Arizona Fair Wages and Healthy Families Act: A PSL-4Step Analysis

Arizona voters last November approved Proposition 206, The Fair Wages and Healthy Families Act. The Act requires most Arizona employers to allow employees to accrue paid sick leave, effective July 1, 2017. It also increases the minimum wage in increments.

Legal challenges to the constitutionality of that law by a cadre of business interests have been unsuccessful, thus far. On March 14, in a one-paragraph opinion, the Arizona Supreme Court rejected the argument that the Proposition was unconstitutional. The Court stated that it would issue a “written opinion further explaining the Court’s decision … in due course” but has not yet done so.

The Arizona Industrial Commission (AIC) issued a Notice of Proposed Rulemaking concerning the Act on May 5, 2017. The comment period ended on June 5, 2017. The AIC also issued Frequently Asked Questions (FAQs) about Minimum Wage and Earned Paid Sick Time, updated most recently on May 19, 2017.saguaro-232762_640

Here, I use the PSL-4Step framework to analyze The Arizona Fair Wages and Healthy Families Act.

Step 1: Does it apply?

“Employer” includes every type of business entity, political subdivision of Arizona, individual or other entity “acting directly or indirectly in the interest of an employer in relation to an employee” excluding the State of Arizona and the United States.

“Employee” means any person who is employed by an employer but does not include anyone employed by a parent or a sibling, or who is employed performing babysitting services in the employer’s home on a casual basis. The term also includes recipients of public benefits working as a condition of receiving public assistance. There are no salary-based exemptions.

The earned paid sick time provisions (referred to in this blog as PSL) are effective July 1, 2017 except if a labor contract is in effect at that time, the law takes effect upon the expiration of that contract.

An employer and union may “expressly waive[]” any or all of the law’s PSL requirements in their labor contract by using “clear and unambiguous terms.”   (Help me understand the logic of that provision.) Continue reading

AZ Supreme Court Rejects Paid Sick Leave Challenge

Just three days after hearing oral argument, in a one paragraph Order, the Arizona Supreme Court unanimously rejected the challenge by a cadre of business interests to the constitutionality of Proposition 206. That proposition increases the minimum wage in a series of steps and requires most Arizona employees to provide employees with paid sick leave beginning July 1, 2017. The Court said that it will issue a written opinion explaining its decision.courthouse-1223280_640

The plaintiffs had sought to enjoin the implementation of Proposition 206. With the injunction denied, and the Supreme Court’s  rejection of the Revenue Source Rule argument, plaintiffs must decide whether to pursue the other claims in their lawsuit.

 

Effort to Enjoin Arizona Paid Sick Leave Law Rejected

A Maricopa County Superior Court judge has denied the plaintiffs’ request to enjoin implementation of the Arizona Fair Wages and Healthy Families Act. That Act will increase the minimum wage to $10 on January 1, 2017 and will require most Arizona employers to provide paid sick leave beginning July 1, 2017. It became law when nearly 60% of Arizona voters approved Proposition 206 in the November election.

The plaintiffs, a host of business organizations, had alleged that the Law violated various state constitution provisions.  My post about the filing of lawsuit being is here.  The court concluded that the plaintiffs hammer-1707721_640-1had not overcome the presumption that a legislative enactment is constitutional.  The court also cited the state’s public policy favoring “appropriate minimum conditions of employment” and strongly favoring “direct citizen
participation in the legislative process.”

While the court denied the injunction request, the case has not been dismissed.  A copy of the court’s decision is here.

Arizona Lawsuit Joins PSL Docket

Add another entry to the PSL litigation docket. The Arizona Chamber of Commerce and a host of other plaintiffs last week filed a lawsuit against the State of Arizona and a host of other defendants seeking to enjoin implementation of Arizona Proposition 206. Arizona voters approved that proposition by a nearly 60% margin in November. It raises the minimum wage in Arizona to $10 per hour on January 1, 2017 and requires most Arizona employers to provide paid sick leave beginning July 1, 2017.  saguaro-232762_640

The plaintiffs claim that the proposition violates the “Revenue Source Rule” of the Arizona constitution because it will lead to increased costs to the state and it does not identify a revenue source to fund the additional cost, essentially an unfunded mandate. It also alleges that the proposition violates the “Separate Amendment Rule” of the state constitution because the ballot question “cobble[d] together” distinct issues, denying voters the opportunity to vote on the minimum wage and PSL issues separately. The complaint also alleges that the proposition does not address the increased costs to Arizona business, especially those with tipped employees, although it is not clear to which legal argument this relates. The suit was filed in Superior Court in Maricopa County.

The Arizona lawsuit is the fourth pending case to directly challenge a paid sick leave law. The others are pending in Oregon, Minneapolis and Pittsburgh. A PSL-related case is pending in Alabama. My recent post about these cases is here.

Arizona Fair Wages and Healthy Families Act: PSL-4Step Analysis

Last week, Arizona voters approved The Fair Wages and Healthy Families Act. Here, I use the PSL-4Step framework to analyze that Act.

Step 1: Does it apply?arizona-state-seal-color

“Employer” includes every type of business entity, political subdivision of Arizona, individual or other entity “acting directly or indirectly in the interest of an employer in relation to an employee” excusing the State of Arizona and the United States.

“Employee” means any person who is employed by an employer but does not include anyone employed by a parent or a sibling, or who is employed performing babysitting services in the employer’s home on a casual basis. The term also includes recipients of public benefits working as a condition of receiving public assistance.

The earned paid sick time provisions (referred to in this blog as PSL) are effective July 1, 2017 except if a labor contract is in effect at that time, the law takes effect upon the expiration of that contract.

An employer and union may “expressly waive[]” any or all of the law’s PSL requirements in their labor contract by using “clear and unambiguous terms.”   (Help me understand the logic of that provision.)

Step 2:  the Benefit

Accrual: One hour of leave for every 30 hours worked, beginning the first day of employment (or July 1, 2017 for then-current employees). Those employed on July 1, 2017 may use leave as it accrues. For those hired after July 1, 2017, accrued leave may be used on the 90th calendar day of employment. An employer may cap accrual and use at 40 hours per year (any consecutive 12 month period as determined by employer) except that employers with fewer than 15 employees may cap accrual and use at 24 hours per year.

Exempt Employees: Are assumed to work 40 hours weekly unless their normal work week is less than 40 hours, in which case PSL accrues based upon that normal work week.

Rate of Pay: The “same hourly rate and with the same benefits, including health care benefits, as the employee normally earns during hours worked” but not less than the federal minimum wage.

Unused Hours: Carried over to the following year, subject to use limits set forth in “Accrual” section above. An employer may elect to pay an employee for unused sick time at the end of the year if the employer frontloads the employee’s sick time accrual, which would be available for immediate use, at the beginning of the subsequent year.

Alternatives to Accrual: An employer may frontload sick time.

Uses of PSL:

  • Employee’s or family member’s illness, injury or health condition (including diagnosis, care or treatment) or preventative medical care;
  • When employee’s workplace, or employee’s child’s school or place of care is closed by a public official for a health reason;
  • Care for employee or family member when presence in the community may jeopardize the health of others because of his or her exposure to a communicable disease, regardless of whether the individual actually has the communicable disease;
  • Reasons due to domestic violence, sexual violence, abuse or stalking, provided the absence is to obtain related services, i.e. medical attention, services from a domestic violence or sexual violence program or victim services organization; psychological or other counseling; relocation or taking steps to secure an existing home; legal services.

Minimum Increments of Use: PSL may be used in “the smaller of hourly increments of the smallest increment that the employer’s payroll system uses to account of absences or use of other time.”

Step 3: Common Clauses

Continue reading