Arizona employers, get ready to raise your voice – the Industrial Commission of Arizona (ICA) has issued a Notice of Proposed Rulemaking relating to the Earned Paid Sick Time law which will go into effect on July 1, 2017. The ICA will be accepting written comments on the proposed rules until June 5, 2017, and an oral proceeding is scheduled for the same day.
The proposed rules amend Sections R20-5-1201 through R20-5-1218 of the Arizona Administrative Code, which were originally implemented in 2007 to regulate the Arizona Minimum Wage Act. In the time since the regulations were written, Arizona law has been supplemented not only with the Fair Wages and Healthy Families Act, which mandates a scheduled minimum wage increase as well as earned paid sick leave for employees, but also the Declaration of Independent Business Status (DIBS) law which allows employers to create a rebuttable presumption that a qualifying worker is an independent contractor rather than an employee.
Although most of the suggested additions are for the purposes of implementing earned paid sick time, some amendments also relate to existing minimum wage requirements. According to the economic impact summary, “the Commission anticipates that the proposed amendments will reduce regulatory burden on businesses,” particularly small employers, by providing clarity and aligning regulations with current law. One way the proposed rules do this is by specifying that the DIBS law will be taken into account during determination of an employment relationship under the Act.
In addition, the proposed rules seek to ease regulatory burdens on small employers by exempting them from posting requirements. Under the current regulations, “every employer subject to the Act” is required to post a notice informing employees of their rights under the Act. Although specified small employers are not subject to the state minimum wage requirements, and therefore were never required to post the minimum wage notice, all employers are subject to the new earned paid sick time provisions. (Employees with fewer than 15 employees may, however, provide less earned paid sick time than an employer with 15 or more employees.) The proposed amendments define a “small employer” for the purposes of the posting exemption as “a corporation, proprietorship, partnership, joint venture, limited liability company, trust, or association that has less than $500,000 in gross annual revenue.”
The proposed rules also provide clarification on how to determine an employee’s hourly rate for the purposes of providing earned paid sick time “at the same hourly rate” as an employee normally earns during hours worked, particularly for employees with multiple hourly rates of pay, salaried employees, and employees who are paid on a commission, piece-rate, or fee-for-service basis. Although employers must take into account shift differentials and premium pay, the proposed rules explicitly exclude overtime, holiday pay, incentive pay, and tips from the hourly rate calculation.
Additionally, the proposed rules establish limitations on the amount of unused earned paid sick time which may be carried over from one year to the next, and would allow employers to pay an employee for the unused time in lieu of carrying it over.
You can read the proposed rules here on page 1019 of the Arizona Register, Volume 23, Issue 18. Individuals who have questions about the economic impact statement, or who wish to make a written comment about the proposed rulemaking, should contact Steven Welker at the Industrial Commission of Arizona, Labor Department.