Why Current PTO Policies are Not Enough to Comply with Arizona Prop 206
On May 23, 2017, the Arizona Industrial Commission issued a new FAQ concerning Arizona’s new paid sick time law (the Fair Wages and Healthy Families Act). The new FAQ attempts to address many of the issues that were not previously addressed in the Industrial Commission’s FAQ. We will explain the following Q&A and detail four key areas of concern if an Arizona employer does not create a separate PST policy or modify their existing paid leave policy.
“Q: When an employer’s paid leave policy either meets or exceeds the Fair Wages and Healthy Families Act’s requirements, and an employee uses accrued leave for reasons unrelated to earned paid sick time (such as vacation), is the employer required to provide the employee additional leave for earned paid sick time purposes?
A: No. The Fair Wages and Healthy Families Act (the “Act”) provides that “an employer with a paid leave policy . . . who makes available an amount of paid leave sufficient to meet the accrual requirements of this section that may be used for the same purposes and under the same conditions as earned paid sick time under this article is not required to provide additional paid sick time.” Arizona Revised Statutes section 23-372(E). Therefore, provided that an employer’s equivalent paid leave policy provides paid leave that may be used for the same purposes and under the same conditions enumerated in the Act, it need not offer additional leave when an employee utilizes the available time for purposes other than those enumerated in the Act.”
Despite the Industrial Commission’s interpretation, we continue to believe that employers may face liability if they allow an employee to use their paid sick time (“PST”) for a non-qualifying reason, such as a vacation. If the employee later requests paid time off for a qualifying medical or legal reason and their request is denied because they used all of their Paid Time Off for a non-qualifying reason, a court could conclude that the employer failed to give the employee the required amount of PST for a qualifying reason. Based on this FAQ, the Industrial Commission apparently will not go after employers, but that doesn’t mean a lawyer representing an employee won’t file a lawsuit against their employer.
How to Play it Safe with the New Law
We believe the safest and best course of action is to maintain a separate PST policy that only allows employees to use their accrued PST for a qualifying healthcare or legal reason. If employers want to offer additional paid time off above and beyond what the new law requires, then they should establish separate buckets: one for PST that only be used for a qualifying reason, and a separate bucket for personal/vacation time that can be used for non-qualifying reasons. This approach will also help meet the recordkeeping requirements of the law.
Although we appreciate that the Arizona Industrial Commission provided additional guidance, its FAQ is not the law. It is merely the Industrial Commission’s interpretation of the law. Indeed, the FAQ contains a disclaimer that it is an “unofficial publication” and “should not be used as a replacement for the Fair Wages and Healthy Families Act or the qualified advice of legal counsel.”
The Industrial Commission could also change its mind. Their most recent FAQ contains opinions and conclusions that differ from their interpretations under their previous FAQ. More troubling is that the updated FAQ states that employers “must offer vacation/personal time on the same terms and conditions as the new paid sick time law.” That could mean that an employee can take vacation time by calling into work ten minutes before their shift. It likely means employers need to keep track of all of the records required by the new law and that employers must have an anti-retaliation provision in their PTO policy. Additionally, PST may accrue on a more frequent basis (one hour PST for every 30 hours worked) than other PTO accruals. In other words, an employer’s existing PTO policy would need to be significantly modified to comply with the new law.
Arizona PTO Policy Assistance
For these reasons, we believe that existing PTO policies are not good enough. We encourage you to consult legal counsel to discuss your obligations under the new law and what changes need to be made to your organization’s PTO policy. For a flat fee of $700, we draft Arizona PST policies and address any questions or concerns you may have about the new law.
Jeffrey Silence is an employment law attorney at Jaburg Wilk. He helps employers with challenging employment law issues including employee handbooks and policies.