It has been nine months since Arizona citizens cast their vote in favor of Proposition 206, a measure to increase the State’s minimum wage and mandate businesses provide paid sick time to employees.

Since January, employers and the State have felt the pain of the minimum wage changes.  The Legislature struggled to fill budgetary gaps for contracted care providers, and businesses have faced retracting their workforce or closing altogether. It will only get worse as workers begin to encounter the Seattle experience of less pay and fewer hours when the wage ratchets up to $12/hour by 2020.

Now, at the beginning of this month, the second kicker of the 9-page proposition takes effect.  The new law requires employers provide one hour of paid sick time per every thirty hours worked; with up to 24 hours per year for employers with fewer than 15 employees, and 40 hours of paid sick time a year for employers with more than 15 employees.

These mandates come with real hard costs for all businesses large and small – both in the ways of new bureaucratic requirements, higher legal standards to defend themselves against possible suits, and a less reliable workforce.

With the sick time allowance comes a slew of new accounting and reporting burdens.  Employers will now be required to reformat pay stubs to include employees’ accrued time, amount of pay earned as sick time, as well as sick time used to date.  In addition to this, employers will have to retain these payroll records up to four years and post a notice in their workplaces outlining employee “rights” under Prop 206. The law applies to part-time and temporary workers as well – which means employers will have to think long and hard about whether the costs associated with these additional requirements are worth the investment in employees who may or may not provide longer term value to the company.  These considerations are compounded when the minimum $250 penalty for record-keeping noncompliance is factored.

More significant however, will be the new legal reality employers face.  Companies are prohibited from taking a negative action in response to an employee’s use of paid sick time.  That means within 90 days of a sick time request or use, the employer will be under a microscope, whereby any action perceived as negative by the employee may be scrutinized as retaliation or deterrence.    And because employees are permitted to take their sick time in the smallest increment of time within the business’s accounting system, an employee could spread out their sick time in a way that puts employers within perpetual 90-day duress.

This policy change threatens the very nature of Arizona’s “Right to Work” laws that make the state such an attractive place for businesses.  Employers will need to meticulously document every reason for changing or cutting an employee’s hours, denying or requiring transfers, or denying vacation time use in peak times.  Anytime there is a dispute, the higher burden for defending any changes will always fall upon the employer.

Despite the inevitable damages and economic drain of these liberal, socially-engineered policies, paid sick leave is a “solution” wanting a problem.  Comprehensive studies of employer paid leave policies demonstrate most businesses provide paid sick days, workplace illness is not a widespread issue, and mandatory sick laws do not reduce employee turnover.  Arizonans will see no real benefit from this policy change.

Over time, the greatest effect of paid leave will be the expansion of government authority into employment contracts and the adoption of one of the highest-cost paid leave mandates in the country.  It undermines Arizona’s “right-to-work” law, emboldens big unions, and erodes the trust and synergy of the employer/employee relationship.

For more information on compliance with the new minimum wage or paid sick time laws, businesses should visit the Arizona Industrial Commission: https://www.azica.gov/frequently-asked-questions-about-wage-and-earned-paid-sick-time-laws

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