Previously, we addressed eight common questions that employers have about Arizona’s new paid sick time (“PST”) law, which goes into effect on July 1, 2017. As the law is complex, we are answering seven of the more difficult, and possibly thorny, questions about the new PST law. 

1. Does the new PST law apply to salaried employees who are exempt under the FLSA?

Yes, the new law applies to all employees, including salaried employees who are exempt under the Fair Labor Standards Act (“FLSA”). For purposes of calculating the number of hours worked, the new law allows employers to presume that a salaried employee works 40 hours per week, unless their normal work week is less than 40 hours, in which case PST accrues based upon the actual hours worked.

2. Can an employer require an employee to use their accrued PST when taking FMLA leave? 

Yes, employers may require employees to use any accrued PST when taking approved leave under the Family Medical Leave Act (“FMLA”). The employer should, however, consider that although there is some overlap between the FMLA and the new PST law, they are not the same. Before requiring an employee to use their accrued PST as part of their FMLA leave, employers should ensure that the employee has a qualifying reason to use their PST. For example, the FMLA allows an employee to take leave for any qualifying emergency arising out of the fact that a spouse, son, daughter, or parent is a military member on covered active duty or call to covered active duty status. The new PST law does not allow an employee to take PST for this reason. Thus, the employer could not require the employee to use their accrued PST in this scenario. When an employer decides that an employee’s request for FMLA also qualifies for PST, employers should notify the employee that they will be deducting their accrued PST before they take leave.

3. Employees may only accrue, or use, 24 or 40 hours of PST per year depending on the number of employees. Can employers just give employees half that amount for the period from July 1, 2017 December 31, 2017?

No. Many employers plan to give their employees the full 24 or 40 hours of PST at the outset of the fiscal year because they don’t want to keep track of how many hours have been accrued during the year. That is fine, although employers still need to keep track of the number of hours worked each week. Some employers, however, mistakenly believe that since July 1, 2017 is the midpoint in the calendar year, they can just give their employees half of the 24 or 40 PST hours for the period from July 1, 2017 through December 31, 2017.  

Actually, an employee who worked 40 hours per week every week from July 1 through December 31 would earn 32 PST hours. The math is as follows:

• 160 hours per month x 6 months = 960 hours.
• 960 divided by 30 hours = 32 PST hours earned.

Thus, an employer in this scenario would have to give each full-time employee 32 PST hours. If these employees worked overtime, employers would need to give them more than 32 PST hours. 

The safest course of action is to either keep track of hours accrued or give each employee 40 PST hours for the calendar year July 1 to December 31.

4. Does an employee need to state a reason why they are requesting PST?

Employees are not required to give any specific details about why they need to take PST, but employers can require employees to state the general basis for the request (i.e., that they or a family member have a qualifying health care reason).

We recommend that employers have a PST request form to document (i) that the employee indeed had a qualifying healthcare or legal reason to use PST, and (ii) how many PST hours were used and when. Employers should require that the employee sign the PST request form to verify this information.

5. When must an employee give notice of their PST request?

The new law doesn’t specifically address whether an employee can call into work 5 minutes before their shift and claim to be sick. It is, however, clear that employers can require advance notice of foreseeable leave and that an employer can deny an untimely request for PST. We believe it appropriate to require that an employee request PST as soon as they become aware of the need for leave. However, this issue is not clearly addressed in the law, so employers need to be careful. The safest course is not to deny a PST request based on the failure to provide timely notice.

6. Are there special recordkeeping requirements?

Employers must keep records showing the amount of PST accrued and used each pay period and the employee’s current PST balance. Employers must also keep track of other records to satisfy the requirements of the Arizona Minimum Wage Act and the FLSA. The FLSA’s record keeping requirements largely mirror the Arizona Minimum Wage Act’s record keeping requires and can be found here.

Although the statute of limitations on a claim under the new PST law is no longer than three years, the Arizona Minimum Wage Act states that an employee can seek recovery of minimum wage back to January 1, 2007 if they establish that the violations were a “continuing course of employer conduct.” A.R.S. § 23-364(H). We recommend that employers keep track of all records indefinitely. 

Employers should keep confidential any information an employee provides about their health care or legal reason for requesting PST. 

7. What information must be on the employee’s paycheck?

The new law states, “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 shall be recorded in, or on an attachment to, the employee's regular paycheck.” A.R.S. § 23-375(C).

In other words, this information must be on the employee’s paycheck or “an attachment” to their paycheck. We believe employers could also satisfy this requirement by providing this information in an online portal, so long as the employee can access this information whenever they want.

Conclusion

We strongly recommend that employers engage legal counsel to draft a policy that complies with the new law and discuss best practices. This new law is tricky, and the consequences for non-compliance can be significant.