Industrial Commission of Arizona Issues Proposed Guidance on Carryover Requirements for Earned Paid Sick Leave Under Proposition 206

Since its approval by Arizona voters in late 2016, Proposition 206’s Earned Paid Sick Leave requirements have left Arizona employers struggling to find the answers to many questions, including how to address the Act’s seemingly unlimited carryover requirement. On May 5, 2017, the Industrial Commission of Arizona (ICA) issued a Notice of Proposed Rulemaking that gives Arizona employers some insight as to how the ICA intends to resolve this question. In its proposed rules, the ICA attempts to clarify the extent of the carryover requirement with regulations that will provide that employees of employers with 15 or more employees “may carry over to the following year a maximum of 40 hours of unused earned paid sick time” while employees of employers with fewer than 15 employees “may carry over to the following year a maximum of 24 hours of unused earned paid sick time.” The full text of the ICA’s draft regulations can be found here.

The Notice of Proposed Rulemaking is just one step in the process the ICA is required to complete before the proposed rules can become effective. The ICA is taking written comments regarding the proposed rules until June 5, 2017, and a hearing on the proposed rules is scheduled for 9 a.m. on June 5, 2017.

It is likely that the proposed rules, if adopted as written, will not become effective until sometime in the fall of 2017, leaving a gap between the compliance deadline of July 1, 2017, and the effective date of any potentially clarifying regulations. Moreover, even if the proposed rules are adopted, the ICA’s interpretation may still be vulnerable to a legal challenge of the agency’s authority to issue the rules, creating more uncertainty for employers in the months ahead. In revising their policies, employers should continue to be wary of limiting the amount of earned paid sick time an employee can carry over from one year to the next.

MSEC will continue to monitor the progress of the proposed rules. If you have questions or concerns about your organization’s obligations under Arizona’s Earned Paid Sick Leave law and whether your policies are compliant, contact your MSEC representative.