2017 Arizona Minimum Wage & Sick Leave Update GENERAL INFORMATION SESSION PRESENTED BY NIKI RAMIREZ, MBADECEMBER 2016

Welcome! This presentation has been prepared specifically businesses with employees in Arizona.

This training is intended to be used as general instruction and is not intended to constitute legal advice.

If you or your organization require the assistance of a licensed attorney, we would be pleased to provide a referral.

Your HR Consultant is Niki Ramirez, MBA/PHR/SHRM-CP, Founder and Principal Consultant at HRAnswers.org

Today we’ll cover … AZ wage and hour basics Upcoming, scheduled changes to Arizona minimum wage Mandated paid sick leave for employees Leave time for Q&A

Arizona Wage & Hour Basics AZ Industrial Commission 2006 was last ballot measure that passed that affected minimum wageNon-exempt employees are required to be paid minimum wage plus overtime (for hours worked over 40 per workweek)

Minimum Wage: Scheduled Changes Incremental increases scheduled until 2020.

◦ January 1, 2017: $10.00 per hour◦ January 1, 2018: $10.50 per hour◦ January 1, 2019: $11.00 per hour◦ January 1, 2020: $12.00 per hour

What Comes after $12?January 1, 2021 and beyond: o The minimum wage will increase

commensurate with the cost of living. Changes will be published by the Arizona Industrial Commission.

Minimum Wage: Who is Affected? In 2017 – Over 300,000 workers will be affected. By 2020, over 800,000 workers, 30% of all Arizona workers, will be affected. 90% of beneficiaries of this increased minimum wage are 20 years or older and two-thirds of beneficiaries will be at least 25 years old. Collectively, about half the gains go to households earning less than $40,000 per year.

Minimum Wage:How Businesses May Be Affected Most commonly, businesses will consider increasing the price that they charge for goods or services to cover increased labor costs Some businesses may consider cutting jobs to cover the increase labor costs

Paid Sick Leave Beginning July 1, 2017: Employees accrue 1 hour of paid sick leave for every 30 hours worked.

Paid Sick Leave: Company Size Matters• Companies with 15 or more employees:• Employees accrue and use up to 40 hours, maximum, per calendar year.

• Companies with less than 15 employees:• Employees accrue and use up to 24 hours, maximum per calendar year.

Paid Sick Leave: Payout / Carryover • Employers must pay out accrued but unused sick time at the end of the calendar year; or• Employers may allow employees to carryover up to 40 hours annually.•If an employer pays out accrued, unused time, the employee must be allotted their full estimated accrual for the following year, immediately (+/- Jan 1st each year).

Paid Sick Leave: Separation of Employment• Unless provided by company policy, employers are not required to pay out accrued but unused sick time when an employee terminates employment.

Exempt Employees: Accrual • Exempt employees are assumed to work 40 hours per week and are to accrue based on this assumption. • As a general rule, if an exempt employee performs any work during the workweek, he or she must be paid the full salary amount. The employee need not be paid for any workweek during which he or she performs no work.

Exempt Employees:When Can an Employer Deduct The Department of Labor: FLSA Online Advisor on Sickness An employer may make a deduction from an exempt employee's salary for the employee's full day absences due to sickness provided the deduction is made in accordance with a bona fide plan, policy or practice of providing wage replacement benefits for such absences. Deductions may also be made for the exempt employee's full day absences due to sickness before the employee has qualified for the plan, policy or practice or after the employee has exhausted the leave allowance under the plan.

Sick Leave: Covered Absences Covered absences include those for employee or their family member. Family member is very broadly defined: spouse or domestic partner parent, step-parent, grandparent child, step-child, adopted, foster, guardian “any other person related by blood or affinity whose close association with the employee is the equivalent of a family relationship.”

Sick Leave: Covered Absences4 Reasons for absence: 1 of 4: An employee’s mental or physical illness, injury or health condition; An employee’s need for medical diagnosis, care, or treatment of a mental or physical illness, injury or health condition;An employees’ need for preventative medical care.

Sick Leave: Covered Absences4 Reasons for absence: 2 of 4: Care of a family member with a mental or physical illness, injury or health condition;Care of a family member who needs medical diagnosis, care or treatment of a mental or physical illness, injury or health condition; Care of a family member who needs preventative care.

Sick Leave: Covered Absences4 Reasons for absence: 3 of 4: Absence necessary due to domestic abuse, violence, sexual violence, abuse or stalking, when the absence is to allow the employee or their family member to:Obtain medical physical or psychological attention or counseling Receive services from a domestic violence or sexual violence programRelocation of residence for the protection of the victimObtain legal services in relation to related issues.

Sick Leave: Covered Absences4 Reasons for absence: 4 of 4: Leave may also be used if a place of business or child care is closed by order of a public health official or an employee or family member must stay home by order of a public health official due to exposure to a communicable disease, even if the employee or family member does not have the disease.

Sick Leave Notification to Employer• Employees should provide their notice verbally, in writing, by electronic means or any other means deemed acceptable by the employer.• When possible, the request must include the expected duration of the absence.

Sick Leave Notification to Employer

Good faith effort must be made by the employee to provide proper notice, and not disrupt business operations.

Sick Leave: 3 or More Days Out Employers may require reasonable documentation that the paid sick time has been used for a purpose covered by the law. Ensure confidentiality when retaining documentation. Unless the employee is requesting an accommodation under the Americans with Disabilities Act, employers may not require information about the nature of the health condition or details of the absence.

Sick Leave: No Retaliation Employers cannot retaliate in any way against an employee who takes leave under this law.

Minimum Wage Analysis, To Do List:

1) Analyze current rates of pay.

2) Review pay history and estimate annual labor cost/financial impact.

3) Engage business leaders in making decisions that impact labor budgets.

4) Plan to update payroll systems and notify employees.

Sick Leave Analysis, To Do List: 1) Review and update current sick leave policy. 2) Provide written notice to employee by July 1, 2017. 3) Review pay history and hours worked in previous month, quarter,

year, per employee to determine what accruals can be expected in 2017.

4) Engage business leaders in making educated decisions that impact staffing and benefits.

What questions do you have?

For legal advice or legal questions: Luis Ramirez, Esq.Pryor, Ramirez & Amar LLP(480) 414-0313 or lramirez@pryorandamar.com

Contact your HR Consultant, Niki Ramirez for assistance with an HR matter.Call or text: (480) 717-8882or nramirez@hranswers.org

www.hranswers.org