Arizona Prop. 206 (Fair Wages and Healthy Families Act) is now in effect and is described as one of the most complicated mandatory leave laws in the country. It passed by a healthy margin in November and portions of the law went into effect on January 1st. An overview of the provisions is below and our webinar will go into more depth on how to be compliant with the numerous requirements.
Change to the Minimum Wage
The minimum wage increase that was passed as part of the proposition is significant. As of January 1st, the minimum wage in the state increased from $8.05 to $10 per hour. The wage will continue on scheduled increases until hitting $12 per hour at the start of 2020. After that, it will be indexed to the CPI, similar to our pre-2017 process for handling minimum wage increases in Arizona. There were also adjustments to the language for tipped employees. Additionally, several municipalities also had changes to their minimum wage requirements. As an example, Flagstaff will bump theirs to $12 per hour in July and will hit $15 per hour in 2021.
Also, tipped workers may earn a full $3 less than the minimum wage as long as the employer maintains records proving that the employee earned above minimum wage when tips are factored in to the employee’s wage.
Posting a New Notice — Here’s the Link
The Industrial Commission of Arizona just made the new required posting available (here). Most of the 2017 all-in-one laminated posters provided by poster services are not compliant with this posting requirement as the posting was just released. It’s a good idea to print and post the new notification while you wait for an updated 2017 poster from your vendor.
Record Retention
Payroll records now need to be maintained for a minimum of four years under the provisions of the Act.
Paid Sick Leave Accrual
The Act is complicated as it pertains to accumulating, reporting, and managing paid sick leave. In general:
- Employers with fewer than 15 employees must provide one hour of paid sick leave for every 30 hours worked, up to 24 hours per year
- Employers with 15 or more employees must provide one hour of paid sick leave for every 30 hours worked, up to 40 hours per year
These thresholds include your part-time employees as well as any temporary workers you may have. Exempt employees are also subject to the two bullets above.
Special Provision: New Hire Introductory Period
If the employer has a bona fide introductory period of not longer than 90 days from the employee’s start date, the employer may prohibit newly hired employees from taking paid sick time during that introductory period. However, the newly hired employee does still accrue paid sick leave during this period.
Special Provision: Itemizations on Pay Stubs
Employers will need to work with their payroll provider to begin (1) tracking paid sick time pursuant to the law and (2) itemizing those totals on each employee’s paycheck each pay period. The required itemizations:
- The amount of pay the employee has received as paid sick leave year-to-date
- The amount of paid sick leave still available to the employee
- The amount of paid sick leave already taken by the employee year-to-date
Numerous Additional Requirements
And the list of unique requirements goes on, and they are actually quite detailed. For example, an employer can prevent employee’s from rolling over paid sick leave into the subsequent year, but the employer must make special provisions in order to do so. Additionally, the reasons an employee can take paid sick time vary considerably as does the documentation an employer may request to substantiate the paid leave. Also, employees may request to take the paid sick leave in increments other than 8-hour blocks. Understanding the ancillary details with this Act will be critical to ensuring your employees are treated appropriately and your business is not vulnerable to a complaint.
For all of the details on the Act and how to maintain compliance, attend our webinar. As always, all of our webinars are pre-approved for re-certification credit with HRCI.
