5 MYTHS ABOUT THE AZ PAID SICK TIME LAW SOON LEADING TO PENALTIES

On November 18th, 2016, Arizona’s Fair Wages and Healthy Families Act (Prop 206), passed with high voter approval increasing both minimum wage and mandated paid sick leave for Arizona employers.  While the minimum wage increase has been in effect since January 1st, the paid sick time portion of the mandate takes effect July 1st.  Generally, a state without severe weather, this new paid sick time standard is likely to rock Arizona employers like a hurricane largely due to the lack of attention received as most headlines focused on the minimum wage impact to employers.  Unfortunately, silence appears to have left many employers being unaware of the paid sick time portion or feeling they are unaffected.  Here are the top 5 myths we have found, leaving employers ill-prepared for the July 1st change.

Myth #1 – The Fair Wages and Healthy Families Act doesn’t apply to companies with fewer than 15 employees.

Perhaps the most common myth we’ve uncovered, unlike other similar labor laws and protections, the Fair Wages and Healthy Families Act does not have a small business exemption.  Under the Act, “employer” is defined as any corporation, proprietorship, partnership, joint venture, limited liability company, trust, association, political subdivision of the state, individual or other entity acting directly or indirectly in the interest of an employer in relation to an employee, but does not include the state of Arizona, the United States.  Therefore, the new law applies whether the company has one employee or 1,000 employees.  The only aspect that differs based on number of employees is the minimum cap of either 40 hours of paid sick time for employers with 15+ employees and 24 hours of paid sick time to employers with less than 15 employees.

Myth #2 – Only full-time employees are entitled to paid sick time under the Fair Wages and Healthy Families Act.

Employees, full-time and part-time alike, are to accrue one hour of sick time for every 30 hours worked.  While many larger employers likely have some sort of time off or better yet, sick time benefit and policy, it’s possible that it speaks to only full-time employees.  This change then forcing even larger, more prominent Arizona employers to revise their policies and practices around paid sick time.

Myth #3 – Seasonal and/or temporary employees are not eligible to accrue paid sick time.

Employees are to accrue paid sick time upon hire or July 1st, 2017, whichever is later – period.  Employers can however, implement a 90-day waiting period before allowing employees to use their accrued sick time.  So, it is possible to hire a seasonal or temporary employee for a 90-day period in which he/she will accrue paid sick time but will not meet the eligibility requirement to use it, so long as the duration of employment does not exceed 90 days, required by your sick time policy.  If an employee leaves the company and is rehired within nine months from separation, the employee is entitled to any previously accrued, unused paid sick time immediately upon rehire.  In summary, if employment exceeds 90 days or the employee should be rehired within nine months of separating, the employee, regardless of whether or not he/she is working in a temporary or seasonal capacity, becomes eligible to use accrued paid sick time.

Myth #4 – Straight commission employees are not entitled to paid sick time.

Here’s where things get tricky as Prop 206 does not clearly address the issue of calculating paid sick time rates for those with variable pay (due to commissions or “piecework” type pay systems).  Instead, employers should look to the enforcing agency, the Industrial Commission of Arizona which encourages employers, in the absence of guidance, to calculate an average hourly rate using time worked and compensation earned in the previous 90 days.  Needless to say, payroll processors can anticipate a frustrating first few payroll runs following July 1st in calculating sick time payouts for unique pay structures.

Myth #5 – Companies with PTO accruals that exceed 40 hours/year do not need to be reviewed.

Aside from the financial and administrative burdens associated with the changes brought by the Fair Wages and Healthy Families Act, there are also legal challenges, particularly for small employers.  Employers with less than 15 employees are likely unfamiliar with handling retaliation, and discrimination claims or reasonable accommodation discussions.  This law allows for employees to use paid sick time for a variety of reasons, beyond what many may associate with the notion of sick time, forcing some potentially risky conversations to take place between employees and untrained managers.  Acceptable reasons for an employee to use accrued sick time as outlined in the Act include:

  • An employee’s mental or physical illness, injury or health condition; an employee’s need for medical diagnosis, care, or treatment of a mental or physical illness, injury or health condition; an employee’s need for preventive medical care;
  • Care of a family member with a mental or physical illness, injury or health condition; care of a family member who needs medical diagnosis, care, or treatment of a mental or physical illness, injury or health condition; care of a family member who needs preventive medical care;
  • Closure of the employee’s place of business by order of a public official 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 by order of a public official due to a public health emergency, or care for oneself or a family member when it has been determined by the health authorities having jurisdiction or by a health care provider that the employee’s or family member’s presence in the community may jeopardize the health of others because of his or her exposure to a communicable disease, whether or not the employee or family member has actually contracted the communicable disease; or
  • To relocate or seek legal or medical services for the employee or family member who was subject to domestic violence, sexual violence, abuse or stalking.

So, when your employee calls out, do you ask for a reason?  If your policy is to avoid questioning absences because you have a PTO policy (and do not designate sick from vacation time), have you inadvertently given way for the employee to use the entire PTO balance to cover incremental unplanned absences?  Can coming in late, leaving early, and any schedule deviations then become unmanageable.  This is especially important as this Act also protects activities related to paid sick time in a way similar to the Family Medical Leave Act.

The Act does allow an employer to require reasonable documentation for absences of three or more consecutive days; however, “reasonable” as outlined in the Act is broad.  Attempts by the employer to challenge documentation should be done so with extreme caution given protections in using sick time.  Furthermore, employees are to be made aware of this change – informed of how much time they have accrued and used with each pay period.

 

With far reaching impact, particularly for small-to-medium sized Arizona companies, it’s important businesses start taking note now as July 1st is quickly approaching.  Like most things, waiting until the deadline will only allow for more expensive and less effective solutions.  Take the time to review the changes or engage a local expert to help guide your company with the Fair Wages and Healthy Families Act. Labeled by supporters as a substantial step in ensuring Arizonans can “take care of their families without risking their jobs”, we now need to ensure companies are taking care of their employees without risking their ability to succeed.

REQUEST HELP WITH PROP 206 COMPLIANCE

When is break time?

Why do you offer breaks to your employees? Is it good for morale? Does it help ensure better quality? Well, for 21 states, if you’re a company operating in the private sector – it may be because it’s required.

Private sector employers in California, Colorado, Connecticut, Delaware, Illinois, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Nebraska, Nevada, New Hampshire, New York, North Dakota, Oregon, Rhode Island, Tennessee, Vermont, Washington, and West Virginia have minimum requirements for meal and/or break periods. While a company may choose to go above and beyond the minimum, the following is important for all employers to make note of, regardless of state requirements:

Track time worked by hourly employees
The actual time “worked” by an employee is a very valuable piece of information as it is used for a variety of calculations and reports. Internally, this figure can be used to determine productivity and efficiency, employee benefit eligibility, leave entitlement, and calculating overtime for payroll purposes. More broadly, this figure is reported in annual OSHA 300(A) logs, and may even be what makes or breaks a company’s worker’s comp rates (as rates take into account payroll dollars). Should the company for any reason be subjected to an audit, employers can most certainly expect to be questioned about “time worked” – given the impact this figure has on a company, and its employees. So, aside from being able to track and comply with break period requirements, an accurate “time worked” figure for hourly employees will be beneficial, legally and financially.

Consider breaks as part of an accommodation
What if an employee is taking more frequent or longer breaks than permitted? Is this a behavioral issue? Should you warn the employee or perhaps dismiss them altogether? Before moving too quickly to judgement, discuss (and of course document) a conversation with the employee. What is his/her reason for deviating from break policies? If it’s due to a medical condition or medical needs of the employee, be prepared for an accommodation discussion. A request for accommodation is not always an obvious or formal interaction. As with most expectation conversations – it’s best to first have a discussion with the employee to understand the reasons behind issues around behavior or performance. A simple accommodation such as an additional or extended break may be a worthwhile step in retaining an exceptional employee as well as avoiding unnecessary, public, legal issues.

Don’t overlook employee morale
What does your policy around breaks say about your company? Does it suggest a company that is concerned about its employees and their well-being? Or, does it suggest a company that offers only what it must? Company culture is not something that is created in a mission statement or on a company website, but collectively by policies, practices, priorities – put together and/or upheld by the company’s leadership. Let your policies reflect the priorities of the company while taking into consideration minimum requirements. Then consider, “is the minimum enough for us”?

Requirements for the 21 states listed above may be found on the US Department of Labor Wage & Hour website. Be sure your policies and practices around breaks and rest period are compliant today.

https://www.dol.gov/whd/state/meal.htm

Contact a Culture Engineer

LOOKING FOR A NEW CAREER OPPORTUNITY? WHICH SOUNDS IDEAL TO YOU?

Option 1:

  • Amazing travel benefits for you and your family (although you may want to hold off on booking that trip to China for a while)
  • Great work-life balance
  • As an employee, your travel is PRIORITY – more important than even purchased customer travel
  • Opportunity to serve as an authority on fashion when it comes to boarding flights (your ability to pass judgment is not limited to adults – teenager attire may also be subject to your personal views)
  • Running late for your next shift OR you need to catch a return-flight home? Don’t worry!  The company will aggressively and proudly drag even an elderly, paying customer from a seat so that you can fly comfortably without delay.  A policy supported by the CEO (for a while at least).

Option 2:

  • Contribute to technology that may change modern society’s manner of daily travel
  • Work alongside some of the greatest minds in tech
  • Receive unwanted sexual advances by your manager…on your first day (Don’t worry though….HR only tolerates it because he is a great performer. If he was a bad performer…he’d be out.
  • Advance self-driving technology without stress or accountability since it’s technology claimed to have been stolen by Google anyway

Good news – both companies are hiring and will probably be looking for PR and HR professionals for quite some time.  For employees working with well-known brands – not all press is good press.  Look to leverage your company’s brand with employees in positive times and address challenging public blunders as you would with customers.  When it comes to the product of “employment”, employees are perhaps the most valuable of consumers.  What are you doing to market to your employees?

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Paid Sick Time Required for AZ Employers….the silent but potentially deadly hidden dangers of Prop 206

Late yesterday, the Arizona Supreme Court ruled to uphold the previously challenged Prop 206, a law passed by Arizona voters in November 2016 that raises state minimum wage to $10 in 2017 and incrementally to $12 by 2020, as well as requires mandatory sick time to be paid by Arizona employers.

While the minimum wage aspect of Prop 206 has received a majority of the attention in debates, has the significance of the paid sick time burden which impacts small and large Arizona employers (yes, even those with less than 15 employees) been overshadowed? The paid sick time component comes with not only a financial impact to businesses (as historically Arizona has been silent regarding paid time off), but also implied protections to employees utilizing their new leave benefits, posting requirements, and a hefty administrative burden for smaller employers especially who may be unprepared or even in-the-dark on the change. With yesterday’s ruling however it is clear, whether a small or large Arizona employer – now is the time to start reviewing your time off policies to ensure your business will not learn the hard way.

REQUEST HELP WITH PROP 206 COMPLIANCE

Are you discussing these 2 things with your employees? No worries if you’re not – they’re probably leaving you anyway.

Gallup’s recently released State of the American Workplace report shows that more than 51% of employees are searching for a new job. Assuming most companies are not excited about turning over 51% of its workforce – it’s important to consider what employees value in a job and company. Gallup’s same report asked employees to rate the importance of various company/job attributes.

60% of surveyed employees say doing what they do best is “very important” to them. Not too surprising when you given some of us spend more time working than we are with our own family and friends. Who then wants to spend the majority of his/her life feeling insignificant? Tip: Find ways to leverage your employee’s strengths in the workplace.

53% of employees state a healthy work-life balance is “very important”. Do you encourage your employees to use their time off benefits? Do you expect them to be available 24/7? Tip: Start recognizing those working effectively versus round-the-clock?

While incorporating these topics likely requires changing up traditional coaching conversations the question becomes – will you start discussing this with your current employees – or the 51% of new employees who you hire to replace them?

Contact a Culture Engineer