The Fair Wages and Healthy Families Act
The Fair Wages and Healthy Families Act (Proposition 206) requires employers to provide paid sick leave to their employees. Small employers must allow employees to accrue at least 24 hours of sick time per year, and for larger employers (15+), it's a minimum of forty hours per year.
For more information on Proposition 206 and how it can affect your company, please review the Industrial Commission of Arizona's website.
What employers need to know
Accrual minimum depends on company size
- Fewer than 15 Employees: Employees must accrue a minimum of one hour of earned paid sick time for every 30 hours worked, but they are not entitled to accrue or use more than 24 hours of earned paid sick time per year unless the employer selects a higher limit.
- 15 or More Employees: Employees must accrue a minimum of one hour of earned paid sick time for every 30 hours worked, but employees are not entitled to accrue or use more than 40 hours of earned paid sick time per year unless the employer selects a higher limit.
Eligibility
- All full-time, part-time, and temporary employees are covered under the law.
- Exempt and non-exempt employees are covered under the law.
Overtime
- Non-exempt employees continue to earn sick leave during overtime hours worked.
- Exempt employees are assumed to work at a rate of 40 hours per week.
Limits, caps, and carryover?
- Employees must accrue time beginning on their date of hire, but the employer can limit employees from using the earned time until they have been employed for at least 90 days.
- Arizona employers are required to allow employees to carry their unused time year over year or pay the time out to the employee at the end of the year. If the employee does carry unused time from year to year, the employer is allowed to cap the usage of the sick leave at 40 hours.
- Employers must allow sick leave to be used in a minimum of 1-hour increments.
How to set up an accrual policy in OnPay
Go to Payroll, then Set up, and click Accrual Policies.
Click Add in the upper right to open the Policy Setup template.
The Policy Setup template is divided into two parts:
- Policy name and type
- Policy setup
Policy name and type
Give this policy a unique name that sets it apart from other accruals. The name should make it very clear how and when this policy will apply. For this example, we'll make a sick time policy that accrues annually, but we'll explore many more examples later in this article.
Determine the timeframe by which accrued time is earned. Your choices are “Per hour worked,” “Per pay period,” or “Annual on anniversary date” (hire date).
Choose when these hours will expire, if ever. Your choices are “Hours do not expire”, “Hours expire on anniversary”, or “Hours expire on Jan 1st”.
Select the accrual type.
Policy Setup
The Policy Setup is in three periods. This means hours accrued by workers can increase with their tenure in up to three stages. To create a probationary period, where no time is accrued until this introductory period is over, enter "0" per hour, then the number of months in the probationary period. If you don't want accruals to increase, enter the same information in each period. Unused hours will rollover to the next period. We'll explore more examples later.
Note: Setting the "Cap" is not the same as setting a "rollover limit".
- Some businesses limit the amount of unused time off that an employee can continue to hold going into a new year. This is to ensure that employees are taking the time they need to live a balanced and full life, as well as to protect the business from employees taking or cashing out large sums of paid time off all at once. We'll show you how to limit rollover in How to assign time off accrual policies to employees→
First two periods
For the first two periods, enter:
- How many hours can be accrued each year
- For how many months time is accrued at this rate
- The limit, or cap for these hours.
Third period
You don’t need to indicate the number of months in the third period. This period lasts for the remainder of the worker's employment.
Click Create when you're ready to finalize this accrual. Clicking Not Now will close this window, but will not save your progress.