At the 11th Hour Arizona’s Industrial Commission has Issued Revised Proposed Paid Sick Leave Rules!

June 30, 2017

The Industrial Commission had indicated that they were going to issue revised proposed paid sick leave rules based on all the comments they had received.  Well, they did!  You can find them here.  Everyone gets the opportunity again to comment on the proposed rules.  The deadline is August 8.  There will also be a public hearing on August 8.

 

So, let’s take a look at what the newly revised proposed rules include.  In general, the proposed rules do make it a lot clearer how equivalent paid time off plans can meet the requirements of the law, as “equivalent paid time off” has been added when the rules reference paid sick time. 

 

There have been ongoing questions about what really needs to be shown on the pay stub regarding paid sick leave (PSL).  Per the proposed rules, the following needs to be on a paystub:

  • The amount of earned PSL available to the employee;

  • The amount of earned PSL taken by the employee to date in the year;

  • The amount of pay the employee has received as PSL; and

  • The employee’s earned PSL balance.

If you recall the language in Proposition 206 has three things that have to be on the paystub and now that has been expanded to four things.  The “amount of earned PSL available” means the amount of PSL that the employee has available to use in the current year.  The “amount of earned PSL taken by the employee to date” means the amount of PSL taken in the current year.  If employers are using an equivalent paid time off plan then they can list the amount of the equivalent paid time off taken in the year.  The “amount of pay the employee has received as PSL” means the amount of pay the employee has received as PSL in the current year.  If employers are using an equivalent paid time off plan then they can list the amount of pay received under the equivalent paid time off plan in the year.  The “employee’s earned PSL balance” means the sum of earned PSL that is:  (i) carried over to the current year; (ii) accrued to date in the current year; and (iii) provided to date in the current year under a front-loading system.  I do believe that the new paystub requirements clear up the concern of showing a balance on the paystub that the employee could not entirely use.

 

The revised proposed rules do clear up a lot of questions around front loading of PSL.  If an employee is hired after the beginning of the employer’s year for purposes of PSL then the employer can provide for immediate use on the 90th day of employment an amount of PSL that meets the equivalent of the employer’s reasonable projection of the amount of PSL the employee would have accrued from the date of hire through the end of the year.  If the amount falls short based on actual hours worked then the employer can grant additional PSL to make up for the short-fall.  What does this really mean… let’s say your organization uses a calendar year and the employee is hired in September then you will not have to front load 40 hours.  The revised proposed rules answer the carry over question with respect to front loading PSL.  If the employer provides employees at the beginning of the year the full annual amount of PSL (40 hours for 15 or more employees; 24 hours for less than 15 employees) then carryover of any unused PSL at the end of the year is not required. 

 

The revised proposed rules still have the carryover limit of 40 hours for employers with 15 or more employee and 24 hours for employers with less than 24 hours.  This will apply unless the employer pays out PSL at the end of the year or using a front-loading approach as stated previously.

 

The revised proposed rules do revise slightly the previously proposed rates of pay when employees use PSL.  No one can be paid less than minimum wage.  If an employee is paid multiple hourly rates of pay, then the rate of pay when on PSL is to be determined in the following order of priority:

  • Hourly rate the employee would have earned, if known, for each hour of PSL;

  • Weighted average of all hourly rates of pay during the previous pay period.

If an employee is paid on a commission, piece-rate, or fee-for-service basis, then the rate of pay when on PSL is to be determined in the following order of priority:

  • the previously agreed upon hourly rate of pay to be used for work or for PSL;

  • wages the employee would have been paid, if known, for the period of time when using PSL, divided by the number of hours of PSL;

  • A reasonable estimation of the commission, piece-rate, or fee-for-service compensation that the employee would have been paid if not using PSL, divided by the number of hours of PSL;

  • Hourly average of all commission, piece-rate, or fee-for-service compensation that the employee earned during the previous 90 days based on either (i) hours the employee actually worked, or (ii) a 40-hour workweek;

  • Hourly average of all commission, piece-rate, or fee-for-service compensation that the employee earned during the previous 365 days based on either (i) hours the employee actually worked, or (ii) a 40-hour workweek.

Shift differentials are to be included in the pay rate if the employee would have earned the shift differential during the time period they are out on PSL.

 

One final note is that the smallest increment of time for purposes of PSL is the smallest increment of time that an employer utilizes, by policy or practice, to account for absences or use of other paid time off.

 

Do not forget that you can comment on these rules and have a voice!  I would also watch for updated FAQ’s.  The last time proposed rules were issued the Industrial Commission issued updated FAQ’s. 

 

The picture I have included with today’s post is from our trip to the Wave a couple of years ago.  It is an amazing place!  I do love Arizona and the wonders it has to offer.

 

 

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