Much broader definition than under the FMLA:a spouse or legally registered domestic partner, a grandparent (or person who stood in loco parentis of an employee or his or her spouse or domestic partner)

grandchild

,

sibling,A biological child, adopted child, foster child, stepchild, of the employee or the employee’s spouse or domestic partner, regardless of age, a child to whom the employee or employee’s spouse or domestic partner stands or stood in loco parentis, regardless of age, and any other individual related by blood or affinity whose close relationship is the equivalent of a family relationship.“Family Member” means….Slide12

Can Be Used Upon Request For:An employee’s own mental or physical illness, injury or health condition, or the employee’s need to seek medical diagnosis, treatment, or preventative care;

A family member’s mental or physical illness, injury or health condition, or the family member’s need to seek medical diagnosis, treatment, or preventative care;

Closure of the employee’s workplace due to a public health emergency, or an employee’s need to care for a child whose school or place of care has been closed due to a public health emergency;

When an employee or employee’s family member’s “presence in the community may jeopardize the health of others” due to exposure or suspected exposure to a communicable disease; andAbsences due to domestic violence (such as counseling or court matters), sexual violence, abuse, or stalking of an employee or employee’s family member, as these terms are defined in the statute, if the leave is to address the psychological, physical, or legal effects on the employee or the employee’s family member.Slide13

PST CarryoverAn employee must be permitted to carry over unused, accrued PST to the “following year”It is unclear whether carryover must be indefinite, i.e. an employee can carry over multiple years of accrued, unused PST for several years, thereby accumulating a bank in excess of 40, 80, or 120 hours…Forthcoming regulations may address this or impose a “carryover cap”However, hours carried over cannot be

used

in excess of the annual use cap (24 or 40 hours)

PST BorrowingAn employer may permit an EE to borrow from subsequent year if it choosesBe careful: there is no provision in the statute speaking to an employer’s ability to recover borrowed PST if the employee in question separates from employment before he or she actually accrues the borrowed PSTAt a minimum, ensure you are complying with A.R.S. § 23-352 (requiring prior written authorization or a genuine dispute as to any recoupment amount) if you decide to recoup such borrowed PST from employees’ wagesIn the absence of legislative guidance on this issue, recoupment is not without riskCarryover Rule and BorrowingSlide14

Requesting Time:Request for PST “may be made orally, in writing, by electronic means or by any other means acceptable to the employer”  If possible, a leave request must include the expected duration of the leave  If leave is

foreseeable, EEs

must make a “good faith effort” to give

an employer advance notice and schedule their absences in a way that lessens the impact on the employers’ business (much like FMLA leave)For unforeseeable leave, employers may require that EEs give prior notice of the leave if the notice requirements are clearly set forth in writing and that written description is disseminated to the EE (but don’t be too strict!) Verifying The Reason for PST UseEmployer may request “reasonable documentation” of the purpose of PST leave only where 3 or more consecutive days off are requestedTake Note: No doctor’s note may be requested for single-day absences!Requesting and Verifying PST UseSlide15

An employer may exercise the option to pay out unused, accrued PST to EEs at the end of the year (as opposed to carryover), BUT:

The EE must

then

be given a “full” bank of accrued hours available for the employee’s immediate use at the beginning of the next yearAs unused, accrued PST that is carried over is subject to annual use caps, and unused accrued PST need not be paid out upon termination, there is little incentive for employers to exercise this payout option in light of the “payout penalty” above                                 End-Of-Year Payout OptionSlide16

Pay Statements (or in a notice provided with employee paychecks) must includeThe amount of the employee’s accrued PSTThe amount of PST used by the employee to date that yearThe amount of pay an employee has received as earned

PST

Written/Posted Notice must include

Employer’s business name, address, and telephone numberEmployees’ entitlement to earn PST and the rate at which employees will accrue PST;The terms of use of PST as provided by the Act;That retaliation against employees requesting or using PST is prohibited;Details of the employees’ right to file a complaint if PST use is unlawfully denied or retaliated against; andThe contact information for the Commission where questions about rights and responsibilities under the Act can be answered.Written notices must be distributed on the effective date or given at time of hire, if laterPosting must be made and notice must be given in English, Spanish, and “any language that is deemed appropriate by the commission.”  Sample notices in each language provided by the Arizona Industrial CommissionNotice and Posting RequirementsSlide17

Arizona Paid Sick Time Poster 2017 (English)Published by Arizona Industrial CommissionContact us!Sample NoticesSlide18

The FWHFA prohibits discrimination and retaliation for requesting or using PST, or any other exercise of rights provided by the Act. 

As with the FMLA, any

PST day counts as a protected absence and cannot be used or counted toward

any disciplinary or other adverse actionNo more “no fault” attendance policies!Presumption that any adverse employment action taken within 90 days of an EE’s exercise of PST rights is retaliatory, unless there is “clear and convincing” evidence otherwiseDocument, document, document!Anti-DiscriminationSlide19

Reinstatement Upon Rehire. If an employer rehires a separated employee within nine (9) months, all PST that the employee had accrued at the time of his or her separation must be reinstated.Confidentiality.  An employer must treat any health or other verification information it obtains from an employee as confidential and “may only disclose it to the affected employee or with the affected employee’s permission.”  Law offers no guidance as to an employer’s obligation to release this information if requested by subpoena or other court order, or if requested in a government investigation.  We are hopeful that this issue will be addressed with forthcoming regulations.

Recordkeeping Requirements.

  The Act requires employers to add to their existing Arizona Minimum Wage Act recordkeeping obligations details of an employee’s PST use and accrual for four years.  There is a rebuttable presumption that an employer who fails to maintain such records did not pay statutorily earned PST.

Misc.Slide20

Collective Bargaining Agreements (“CBAs”).  If employees are covered by a CBA that is in effect as of the July 1, 2017 (the Act’s effective date), the Act will not apply to those CBA-covered employees until the CBA’s “stated expiration date.”  CBAs entered into after July 1, 2017, may contain a waiver of employees’ PST entitlements under the Act if the waiver is “express” and “clear and unambiguous.”Waiver by Other Employment Contract.  No other verbal

or written agreement or employment contract may waive any

rights under

the Act. Misc. Continued…Slide21

More Than Meets The Eye: Prop 206’s Hidden SurprisesSlide22

Under the new law, any PST day counts as a protected absence and cannot be used or counted toward disciplinary action (similar to ADA/FMLA)The Act is a death knell for “No Fault” attendance policies in AZThe Act carries a presumption of retaliation for any adverse employment action taken within 90 days of an EE’s exercise of PST, unless the employer has “clear

and convincing” evidence

otherwise

An employer can request “reasonable documentation” for use of PST only where an EE seeks to use three or more consecutive work days of PSTPST can be concurrent with FMLA, but AZ law is generally broaderPST can be taken intermittently throughout the day in one hour increments EE may not be required to find coverage or a replacement worker for his or her use of PSTLurking Beneath The Surface: What you may not realize yet about Prop 206Slide23

Confusing Payout “Penalty”- If an employer elects to annually pay out unused PST, it must then provide the EE with a full bank of PST hours that will be immediately available for useEven if an employer’s existing PTO policy is minimally compliant with the statute, there are compelling reasons to consider implementing new, separate, “Sick Time” and “Vacation Time” banks, to be discussed later…Other Noteworthy Nuances…Slide24

Existing Leave Banks

v.

New Sick Time Bank

Implementation IssuesSlide25

Proceed with caution! The statute is silent on whether an employee’s already-accrued PST as of July 1, 2017 may be counted toward his or her statutory cap of 40 (or 24, depending on the size of the employer) hours per year for 2017Given the Act’s purpose and the fact that employers with existing compliant practices are not required to “offer additional benefits,” it may be that such time could be counted toward the cap At a minimum, employees should

be

permitted to retain any accrued

time in their banks as of July 1, 2017, as these banks may be considered “wages”Consider the use of a “legacy bank”  Regulations may address this issue…What Do I Do With Existing Sick Time or PTO Leave Banks on July 1, 2017?Slide26

ProsIf prior benefit can be reworked in minor ways to comply with applicable law, can result in no cost increase (same cost)Culturally, may be easier to implement operational or process changes because people already know/expect to use benefit offered

Avoids common issue with implementing new PST bank: in order to remain

cost neutral, is likely to be perceived as

“taking away” existing daysConsExisting banks often do not meet rate of accrual requirementsExisting banks may not cover all employeesExisting banks may far exceed the amount of paid sick time that is required under the statute, and efforts to limit existing banks face potential legality issues and implementation issues (such as ability to accurately track and report)Retention of Existing Leave BanksSlide27

PTO v.Sick / VacationImplementation IssuesSlide28

General ConsiderationsLow concerns re employee abuseLow concerns re cost of sick leave (in wages and business disruption)

More

likely to work with an exempt

populationCarry-over provision must be applicable to all timeProsAdministrative EaseAvoid employee discontent that may occur during a transition from PTO to separate sick and vacation banksConsThe restrictive rules tying employers’ hands in curbing leave abuse will apply to more absences The accrual rates and tracking must comply with the PST law for more absencesIt expands the number of employees who will take PTO if many currently do not receive PTO“Combined” PTO BankSlide29

General Considerations

Mid

to high concerns re employee abuse

Mid to high concerns re cost of sick leave in wages and business disruptionMay be preferable with substantial employee population who received PTO/Vacation previouslyProsLimit risk of making all paid time off “regulated” under paid sick leave lawsMore conservative approach in terms of carry-over Limit disruption of sick leave program (i.e., limit ability to take job-protected leave with little or no notice)Limit opportunity for attendance abuse by limiting amount of

paid time off that may be used for vacation/personal daysConsMay require a culture shift for employees accustomed to PTOMay encourage use of more time off to preserve vacation daysLimits employee flexibility in taking short-notice leavesSeparate Sick / Vacation BanksSlide30
Slide31