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Next week, when Flagstaff’s minimum wage jumps to $10.50 per hour, employers in the city, and the rest of the state will also be required to comply with the requirement built into Proposition 206 that requires employers to provide sick leave for their employees.

Proposition 206, a citizens initiative also called the Fair Wages and Healthy Families Act, brought forth by the group Arizonans for Fair Wages and Healthy Families, requires employers to allow employees to accrue one hour of paid sick leave per 30 hours worked, up to 24 hours annually for employers with fewer than 15 employees, and up to 40 hours for employers with 15 or more employees. Employers can choose to allow a higher limit, but must meet the minimum requirements to comply with the law.

Full time, part time, temporary and other workers are required to be able to accrue sick leave under the law, which can be used for medical care, physical or mental illness or health conditions, a public health emergency, and absence due to domestic violence, sexual violence, abuse or stalking, according to the law.

Employees hired after July 1 can be required to work 90 days before beginning to accrue sick time.

Federal and state employers are exempt from both the minimum wage increase schedule and the sick time accrual requirements included in Prop. 206. Tribal employees on tribal land are also not subject to Proposition 206.

However, employers that are based out of state but employ people in Arizona must follow all provisions of Prop. 206 for employees that perform work in Arizona.

The law, as written, allows employers two options about how to address unused accrued sick time. The Industrial Commission of Arizona, the regulatory body for both minimum wage and sick leave requirements, has proposed a third option, which is required to be approved by Gov. Doug Ducey before it can take effect, said Jonathan Hauer, assistant chief counsel for the Industrial Commission said.

The first option would allow employees to carry over any unused earned sick time from year to year. However, an employer is only required to grant 40 hours, or 24 hours for a smaller employer, per year, meaning the employee could accrue time without being able to use it all, Hauer said.

The second option, if employers decide not to allow a carry forward, would require employers to pay for unused earned sick time at the end of the company’s fiscal year, and provide the maximum amount of hours required for the business size immediately available at the beginning of the next fiscal year for the company, Hauer said.

The third option, which was drafted this week by the commission and still needs to go through the formal approval process for rules, would allow employers to “front load” sick hours at the beginning of the year and remove the accrual requirement. This would mean an employer could immediately grant 40 hours, or 24 for a smaller company, of sick time at the beginning of the year. If an employer chose to front load the hours, the employer would not have to carry forward hours from year to year, and would not have to pay employees for unused time, Hauer said.

However, the front loading option is not yet legal, and could take between six months to a year before it can go through the rulemaking process and be approved by Ducey, Hauer said. An employer that does not follow one of the first two options, either carry forward or paying out the unused earned time, is in violation of the statute until the front loading option is made official, Hauer said.

“The front loading concept is still just that,” Hauer said. “What the Industrial Commission can do is signal to employers our intent and offer our guidance. We need to make it very clear that these are proposed rules, which are not in effect yet.”

However, companies that choose to use a front loading method might not be subject to enforcement. Hauer said.

“We would not, as a commission, go after an employer that is following our guidance and is acting in good faith,” Hauer said.

In order to create rules, the Industrial Commission does not have to meet the same requirements as the state legislature to amend a citizens initiative, which require a supermajority of the Legislature and amendments must further the intent of the initiative, as required under Arizona’s Voter Protection Act.

“Rules and statutory amendments are different concepts,” Hauer said. “Rules are to clarify and fill gaps in the statute, not to change it.”

While the city of Flagstaff has created an Office of Labor Standards, as was required in Proposition 414, the Industrial Commission is the regulating body for sick leave enforcement. The city’s office handles minimum wage and wage theft enforcement.

The reporter can be reached at cvanek@azdailysun.com or 556-2249.

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Corina Vanek covers city government, city growth and development for the Arizona Daily Sun.

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