DISCLAIMER: This is an unofficial publication of the Industrial Commission of Arizona. All information
provided herein is for informational purposes only and is not intended as legal advice. This
information should not be used as a replacement for the Fair Wages and Healthy Families Act or the
advice of qualified legal counsel.
MINIMUM WAGE AND EARNED PAID SICK TIME FAQS:
UPDATED CONTENT (REV. JULY 3, 2017)
The Industrial Commission of Arizona (the “Commission”) has updated its minimum wage and earned
paid sick time frequently asked questions. This document contains new and revised content. The full
FAQs can be found here and the Notice of Proposed Supplemental Rulemaking can be found here
. The
following FAQs contain substantial new content (other FAQs may also contain modified content).
Earned Paid Sick Time
What is earned paid sick time?
Earned paid sick time is leave time that is compensated at the same hourly rate (but no less than
minimum wage) and with the same benefits, including health care benefits, that an employee would
have received for the work hours during which earned paid sick time is used. Generally, employees may
use earned paid sick time in the following circumstances:
• Medical care or mental or physical illness, injury, or health condition of the employee or any of
the employee’s family members (see the definition of “family member” in Arizona Revised
Statutes § 23-371 to see who qualifies as a family member);
• A public health emergency affecting the employee or a family member of the employee
pursuant to Arizona Revised Statutes § 23-373
; and
• A
n absence due to domestic violence, sexual violence, abuse, or stalking involving the employ
ee
o
r any of the employee’s family members (see the definition of “family member” in Arizon
a
R
evised Statutes § 23-371 to see who qualifies as a family member).
See Arizona Revised Statutes § 23-373
for further detail concerning authorized uses of earned paid sick
time.
What is equivalent paid time off?
The Industrial Commission is proposing rules that define “equivalent paid time off” as paid time off provided
under a paid leave policy, such as a paid time off policy, that makes available an amount of paid leave
sufficient to meet the accrual requirements of the Fair Wages and Healthy Families Act that may be used for
the same purposes and under the same conditions as earned paid sick time.
INDUSTRIAL COMMISSION OF ARIZONA
800 W WASHINGTON STREET
PHOENIX, ARIZONA 85007
(602) 542-4661
When can employees begin accruing earned paid sick time?
Employees can begin accruing earned paid sick time at the commencement of employment or July 1,
2017, whichever is later. For more information, see How soon can an employee begin using earned paid
sick time?
What can earned paid sick time be used for?
Generally, employees may use earned paid sick time in the following circumstances:
• Medical care or mental or physical illness, injury, or health condition of the employee or any of
the employee’s family members (see the definition of “family member” in Arizona Revised
Statutes § 23-371 to see who qualifies as a family member);
• A public health emergency affecting the employee or a family member of the employee
pursuant to Arizona Revised Statutes § 23-373
; and
• An absence due to domestic violence, sexual violence, abuse, or stalking involving the employee
or any of the employee’s family members (see the definition of “family member” in Arizona
Revised Statutes § 23-371 to see who qualifies as a family member).
See Arizona Revised Statutes § 23-373
for further detail concerning authorized uses for earned paid sick
time.
Is a service animal a “family member” under the Act?
Absent additional legislative or judicial guidance, the Industrial Commission will not enforce against an
employer that does not consider a service animal a “family member” within the meaning of the Fair
Wages and Healthy Families Act. However, the loss or incapacitation of a service animal may give rise to
a qualifying condition for the use of earned paid sick time (such as a mental or physical illness, injury, or
health condition of the employee or the employee’s family member).
See What can earned paid sick time be used for? and Arizona Revised Statutes § 23-371
for the
definition of a “family member.”
When can an on-call employee use earned paid sick time?
Absent additional statutory or judicial guidance, the Industrial Commission does not intend to enforce
against employers who restrict on-call employees’ earned paid sick time use to periods of time in which
the on-call employee is scheduled to work, or periods of time that the on-call employee would be
scheduled to work but for circumstances justifying the use of earned paid sick time.
Example 1. On-call Employee A is scheduled to work for five consecutive days. Assuming circumstances
justifying the use of earned paid sick time, Employee A may use available earned paid sick time for all or
a portion of the scheduled five-day period.
Example 2. On-call Employee B receives a call from Employee B’s employer to work the same day and
the following day. Assuming circumstances justifying the use of earned paid sick time, Employee B may
use available earned paid sick time for all or any portion of the two days.
Example 3. An employer permits its employees to select periods of work from a posted schedule.
Assuming circumstances justifying the use of earned paid sick time, on-call Employee C may use
available earned paid sick time for all or any portion of the work hours that Employee C selects and is
assigned.
Can an employer front load earned paid sick time?
Yes. The Fair Wages and Healthy Families Act (the “Act”) permits employers to provide all earned paid
sick time that an employee is expected to accrue in a year at the beginning of the employer’s year.
Note: The Industrial Commission’s proposed rules would permit employers to satisfy the Act’s accrual
and carryover provisions by annually front loading earned paid sick time. See
Is an employer that front
loads earned paid sick time required to provide additional accrual or carryover?
How does an employer front load earned paid sick time for a new hire?
The Fair Wages and Healthy Families Act (the “Act”) permits employers to provide all earned paid sick
time that an employee is expected to accrue in a year at the beginning of the employer’s year. The
Industrial Commission’s proposed rules specify that an employer who hires an employee after the
beginning of the employer’s year is not required to provide additional earned paid sick time during that
year if the employer provides the employee - for immediate use on the employee’s ninetieth calendar
day after commencing employment - an amount of earned paid sick time that meets or exceeds the
employer’s reasonable projection of the amount of earned paid sick time that the employee would
accrue from the date of hire through the end of the employer’s year at a rate of one hour for every 30
hours worked. If the projection of earned paid sick time turns out to be less than the employee would
have accrued based on hours actually worked during the employer’s year, the employer must
immediately provide an amount of earned paid sick time that reflects the difference between the
employer’s prior projection and the amount of earned paid sick time that the employee would have
accrued for hours actually worked in the year.
Example. Employer A has 15 or more employees who work 40-hour weeks. It hires a new employee with
twelve 40-hour weeks remaining in its year. Employer A may reasonably project that the employee will
work 480 hours in the remainder of the year (12 weeks x 40 hours = 480 hours), which would entitle the
employee to 16 hours of earned paid sick time (480 hours ÷ 30 = 16). If Employer A provides the new
employee with 16 hours of earned paid sick time that the employee may use beginning on the ninetieth
calendar day after the employee commences employment, Employer A is not required to provide
additional accrual unless the employee actually works more than the 480 projected hours. If, for
example, the employee actually works 540 hours, Employer A will have to provide two additional hours
of earned paid sick time (60 additional hours ÷ 30 = 2).
If an employer’s selected “year” ends less than 365 days after the Fair Wages and Healthy
Families Act’s earned paid sick time effective date (July 1, 2017), can that employer prorate
its employees’ annual earned paid sick time accrual and usage entitlements in the first
partial year after July 1, 2017, based on the number of days remaining in the employer’s
“year?”
Absent additional statutory and judicial guidance, the Industrial Commission will not enforce against an
employer whose selected “year” ends less than 365 days after the Fair Wages and Healthy Families Act’s
(the “Act”) earned paid sick time effective date (July 1, 2017) and prorates employees’ annual earned
paid sick time accrual and usage entitlements in the first partial year after July 1, 2017, based on the
number of days remaining in the employer’s “year.” Prorated accrual and usage entitlements should be
rounded up to the nearest hour or the smallest increment that the employer’s payroll system uses to
account for absences or use of other time (see What is the smallest increment of earned paid sick time
that an employee can use? for more information on this topic), whichever is smaller. An employee’s
accrual rate, however, may not be prorated during the first partial year after July 1, 2017, meaning that
an employee may still accrue at a rate of 1 hour per 30 hours worked. See What is a “year” for earned
paid sick time purposes?
Example 1: Employer A’s selected “year” runs from January 1 through December 31, 2017. The
employer will have 184 days remaining between the Act’s earned paid sick time effective date (July 1,
2017) and the end of the employer’s selected “year.” Employer A may prorate the amount of earned
paid sick time that its employees are entitled to accrue and use during the first partial year after July 1,
2017, at a rate of .504 (184/365 = .504). Assuming that Employer A has 15 or more employees and the
smallest increment that the employer’s payroll system uses is one-tenth of an hour, employees of
Employer A would be entitled to accrue and use at least 20.2 hours of earned paid sick time (.504 x 40
hours, rounded up to nearest tenth of an hour) in the 184 days following July 1, 2017 (the remainder of
the employer’s “year”).
Example 2: Employer B’s selected “year” runs from June 1, 2017, through May 31, 2018. The employer
will have 335 days remaining between the Act’s earned paid sick time effective date (July 1, 2017) and
the end of the employer’s selected “year.” Employer B may prorate the amount of earned paid sick time
that its employees are entitled to accrue and use during the first partial year after July 1, 2017, at a rate
of .918 (335/365 = .918). Assuming that Employer B has fewer than 15 employees and the smallest
increment that the employer’s payroll system uses is half of an hour, employees of Employer B would be
entitled to accrue and use at least 22.5 hours of earned paid sick time (.918 x 24 hours, rounded up to
the nearest half of an hour) in the 335 days following July 1, 2017 (the remainder of the employer’s
“year”).
Is an employer with employees outside of Arizona required to include those employees
when calculating its total employees for earned paid sick time purposes?
The Fair Wages and Healthy Families Act’s minimum wage and earned paid sick time provisions apply
only to Arizona employees. Therefore, in the absence of further statutory or judicial guidance on the
issue, the Industrial Commission will not enforce against an employer who does not count its non-
Arizona employees in its total employee count for earned paid sick time purposes.
Example: Employer A has ten California employees, three Colorado employees, and four Arizona
employees. Though Employer A has 17 total employees across three states, it has just four employees
for earned paid sick time purposes. Because Employer A has fewer than 15 employees in Arizona, its
four Arizona employees are entitled to accrue and use 24 hours of earned paid sick time per year
(whereas an employee of an employer with 15 or more employees in Arizona would be entitled to
accrue and use 40 hours of earned paid sick time per year). See How much earned paid sick time must
an employer offer an employee?
May an employer prorate earned paid sick time accrual and usage entitlements for partial-
year employees or employees hired after the first day of an employer’s year?
No. The Fair Wages and Healthy Families Act does not draw a distinction between year-round and
partial-year employees. An employee’s accrual and usage entitlements are based solely on the size of
the employer and are not based upon whether an employee works a full or partial year.
Example. Employer A has 42 employees and hires a new employee three months into its year. Employer
A plans to keep the new employee on staff for six months. The employee is entitled to accrue one hour
of earned paid sick time for every 30 hours worked and remains subject to a usage and accrual
entitlement of up to 40 hours. Employer A cannot prorate the new employee’s usage and accrual
entitlement on the basis that the employee was hired after the start of Employer A’s year or because
Employer A only plans to keep the new employee for a six-month period.
See How much earned paid sick time must an employer offer an employee? for more information.
How does an employer determine hourly rates for earned paid sick time payment
purposes?
The Industrial Commission is proposing rules consistent with the following methods for determining
hourly rates. In no case may the hourly rate paid for earned paid sick time be less than minimum wage.
• For employees with a single hourly rate. The same hourly rate that the employee would have
earned for the period of time in which earned paid sick time is used, but in no case less than
minimum wage.
Example. If an employee’s hourly rate is $15 per hour, the employer would be required to pay
the employee $15 for each hour of earned paid sick time used.
• For employees with multiple hourly rates. The hourly rate the employee would have earned, if
known, for each hour of earned paid sick time used. If this is not known, an employer should use
the weighted average of all hourly rates of pay during the previous pay period.
Example 1. Rates of pay known. Employee A uses eight hours of earned paid sick leave.
Employer B knows that Employee A would have earned $12 per hour for the first 3 hours and
$14 per hour for the last five hours of the leave. Under these circumstances, Employer B would
be required to pay Employee A $106 for the earned paid sick time used ([$12 x 3 hours] + [$14 x
5 hours] = $106).
Example 2. Weighted average. A multiple-hourly-rate employee worked 80 hours the previous
pay period. Employee B earned $12 per hour for 50 hours, and $14 per hour for 30 hours. The
employer can calculate the weighted average of Employee B’s hourly rates by dividing the total
dollars earned in the previous pay period by the total number of hours worked in that pay
period. In this case, Employee B earned $1020 ([$12 x 50 hours] + [$14 x 30 hours] = $1,020) for
80 hours of work. Dividing $1,020 by 80 hours provides a weighted average rate of pay of $12.75
per hour. Thus, Employee B would be entitled to earned paid sick time at a rate of $12.75 per
hour.
• For salaried employees. The wages an employee earns during each pay period covered by the
salary divided by the number of hours agreed to be worked during each pay period, if the
number of hours to be worked during each pay period was previously established. If unknown,
the wages an employee earns during each workweek covered by the salary in the current year
divided by 40 hours. The Industrial Commission will consider an acknowledged policy concerning
the number of hours to be worked during each pay period adequate evidence of an agreement
between employee and employer. Note: No additional pay is due when the employee’s use of
earned paid sick time results in no reduction in the employee’s regular salary during the pay
period in which the earned paid sick time is used.
Example. Employer A has not previously established the number of hours its salaried employees
work in each pay period. Employee B earns $2,000 per workweek. Employee B’s hourly rate, for
earned paid sick time purposes, is $50 per hour ($2,000 ÷ 40 hours). If Employee B’s receives no
reduction in salary as a result of the use of earned paid sick time, however, Employer A would
not be required to offer Employee B additional pay.
• For employees paid on a commission, piece-rate, or fee-for-service basis. Such employees’
hourly rates should be determined in the following order of priority:
o The hourly rate of pay previously agreed upon by the employer and the employee as: (1)
a minimum hourly rate for work performed; or (2) an hourly rate for payment of earned
paid sick time. The Industrial Commission will consider an employee-acknowledged
policy concerning the hourly rate of pay adequate evidence of an agreement between
employee and employer.
o The wages that the employee would have been paid, if known, for the period of time in
which earned paid sick time is used, divided by the number of hours of earned paid sick
time used.
o A reasonable estimation of the commission, piece-rate, or fee-for-service compensation
that the employee would have been paid for the period of time in which the earned
paid sick time is used, divided by the number of hours of earned paid sick time used.
o The hourly average of all commission, piece-rate, or fee-for-service compensation that
the employee earned during the previous 90 days, if the employee worked regularly
during the previous 90-day period, based on: (1) hours that the employee actually
worked (if known); or (2) a 40-hour workweek.
Example 1. Employer knows the hours worked in the previous 90 days. Employer A did
not previously establish an hourly rate for Employee B’s earned paid sick time or a
minimum hourly rate for work performed and it does not know and cannot reasonably
estimate the wages that the employee would have made for the period of time when
the earned paid sick time is used. Employee B worked 480 hours over the previous 90
days, earning $7,680. Employee B’s earned paid sick time hourly rate is $16 per hour
($7,680 ÷ 480 hours = $16 per hour).
Example 2. Employer does not know the hours worked in the previous 90 days.
Employer A did not previously establish an hourly rate for Employee B’s earned paid sick
time or a minimum hourly rate for work performed and it does not know and cannot
reasonably estimate the wages that the employee would have made for the period of
time when the earned paid sick time is used. Employee B worked 13 weeks in the
previous 90 days (90 ÷ 7, rounded), earning $6,240. Employee B’s earned paid sick time
hourly rate is $12 per hour ($6,240 ÷ [13 weeks x 40 hours] = $12). Had Employee B’s
average hourly rate fallen below minimum wage, Employee B’s earned paid sick time
hourly rate would be minimum wage.
o The hourly average of all commission, piece-rate, or fee-for-service compensation that
the employee earned during the previous 365 days, based on: (1) hours that the
employee actually worked (if known); or (2) a 40-hour workweek.
Example 1. Employer knows the hours worked in the previous 365 days. Employer A
did not previously establish an hourly rate for Employee B’s earned paid sick time or a
minimum hourly rate for work performed; it does not know and cannot reasonably
estimate the wages that the employee would have made for the period of time when
the earned paid sick time is used; and Employee B did not work regularly in the last 90
days. Employee B worked 1040 hours over the previous 365 days, earning $14,560.
Employee B’s earned paid sick time hourly rate is $14 per hour ($14,560 ÷ 1040 hours =
$14 per hour).
Example 2. Employer does not know the hours worked in the previous 365 days.
Employer A did not previously establish an hourly rate for Employee B’s earned paid sick
time or a minimum hourly rate for work performed; it does not know and cannot
reasonably estimate the wages that the employee would have made for the period of
time when the earned paid sick time is used; and Employee B did not work regularly in
the last 90 days. Employee B worked 52 weeks in the previous 365 days (365 ÷ 7,
rounded), earning $37,440. Employee B’s earned paid sick time hourly rate is $18 per
hour ($37,440 ÷ [52 weeks x 40 hours] = $18).
NOTE: Shift differentials and premiums meant to compensate an employee for work performed under
differing conditions (such as hazard pay or a shift differential for working at night) must be included
when computing an employee’s hourly rate. Overtime, holiday pay, bonuses, other types of incentive
pay (which do not include shift differentials and premiums meant to compensate and employee for
work performed under differing conditions), tips, and gifts do not need to be included in an hourly wage
rate determination. Pursuant to the Fair wages and Healthy Families Act, in no case may an employer
pay less than minimum wage per hour of earned paid sick time.
Must an employer include shift differentials and hazard pay in calculating an employee’s
hourly rate for earned paid sick time purposes?
The Industrial Commission is proposing rules consistent with the following:
Shift differentials and premiums meant to compensate an employee for work performed under differing
conditions (such as hazard pay or a shift differential for working at night) must be included when
computing an employee’s hourly rate for earned paid sick time purposes. On the other hand, overtime,
holiday pay, bonuses, other types of incentive pay (which do not include shift differentials and
premiums meant to compensate and employee for work performed under differing conditions), tips,
and gifts do not need to be included in an hourly rate determination.
Must an employer include bonuses, overtime, and holiday pay in calculating an employee’s
hourly rate for earned paid sick time purposes?
The Industrial Commission is proposing rules consistent with the following:
Overtime, holiday pay, bonuses, other types of incentive pay (which do not include shift differentials and
premiums meant to compensate and employee for work performed under differing conditions), tips,
and gifts do not need to be included in an hourly rate determination. On the other hand, shift
differentials and premiums meant to compensate an employee for work performed under differing
conditions (such as hazard pay or a shift differential for working at night) should be included when
computing an employee’s hourly rate.
Must an employer pay an employee for unused earned paid sick time at the end of each
year or at separation?
No, but an employer may choose to pay out unused earned paid sick time at the end of the employer’s
year or at separation. The Fair Wages and Healthy Families Act does not require an employer to pay
employees for unused earned paid sick time at the end of each year or at separation. An employer who
elects to pay an employee for unused earned paid sick time at the end of the employer’s year must
comply with the requirements of Arizona Revised Statutes § 23-372(D)(4).
Is an employer required to provide notice to its employees concerning earned paid sick
time rights and responsibilities?
Yes. Employers must provide employees written notice of the following at the commencement of
employment or by July 1, 2017, whichever is later:
• Employees are entitled to earned paid sick time;
• The amount of earned paid sick time that employees are entitled to accrue;
• The terms of use guaranteed by Arizona’s earned paid sick time laws;
• That retaliation against employees who request or use earned paid sick time is prohibited;
• That each employee has the right to file a complaint if earned paid sick time is denied by the
employer or the employee is subjected to retaliation for requesting or taking earned paid sick
time; and
• Contact information for the Industrial Commission.
The Industrial Commission’s 2017 model earned paid sick time notice can be found here
.
An employer must also provide employees either in or on an attachment to the employee’s regular
paycheck:
• The amount of earned paid sick time available to the employee;
• The amount of earned paid sick time taken by the employee to date in the year; and
• The amount of pay time the employee has received as earned paid sick time.
Note: The Industrial Commission is proposing rules that would define these terms as follows:
• “Amount of earned paid sick time available to the employee” means the amount of earned paid
sick time that is available to the employee for use in the current year.
• “Amount of earned paid sick time taken by the employee to date in the year” means the
amount of earned paid sick time taken by the employee to date in the current year. Where an
employee has used available equivalent paid time off for either the purposes enumerated in
Arizona Revised Statutes § 23-373 or other purposes, the employer may count that usage
towards the “amount of earned paid sick time taken by the employee to date in the year.”
• “Amount of pay the employee has received as earned paid sick time” means the amount of pay
the employee has received as earned paid sick time to date in the current year. Where an
employee has received pay for equivalent paid time off for the purposes enumerated in Arizona
Revised Statutes § 23-373 or other purposes, the employer may count that pay towards the
“amount of pay the employee has received as earned paid sick time.”
• “Employee’s regular paycheck” means a regular payroll record that is readily available to
employees and contains the information required by Arizona Revised Statutes § 23-375(C),
including physical or electronic paychecks or paystubs.
Can an employer satisfy the earned paid sick time notice requirements by posting the
Industrial Commission’s model earned paid sick time notice?
Yes. An employer can satisfy the Fair Wages and Healthy Families Act’s notice requirements by posting
in the workplace the Industrial Commission’s model earned paid sick time notice, or a separate notice
that meets the notice requirements in Arizona Revised Statutes § 23-375
.
See Is an employer required to provide notice to its employees concerning earned paid sick time rights
and responsibilities?
Can an employer donate or loan earned paid sick time to an employee?
Yes, subject to the employer’s allowance of such practices.
How soon can an employee begin using earned paid sick time?
An employee may use earned paid sick time as it is accrued or otherwise available for use. An employer may
require an employee hired after July 1, 2017, to wait 90 calendar days after the start of employment before
using accrued earned paid sick time.
Must an employer carry forward balances of unused earned paid sick time at the end of a
year to the next year?
The Fair Wages and Healthy Families Act (the “Act”) provides that earned paid sick time must be carried
over to the following year, subject to usage limitations based on employer size. Carry over does not
affect accrual or use rights under the Act.
Example 1. Employer with 15 or more employees. Employee A accrues 40 hours of earned paid sick
time in Year 1 and does not use any of the accrued time. The proposed rule would allow Employee A to
carry forward the 40 hours of accrued but unused earned paid sick time to Year 2 (unless the employer
exercises its buy back option pursuant to Arizona Revised Statutes § 23-372(D)(4)). Assuming the
employer did not buy back hours pursuant to Arizona Revised Statutes § 23-372(D)(4), Employee A
remains entitled to accrue another 40 hours of earned paid sick time in Year 2 (for a maximum balance
of 80 hours). If, at the end of Year 2, Employee A has 80 hours of unused earned paid sick time and the
employer does not exercise its buyback option pursuant to Arizona Revised Statutes § 23-372(D)(4),
Employee A is entitled to carry forward only 40 hours of earned paid sick time into Year 3 (though they
may accrue another 40 hours in the course of Year 3). NOTE: Subject to the employer’s agreement to be
more generous than the Act requires, Employee A may only use 40 hours of earned paid sick time in any
given year.
Example 2. Employer with fewer than 15 employees. Employee B accrues 24 hours of earned paid sick
time in Year 1 and does not use any of the accrued time. The proposed rule would allow Employee A to
carry forward the 24 hours of accrued but unused earned paid sick time to Year 2 (unless the employer
exercises its buy back option pursuant to Arizona Revised Statutes § 23-372(D)(4)). Assuming the
employer did not buy back hours pursuant to Arizona Revised Statutes § 23-372(D)(4), Employee B
remains entitled to accrue another 24 hours of earned paid sick time in Year 2 (for a maximum balance
of 48 hours). If, at the end of Year 2, Employee B has 48 hours of unused earned paid sick time and the
employer does not exercise its buyback option pursuant to Arizona Revised Statutes § 23-372(D)(4),
Employee B is entitled to carry forward only 24 hours of earned paid sick time into Year 3 (though they
may accrue another 24 hours in the course of Year 3). NOTE: Subject to the employer’s agreement to be
more generous than the Act requires, Employee B may only use 24 hours of earned paid sick time in any
given year.
Alternatively, in lieu of carry over, an employer may pay an employee for unused earned paid sick time
pursuant to Arizona Revised Statutes § 23-372(D)(4). Because the Act permits employers to provide
paid leave policies that are more generous than the requirements of the Act, the Industrial Commission
is proposing rules consistent with the following, subject to permissible restrictions on a new hire’s use of
earned paid sick time:
• An employer with 15 or more employees that provides its employees for immediate use at the
beginning of each year 40 or more hours of earned paid sick time or 40 or more hours of
equivalent paid time off is not required to provide carryover or additional accrual.
• An employer with fewer than 15 employees that provides its employees for immediate use at
the beginning of each year 24 or more hours of earned paid sick time or 24 or more hours of
equivalent paid time off is not required to provide carryover or additional accrual.
See May an employer offer more generous earned paid sick time policies than those required by the
Act?; see also How does an employer front load earned paid sick time for a new hire?
Is an employer that front loads earned paid sick time required to provide additional accrual
or carryover?
Because annually front loading earned paid sick time is more generous than the Act’s carryover and
accrual requirements, the Industrial Commission is proposing rules consistent with the following:
1. An employer with 15 or more employees that provides its employees for immediate use at the
beginning of each year 40 or more hours of earned paid sick time or 40 or more hours of
equivalent paid time off is not required to provide carryover or additional accrual.
2. An employer with fewer than 15 employees that provides its employees for immediate use at
the beginning of each year 24 or more hours of earned paid sick time or 24 or more hours of
equivalent paid time off is not required to provide carryover or additional accrual.
Should a front-loading employer revert to a standard accrual and carryover methodology, it must
provide its employees at the beginning of its first standard accrual year an amount of carryover that
equals or exceeds the amount of unused earned paid sick time each employee would have been entitled
to carry over, subject to usage limits, had the employer utilized an accrual method during the period of
the employees’ employment.
If an employee carries into a subsequent year the maximum amount of earned paid sick
time that the employee can use in the subsequent year, will the employee still accrue
additional earned paid sick time?
Yes. The Industrial Commission is proposing rules that provide that carry over does not affect accrual,
usage rights, or usage limits under the Fair Wages and Healthy Families Act. This means that, subject to
front-loading or payout pursuant to Arizona Revised Statutes § 23-372(D)(4)
, an employee retains the
right to accrue additional earned paid sick time in a subsequent year, regardless of the amount of
earned paid sick time carried over to the subsequent year. Carried over earned paid sick time, however,
may remain subject to yearly usage limits. See May an employer offer more generous earned paid sick
time policies than those required by the Act? See also Is an employer that front loads earned paid sick
time required to provide additional accrual or carryover?
Example 1. Employer with 15 or more employees. Employee A accrues 40 hours of earned paid sick
time in Year 1 and does not use any of the accrued time. The proposed rule would allow Employee A to
carry forward the 40 hours of accrued but unused earned paid sick time to Year 2 (unless the employer
exercises its buy back option pursuant to Arizona Revised Statutes § 23-372(D)(4)). Assuming the
employer did not buy back hours pursuant to Arizona Revised Statutes § 23-372(D)(4), Employee A
remains entitled to accrue another 40 hours of earned paid sick time in Year 2 (for a maximum balance
of 80 hours). If, at the end of Year 2, Employee A has 80 hours of unused earned paid sick time and the
employer does not exercise its buyback option pursuant to Arizona Revised Statutes § 23-372(D)(4),
Employee A is entitled to carry forward only 40 hours of earned paid sick time into Year 3 (though they
may accrue another 40 hours in the course of Year 3). NOTE: Subject to the employer’s agreement to be
more generous than the Act requires, Employee A may only use 40 hours of earned paid sick time in any
given year.
Example 2. Employer with fewer than 15 employees. Employee B accrues 24 hours of earned paid sick
time in Year 1 and does not use any of the accrued time. The proposed rule would allow Employee A to
carry forward the 24 hours of accrued but unused earned paid sick time to Year 2 (unless the employer
exercises its buy back option pursuant to Arizona Revised Statutes § 23-372(D)(4)). Assuming the
employer did not buy back hours pursuant to Arizona Revised Statutes § 23-372(D)(4), Employee B
remains entitled to accrue another 24 hours of earned paid sick time in Year 2 (for a maximum balance
of 48 hours). If, at the end of Year 2, Employee B has 48 hours of unused earned paid sick time and the
employer does not exercise its buyback option pursuant to Arizona Revised Statutes § 23-372(D)(4),
Employee B is entitled to carry forward only 24 hours of earned paid sick time into Year 3 (though they
may accrue another 24 hours in the course of Year 3). NOTE: Subject to the employer’s agreement to be
more generous than the Act requires, Employee B may only use 24 hours of earned paid sick time in any
given year.
What happens to accrued earned paid sick time if an employee is separated from
employment and later rehired?
If rehire occurs within nine months of separation from the same employer, any previously-accrued, unused
earned paid sick time must be reinstated and the employee is entitled to use and accrue earned paid sick
time immediately at the re-commencement of employment.
But see If an employer voluntarily pays an employee for unused earned paid sick time at separation from
employment, is the employer required to reinstate the employee’s accrued but unused earned paid sick
time if the employee is rehired within nine months?
If an employer voluntarily pays an employee for unused earned paid sick time at separation
from employment, is the employer required to reinstate the employee’s unused earned
paid sick time if the employee is rehired within nine months?
Absent additional statutory or judicial guidance, the Industrial Commission will not enforce against an
employer that voluntarily pays an employee for unused earned paid sick time at separation from
employment and does not reinstate earned paid sick time if the employee is rehired within nine months,
provided that the employee accepted the payment for the unused earned paid sick time.
Can an employer offer a single bank of paid time off that may be used for earned paid sick
time or other purposes (such as vacation, bereavement, and holiday leave)?
Yes, provided that the paid time off meets or exceeds the requirements of the Fair Wages and Healthy
Families Act.
When an employer’s paid leave policy either meets or exceeds the requirements of the
Fair Wages and Healthy Families Act, can the employer carve out a specific bank of time
that only applies to earned paid sick time?
Yes. The Fair Wages and Healthy Families Act does not prohibit tracking earned paid sick time separately
from other forms of leave.
If an employer’s paid leave policy either meets or exceeds the requirements of the Fair
Wages and Healthy Families Act, can an employer count time that was accrued and/or
used before the effective date of the Act (July 1, 2017)?
No. Because the Fair Wages and Health Families Act mandates that earned paid sick time begins to
accrue at the commencement of employment or on July 1, 2017, whichever is later, there is no statutory
basis for counting leave time accrued or used before July 1, 2017. The Industrial Commission has,
however, provided methods for prorating the remainder of an employer’s year if an employer’s year
ends less than 365 days after July 1, 2017. See If an employer’s selected “year” ends less than 365 days
after the Fair Wages and Healthy Families Act’s earned paid sick time effective date (July 1, 2017), can
that employer prorate its employees’ annual earned paid sick time accrual and usage entitlements in the
first partial year after July 1, 2017 based on the number of days remaining in the employer’s “year?”
How does an employee request earned paid sick time?
A request to use earned paid sick time may be made orally, in writing, by electronic means, or by any other
means acceptable to the employer. When possible, the request to use earned paid sick time must include
the expected duration of the absence.
When leave is not foreseeable, an employer may require an employee to follow a written policy that
contains procedures for the employee to provide notice. An employer that has not provided to the
employee a copy of its written policy for providing such notice may not deny earned paid sick time to the
employee based on non-compliance with such a policy. See Can an employer require notice of the need to
use earned paid sick time when the need is not foreseeable?
The Fair Wages and Healthy Families Act gives different options for requesting earned paid
sick time (orally, in writing, by electronic means, or by any other means acceptable to the
employer). Can an employer decide which of these options an employee must use to make
a leave request?
No, unless the leave is unforeseeable and the employer has provided a written policy concerning
unforeseeable leave. The Fair Wages and Healthy Families Act permits an employee to use any available
option (orally, in writing, by electronic means, or by any other means acceptable to the employer) when
requesting earned paid sick time. An employer is not permitted to interfere with an employee’s right to
use any of the available options. When leave is not foreseeable, however, the employer may require an
employee to follow a written policy that contains procedures for the employee to provide notice. An
employer that has not provided to the employee a copy of its written policy for providing such notice
may not deny earned paid sick time to the employee based on non-compliance with such a policy. See
Can an employer require notice of the need to use earned paid sick time when the need is not
foreseeable?
Must an employee give an employer advance notice of intent to use earned paid sick time?
When foreseeable, an employee must make a good faith effort to provide notice of the need to use earned
paid sick time in advance and should schedule the leave in a manner that does not unduly disrupt the
employer’s operations.
When leave is not foreseeable, an employer may require an employee to follow a written policy that
contains procedures for the employee to provide notice. An employer that has not provided to the
employee a copy of its written policy for providing such notice may not deny earned paid sick time to
the employee based on non-compliance with such a policy. See Can an employer require notice of the
need to use earned paid sick time when the need is not foreseeable?
What is an employer’s recourse if an employee fails to provide notice in accordance with
an employer’s written policy when earned paid sick leave is not foreseeable?
Absent additional legislative or judicial guidance, when leave is not foreseeable, the Industrial Commission
will not enforce against an employer who elects not to designate an employee’s leave as earned paid sick
time when the employee fails to provide notice in accordance with the employer’s written policy, provided
that: (1) that employer provided to the employee a copy of the written policy; (2) the written policy does
not discriminate against employees using earned paid sick time; and (3) the employee does not have a
reasonable justification (such as an emergency situation or the employee’s own incapacitation) for failing to
follow the written policy.
Can an employee’s family member, medical provider, friend, or other person submit a
request for earned paid sick time on an employee’s behalf?
The Fair Wages and Healthy Families Act (the “Act”) states that “[e]arned paid sick time shall be
provided upon the request of an employee. Such request may be made orally, in writing, by electronic
means or by any other means acceptable to the employer.” The Act is silent as to whether an
employee’s family member, medical provider, friend, or other person may submit a request on the
employee’s behalf. Because the Act authorizes the use of earned paid sick time for conditions that may
render an employee unable to make requests, authorized individuals may request earned paid sick time
for an employee in appropriate circumstances.
What is an employer’s recourse if an employee uses earned paid sick time for purposes
that are not enumerated in the Fair Wages and Healthy Families Act?
Absent additional legislative or judicial guidance, the Industrial Commission will not enforce against
employers who elect not to designate leave time used for purposes other than those enumerated in the Fair
Wages and Healthy Families Act (the “Act”) as earned paid sick time.
What is the smallest increment of earned paid sick time that an employee can use?
Earned paid sick time can either be used in hourly increments or the smallest increment that the employer’s
payroll system uses to account for absences or use of other time, whichever is smaller. For example, if an
employer’s payroll system accounts for absences or use of other time in 6 minute increments (a tenth of an
hour), an employee may use earned paid sick time in this same increment.
The Industrial Commission has proposed rules that define the “smallest increment that the employer’s
payroll system uses to account for absences or use of other time” as the smallest increment of time that an
employer utilizes, by policy or practice, to account for absences or use of other paid time off.
Can an employer require that an employee document an absence of fewer than three
consecutive work days where federal law permits?
Yes. The Fair Wages and Healthy Families Act (the “Act”) provides that nothing in the Act may be
interpreted or applied so as to create a conflict with federal law.
Is withholding perfect attendance bonuses because of earned paid sick time usage a
violation of the Act?
Absent additional legislative or judicial guidance, the Industrial Commission does not intend to enforce
against employers who deny perfect attendance bonuses to employees who utilize earned paid sick
time, provided that employees who have used other leave types are similarly disqualified from perfect
attendance bonuses.
What kind of posting and recordkeeping is required by Arizona’s earned paid sick time
laws?
Unless otherwise exempted from the posting and recordkeeping requirements, employers subject to
Arizona’s earned paid sick time laws are required to comply with notice, posting, and recordkeeping
requirements pertaining to earned paid sick time. The requirements include: (1) posting earned paid
sick time notices in the workplace; (2) providing employees with the employer’s business name, address,
and telephone number in writing upon hire; (3) providing employees with a notice that informs them of
their rights and responsibilities under the Fair Wages and Healthy Families Act; and (4) maintaining
payroll records in accordance with Arizona’s statutes and rules. For more information about which
employers are subject to Arizona’s earned paid sick time laws, see Which employers are subject to
earned paid sick time laws?
The Industrial Commission’s 2017 model earned paid sick time notice can be found here.
Note: The Industrial Commission is currently proposing rules that would exempt small employers
(defined as a corporation, proprietorship, partnership, joint venture, limited liability company, trust, or
association that has less than $500,000 in gross annual revenue) from the Act’s posting requirements.
The Industrial Commission is also proposing rules that would require employers to keep the following
earned paid sick time records:
• The amount of earned paid sick time available to the employee;
• The amount of earned paid sick time taken by the employee to date in the year;
• The amount of pay the employee has received as earned paid sick time; and
• The employee’s earned paid sick time balance. “The employee’s earned paid sick time balance”
means the sum of earned paid sick time or equivalent paid time off that is: (1) carried over to
the current year; (2) accrued to date in the current year; and (3) provided to date in the current
year pursuant to A.R.S § 23-372(D)(4) or A.A.C. R20-5-1206(F), (G), or (H).
The Industrial Commission is proposing rules that would define these terms as follows:
• “Amount of earned paid sick time available to the employee” means the amount of earned paid
sick time or equivalent paid time off that is available to the employee for use in the current year.
• “Amount of earned paid sick time taken by the employee to date in the year” means the
amount of earned paid sick time or equivalent paid time off taken by the employee to date in
the current year. Where an employee has used available equivalent paid time off for either the
purposes enumerated in Arizona Revised Statutes § 23-373 or other purposes, the employer
may count that usage towards the “amount of earned paid sick time taken by the employee to
date in the year.”
• “Amount of pay the employee has received as earned paid sick time” means the amount of pay
the employee has received as earned paid sick time or equivalent paid time off to date in the
current year. Where an employee has received pay for equivalent paid time off for the purposes
enumerated in Arizona Revised Statutes § 23-373 or other purposes, the employer may count
that pay towards the “amount of pay the employee has received as earned paid sick time.”
The Industrial Commission will update this FAQ as the rulemaking process progresses.
What information must be recorded in, or on an attachment to, the employee's regular
paycheck?
The Fair Wages and Healthy Families Act (the “Act”) requires that the following information be recorded
in, or on an attachment to, the employee's regular paycheck (see What qualifies as an employee’s
regular paycheck? For more information about the Industrial Commission’s proposed definition of an
“employee’s regular paycheck):
• The amount of earned paid sick time available to the employee;
• The amount of earned paid sick time taken by the employee to date in the year; and
• The amount of pay the employee has received as earned paid sick time.
Note: The Industrial Commission is proposing rules that would define these terms as follows:
• “Amount of earned paid sick time available to the employee” means the amount of earned paid
sick time or equivalent paid time off that is available to the employee for use in the current year.
• “Amount of earned paid sick time taken by the employee to date in the year” means the
amount of earned paid sick time or equivalent paid time off taken by the employee to date in
the current year. Where an employee has used available equivalent paid time off for either the
purposes enumerated in Arizona Revised Statutes § 23-373 or other purposes, the employer
may count that usage towards the “amount of earned paid sick time taken by the employee to
date in the year.”
• “Amount of pay the employee has received as earned paid sick time” means the amount of pay
the employee has received as earned paid sick time or equivalent paid time off to date in the
current year. Where an employee has received pay for equivalent paid time off for the purposes
enumerated in Arizona Revised Statutes § 23-373 or other purposes, the employer may count
that pay towards the “amount of pay the employee has received as earned paid sick time.”
When an employer’s paid leave policy either meets or exceeds the requirements of the
Fair Wages and Healthy Families Act, and an employee uses accrued leave for reasons
unrelated to earned paid sick time (such as vacation), how does the employer account for
this time on the employee’s regular paycheck?
The Industrial Commission is proposing rules that permit an employer to count equivalent paid time off
(see What is equivalent paid time off?) used for either the purposes enumerated in Arizona Revised
Statutes § 23-373 or other purposes (such as vacation) towards the “amount of earned paid sick time
taken by the employee to date in the year” and the “amount of pay the employee has received as
earned paid sick time.” In other words, when an employee uses equivalent paid time (for earned paid
sick time, vacation, or another reasons) the employer may count that time as “taken” and “received” on
the employee’s regular paycheck. See What information must be recorded in, or on an attachment to,
the employee's regular paycheck? for definitions of these terms.
What qualifies as an employee’s regular paycheck?
The Industrial Commission is proposing rules that define an “employee’s regular paycheck” as a regular
payroll record that is readily available to employees and contains the information required by Arizona
Revised Statutes § 23-375(C), including physical or electronic paychecks or paystubs.
How do collective bargaining agreements affect earned paid sick time obligations and
rights?
The Fair Wages and Healthy Families Act’s (the “Act”) earned paid sick time requirements do not apply
to employees covered by a valid collective bargaining agreement, provided that such requirements are
expressly waived in the collective bargaining agreement in clear and unambiguous terms. Additionally,
the Act’s earned paid sick time provisions do not apply to employees covered by a collective bargaining
agreement in effect on the July 1, 2017 until the stated expiration date in the collective bargaining
agreement.
How do commonly-owned entities account for earned paid sick time?
Absent addition legislative or judicial guidance, the Industrial Commission will consider multiple entities
as a single employer for purposes of the Act’s earned paid sick time provisions when sufficient
commonality exists between the entities. The Industrial Commission will consider various factors,
including the following, when determining whether multiple entities constitute a common employer:
• Who owns the employers (i.e., one employer owns part or all of the other or they have common
owners);
• Whether the employers have any overlapping officers, directors, executives, or managers;
• Whether the employers share control over operations (e.g., hiring, firing, payroll, advertising,
overhead costs);
• Whether the employers’ operations are intermingled (e.g., there is one administrative operation
for all employers, or the same person schedules and pays the employees regardless of which
employer they work for);
• Whether one employer supervises the work of the other;
• Whether the employers share supervisory authority for the employee;
• Whether the employers treat the employees as a pool of employees available to all;
• Whether the potential joint employers share clients or customers; and
• Whether there are any agreements between the employers.
Violations of Proposition 206 - The Fair Wages and Healthy Families Act
What recourse does an employee have against an employer that is not paying minimum
wage or earned paid sick time?
Employees who believe that their employer is violating the Fair Wages and Healthy Families Act may file a
complaint with the Labor Department of the Industrial Commission or file a civil lawsuit. To file a complaint
online concerning underpayment of minimum wage, click here
. To file a complaint online concerning
underpayment of earned paid sick time, click here. To file a claim in writing, send the completed claim form
to:
Industrial Commission of Arizona, Labor Department
800 W Washington St.
Phoenix, AZ 85007
What is an “adverse action” within the meaning of the Fair Wages and Healthy Families
Act?
The Fair Wages and Healthy Families Act (the “Act”) does not define “adverse action.” Absent additional
legislative or judicial guidance, the Industrial Commission will defer to established case law when
determining whether an employee has been subjected to an adverse action.
