United States: 2016 Election Infected With Paid Sick Leave — Part II

Seyfarth Synopsis: As expected, on November 8, 2016, residents in Washington and Arizona voted on and passed the nation's sixth and seventh statewide mandatory paid sick leave laws.

The 2016 election will go down as one of the most memorable elections in our lifetime. As the country scrambles to prepare for the seemingly inevitable wave of change that will mark at least the next four years, one understated winner last Tuesday was the nation's recent mandatory paid sick leave wave.

As highlighted in last week's post, two statewide mandatory paid sick leave ("PSL") laws were poised for passage during the November 8 election. And pass they did. Voters in both Washington and Arizona passed separate ballot measures on election night that will extend mandatory PSL obligations to employers across both states. Washington and Arizona are now the sixth and seventh states in the country to pass such a law, following Connecticut, California, Massachusetts, Oregon, and Vermont.

The Washington and Arizona laws are currently slated to go into effect on January 1, 2018 and July 1, 2017, respectively. While administrative guidance and state regulations could clarify and adjust employers' compliance obligations in the coming months, below are some highlights of these two impending laws as of today.

Washington PSL Law

Employers covered by the Washington PSL law must allow employees to accrue one hour of PSL for every 40 hours worked. Employers also must allow 40 hours of earned, unused PSL to carry over at year-end. The approved initiative currently is silent on whether there is any cap on how much PSL employees can ultimately accrue and use in a single year. Employers should keep close watch on whether any such requirements are imposed before January 1, 2018.

Relatedly, the Washington PSL law expressly permits frontloading PSL at the start of a benefit year. However and significantly, frontloading PSL may not get rid of an employer's year-end carryover obligations. The approved initiative states that frontloading is allowed if it "meets or exceeds the requirements of this section for accrual, use, and carryover of paid sick leave."

Employees eligible can use Washington PSL for a number of reasons, including (a) their own injury, illness, or health condition, (b) the injury, illness, or health condition of a covered family member, (c) closure of the employee's place of business or employee's child's school or place of care by order of a public official, and (d) certain absences related to domestic violence. Covered family members include, among other relationships, the employee's children, parents, spouse, registered domestic partner, grandparents, grandchildren, and siblings.

The Washington law also contains a number of other substantive, technical components. These include, among other provisions, (a) employers can mandate that employees provide reasonable notice of a PSL absence, (b) a 90 calendar day usage waiting period for new hires, (c) employers may require employees to verify that PSL was used for an authorized purpose only after an absence exceeding three days, and (d) unused PSL does not need to be cashed out upon separation of employment.

Arizona PSL Law

Unlike the Washington law, the Arizona PSL law determines covered employers' accrual and usage obligations based on the size of their workforce. Employers with 15 or more employees must allow employees to accrue and use at least 40 hours of PSL per year. The accrual and usage duties drop to 24 hours of PSL per year for smaller employers. The law requires that PSL accrue at least as fast as one hour for every 30 hours worked, regardless of employer size.

The Arizona law notes that earned PSL shall carry over from one year to the next, subject to the above usage cap limitations. However, the law does not clarify whether employers can cap how much unused PSL carries over at year-end. Importantly, Arizona employers can eliminate their year-end carryover obligations if they (a) pay employees for unused PSL at year-end, and (b) provide employees with a lump grant of PSL that is equal to the above amounts (depending on employer size).

Among the protected reasons for using Arizona PSL are (a) employees' own injury, illness, or health condition, (b) the injury, illness, or health condition of a covered family member, (c) certain public health absences, and (d) certain absences related to domestic violence, sexual violence, abuse, or stalking of the employee or the employee's covered family member. Covered family members include, among other relationships, any individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.

Other substantive components of the Arizona PSL law include (a) PSL begins accruing on the later of July 1, 2017 or an employee's start of employment, (b) there is a 90-day PSL usage waiting period for employees hired after July 1, 2017, (c) PSL must be provided upon employee request, which can be done orally, in writing, electronically, or by other means acceptable to the company, and (d) unused PSL need not be cashed out upon separation of employment.

Employers in Washington and Arizona should continue to monitor developments involving their state's respective PSL laws, including looking for possible regulations, FAQs, or notices and begin taking steps as soon as possible to ensure that they will be able to achieve full compliance by the July 1, 2017 (Arizona) and January 1, 2018 (Washington) effective dates.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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