SB1568 - 561R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 23, chapter 2, Arizona Revised Statutes, is amended by adding article 8.2, to read:

ARTICLE 8.2. FAMILY AND MEDICAL LEAVE

START_STATUTE23-382. Definitions

In this article, unless the context otherwise requires:

1. "Abuse" has the same meaning prescribed in section 23-371.

2. "Application year" means the twelve-month period beginning on the first day of the calendar week in which an individual files an application for family and medical leave insurance benefits.

3. "Average weekly wage" means one-thirteenth of the covered individual's total wages for covered work paid during the quarter of the person's base period in which such total wages were highest.

4. "Base period" has the same meaning prescribed in section 23-605.

5. "Commission" means the industrial commission of Arizona.

6. "Covered individual" means any person who meets all of the following requirements:

(a) Meets one of the following:

(i) Has been paid wages for covered work during the individual's base period equal to at least one and one-half times the wages paid to the individual in the calendar quarter of the individual's base period in which the wages were highest, and the individual has been paid wages for covered work in one calendar quarter of the individual's base period equal to an amount that is equal to at least three hundred ninety times the minimum wage prescribed by section 23-363 that is in effect when the individual files a claim for benefits.

(ii) Has been paid wages for covered work during at least two quarters of the individual's base period and the amount of the wages paid in one quarter would be sufficient to qualify the individual for the maximum weekly benefit amount payable under this article and the total of the individual's base-period wages is equal to or greater than the taxable limit for unemployment insurance as specified in section 23-622, subsection B, paragraph 1.

(iii) Is self-employed, elects coverage and meets the requirements of section 23-382.12.

(b) Meets the administrative requirements outlined in this article and in rules adopted pursuant to this article.

7. "Director" means the director of the commission.

8. "Domestic violence" has the same meaning prescribed in section 23-371.

9. "Employee" has the same meaning prescribed in section 23-362.

10. "Employer" has the same meaning prescribed in section 23-371, except that an employer also includes this state.

11. "Family and medical leave insurance benefits" means the benefits provided under this article.

12. "Family member" has the same meaning prescribed in section 23-371.

13. "Health care provider" means any person licensed under federal law or the laws of this state to provide medical or emergency services, including doctors, nurses and emergency room personnel, or certified midwives.

14. "Qualifying exigency leave" means leave based on a need arising out of a covered individual's family member's active duty service or notice of an impending call or order to active duty in the Armed Forces, including any of the following:

(a) Providing for the care or other needs of the military member's child or other family member.

(b) Making financial or legal arrangements for the military member.

(d) Attending military events or ceremonies.

(e) Spending time with the military member during a rest and recuperation leave or following return from deployment.

(f) Making arrangements following the death of the military member.

15. "Retaliatory personnel action":

(a) Means denial of any right guaranteed under this article, including either of the following:

(i) Any threat, discharge, suspension, demotion or reduction of hours or any other adverse action against an employee for the exercise of any right guaranteed in this article.

(ii) Reporting or threatening to report an employee's suspected citizenship or immigration status or the suspected citizenship or immigration status of a family member of the employee to a federal, state or local agency.

(b) Includes interference with or punishment for in any manner participating in or assisting an investigation, proceeding or hearing under this article.

16. "Safe leave" means, notwithstanding section 13-4439, absence necessary due to domestic violence, sexual violence, abuse or stalking, if the leave is to allow the covered individual to obtain for the covered individual or the covered individual's family member any of the following:

(a) Medical attention needed to recover from physical or psychological injury or disability caused by domestic violence, sexual violence, abuse or stalking.

(b) Services from a domestic violence or sexual violence program or victim services organization.

(d) Relocation or taking steps to secure an existing home due to the domestic violence, sexual violence, abuse or stalking.

(e) Legal services, including preparing for or participating in any civil or criminal legal proceeding related to or resulting from the domestic violence, sexual violence, abuse or stalking.

17. "Serious health condition" has the same meaning prescribed in section 101 of the family and medical leave act of 1993 (P.L. 103–3; 107 Stat. 6).

18. "Sexual violence" has the same meaning prescribed in section 23-371.

19. "Stalking" has the same meaning prescribed in section 23-371.

20. "State average weekly wage" means the average monthly wage, as calculated under section 23-1041, subsection E, divided by 4.5. END_STATUTE

START_STATUTE23-382.01. Eligibility for benefits

Beginning January 1, 2026, family and medical leave insurance benefits are payable to an individual who both:

1. Meets the definition of covered individual under this article.

2. Meets one of the following requirements:

(a) Because of birth, adoption or placement through foster care, is caring for a new child during the first year after the birth, adoption or placement of that child.

(b) Is caring for a family member with a serious health condition.

(c) Is pregnant or recovering from childbirth or has an illness, injury, impairment or physical or mental condition that involves inpatient care in a hospital, hospice or residential medical care facility or continuing treatment by a health care provider and that makes the covered individual unable to perform the functions of the employee's position.

(d) Qualifies for qualifying exigency leave arising out of the fact that the family member of the covered individual is on active duty or has been notified of an impending call or order to active duty in the Armed Forces.

(e) Is in need of safe leave. END_STATUTE

START_STATUTE23-382.02. Duration of benefits

A. The maximum number of weeks during which family and medical leave insurance benefits are payable to a covered individual in an application year is as follows:

1. Under section 23-382.01, paragraph 2, subdivision (c), twenty-six weeks.

2. Under section 23-382.01, paragraph 2, subdivision (a), (b), (d) or (e), twenty-four weeks.

B. A covered individual is eligible for twenty-six weeks of leave under subsection A, paragraph 1 of this section and twenty-four weeks of leave under subsection A, paragraph 2 of this section in an application year.

C. The first payment of benefits must be made to a covered individual within two weeks after the claim is filed and subsequent payments must be made every two weeks thereafter. END_STATUTE

START_STATUTE23-382.03. Amount of benefits

A. The weekly amount of family and medical leave insurance benefits is determined as follows:

1. If the covered individual's average weekly wage is equal to or less than one-half of the state average weekly wage, the benefit amount is equal to ninety percent of the covered individual's average weekly wage.

2. If the covered individual's average weekly wage is greater than one-half of the state average weekly wage, the benefit amount is the sum of both of the following:

(a) Ninety percent of one-half of the state average weekly wage.

(b) Fifty percent of the difference of the covered individual's average weekly wage and one-half of the state average weekly wage.

B. Beginning January 1, 2026, the maximum weekly benefit amount calculated pursuant to subsection A of this section is not more than $1,000 per week, except that annually, not later than October 1 of each year thereafter, the commission shall adjust the maximum weekly benefit amount to be ninety percent of the state average weekly wage and the adjusted maximum weekly benefit amount shall take effect on January 1 of the year following the adjustment.

C. The minimum weekly benefit may not be less than $100 per week, except that if the covered individual's average weekly wage is less than $100 per week, the weekly benefit shall be the covered individual's full wage.

D. Family and medical leave insurance benefits are not payable for less than eight hours of family and medical leave taken in one work week. END_STATUTE

START_STATUTE23-382.04. Contributions

A. Payroll contributions are authorized to finance the payment of benefits under the family and medical leave insurance program.

B. Beginning January 1, 2025, Payroll contributions shall be paid by employers and employees in the ratio of one-to-one in an amount to be determined by the commission.

C. Not later than October 1 of each year, the commission shall fix the contribution rate for the coming calendar year as follows:

1. For calendar years 2025 and 2026, the commission shall do so based on sound actuarial principles.

2. For calendar year 2025 and each calendar year thereafter, the commission shall first certify and publish all of the following information:

(a) The total amount of family and medical leave insurance benefits paid by the commission during the previous fiscal year.

(b) The total amount remaining in the family and medical leave insurance fund established by section 23-382.15 at the close of the fiscal year.

(c) The total amount equal to one hundred forty percent of the previous fiscal year's expenditures for family and medical leave insurance benefits paid and for the administration of the family and medical leave insurance program.

(d) The amount by which the total amount remaining in the family and medical leave insurance fund established by section 23-382.15 at the close of the previous fiscal year is less than or greater than one hundred forty percent of the previous fiscal year's expenditures for family and medical leave insurance benefits paid and for the administration of the family and medical leave insurance program.

(e) The amount by which the contribution rate shall be adjusted to ensure that the family and medical leave insurance fund established by section 23-382.15 maintains or achieves an annualized amount of not less than one hundred percent of the previous fiscal year's expenditures for family and medical leave insurance benefits paid and for the administration of the family and medical leave insurance program. The contribution rate adjustment, if any, made as the result of the commission's certification and report under this subsection shall supersede the rate previously set forth and shall become effective on January 1 of the following calendar year.

D. A self-employed individual who elects coverage under section 23-382.12 is responsible for the employee share of contributions set forth in subsection B of this section on that individual's income from self-employment. END_STATUTE

START_STATUTE23-382.05. Reduced leave schedule

A. A covered individual is entitled, at the option of the covered individual, to take paid family and medical leave on an intermittent or reduced leave schedule in which all of the leave authorized under this article is not taken sequentially. Family and medical leave insurance benefits for intermittent or reduced leave schedules shall be prorated.

B. The covered individual shall provide the employer with prior notice of the schedule on which the covered individual will be taking the leave, to the extent practicable. Paid family and medical leave taken under this section may not result in a reduction of the total amount of leave to which an employee is entitled beyond the amount of leave actually taken.

C. This section does not entitle a covered individual to more leave than required under section 23-382.02. END_STATUTE

START_STATUTE23-382.06. Leave and employment protection; enforcement

A. Any covered individual who exercises the covered individual's right to family and medical leave insurance benefits is entitled, on the expiration of that leave, to be restored by the employer to the position held by the covered individual when the leave commenced, or to a position with equivalent seniority, status, employment benefits, pay and other terms and conditions of employment, including fringe benefits and service credits, that the covered individual had been entitled to at the commencement of leave.

B. During any leave taken pursuant to this article, the employer shall maintain any health care benefits the covered individual had before taking such leave for the duration of the leave as if the covered individual had continued in employment continuously from the date the covered individual commenced the leave until the date the family and medical leave insurance benefits terminate, if the covered individual continues to pay the covered individual's share of the cost of health benefits as required before the commencement of the leave.

C. This section and section 23-382.07 shall be enforced as follows:

1. On receipt of a written complaint from an employee, the director shall investigate whether the employer has violated this article.

2. If the director determines that an employer has violated this article, the director shall do any of the following:

(a) With the written consent of the employee, attempt to informally resolve any pertinent issue through mediation.

(b) With the written consent of the employee, request the attorney general to bring an action on behalf of the employee in accordance with this article.

3. An employee may bring a civil action in a court of competent jurisdiction against the employee's employer for a violation of this article regardless of whether the employee first filed a complaint with the director.

4. An action brought under paragraph 2 or 3 of this subsection shall be filed within three years after the occurrence of the act on which the action is based.

5. If a court finds that an employer violated this article in an action brought under paragraph 2 or 3 of this subsection, the court may award the employee all of the following:

(a) The full monetary value of any unpaid family and medical leave that the employee was unlawfully denied. Unpaid family and medical leave awarded pursuant to this subdivision shall be paid to the employee without cost to the employee.

(b) Actual economic damages suffered by the employee as a result of the employer's violation of this article.

(d) Reasonable attorney fees and other costs.

(e) Any other relief that the court deems appropriate, including reinstatement of employment, back pay and injunctive relief.

6. If the action was brought by the attorney general under paragraph 2, subdivision (b) of this subsection, the court shall order the employer to pay at least $1,000 per violation to this state. END_STATUTE

START_STATUTE23-382.07. Retaliatory personnel actions prohibited

A. It is unlawful for an employer or any other person to interfere with, restrain or deny the exercise of, or the attempt to exercise, any right protected under this article.

B. An employer, temporary help company, employment agency, employee organization or other person may not take retaliatory personnel action or otherwise discriminate against a person because the person exercised rights protected under this article. These rights include all of the following:

1. Requesting, filing for, applying for or using benefits or leave provided for under this article.

2. Communicating to the employer or any other person or entity an intent to file a claim, a complaint with the commission or courts or an appeal.

3. Testifying, planning to testify or assisting in any investigation, hearing or proceeding under this article at any time, including during the waiting period and the period in which the person receives family and medical leave insurance benefits under this article.

4. Informing any person about any employer's alleged violation of this article.

5. Informing any person of a person's rights under this article.

C. It is unlawful for an employer's absence control policy to count paid family and medical leave taken under this article as an absence that may lead to or result in discipline, discharge, demotion, suspension or any other adverse action.

D. The protections of this section apply to any person who mistakenly but in good faith alleges violations of this article.

E. There is a rebuttable presumption that an employer has violated this article if the employer takes adverse action against an employee within ninety days after the employee does any of the following:

1. Files a complaint with the director alleging a violation of this article or brings a civil action under this article.

2. Informs a person about the employer's alleged violation of this article.

3. Cooperates with the director or another person in the investigation or prosecution of the employer's alleged violation of this article.

4. Opposes a policy or practice of the employer or an act of the employer that is prohibited under this article.

5. Takes or requests leave or benefits under this article.

F. An employer may overcome the rebuttable presumption established pursuant to subsection E of this section with clear and convincing evidence of all of the following:

1. That the employer's action was not retaliation against the employee.

2. That the employer had sufficient independent justification for taking the action.

3. That the employer would have in fact taken the action in the same manner and at the same time the action was taken, regardless of the employee's exercise of protected rights under this article. END_STATUTE

START_STATUTE23-382.08. Coordination of benefits

A. Leave taken with wage replacement under this article that also qualifies as leave under the family and medical leave act of 1993 (P.L. 103–3; 107 Stat. 6) shall run concurrently with leave taken under the family and medical leave act of 1993 (P.L. 103–3; 107 Stat. 6).

B. A covered individual is not required to use any accrued paid sick, vacation or annual leave, including sick leave under section 23-373, or other paid time off to which the covered individual is entitled before or while receiving family and medical leave insurance benefits, provided, however, that if the employer and the covered individual agree, a covered individual may elect to use accrued paid sick, vacation or annual leave or other paid time off to supplement family and medical leave insurance benefits under this article in order to receive full pay while on leave.

C. An employer may require that payment made pursuant to this article be made concurrently or otherwise coordinated with payment made or leave allowed under the terms of disability or family care leave under a collective bargaining agreement or employer policy. The employer must give employees written notice of this requirement.

D. This article does not diminish an employer's obligation to comply with any of the following that provide more generous leave:

1. A collective bargaining agreement.

2. Employer policy.

3. Any other law.

E. An individual's right to leave under this article may not be diminished by a collective bargaining agreement entered into or renewed, or an employer policy adopted or retained, after the effective date of this article. Any agreement by an individual to waive the individual's rights under this article is void as against public policy. END_STATUTE

START_STATUTE23-382.09. Notice; civil penalty

A. Each employer shall provide written notice that complies with this section:

1. To each employee on hiring and annually thereafter.

2. To an employee when the employee requests leave under this article.

3. To an employee when the employer acquires knowledge that the employee's leave may be for a qualifying reason under section 23-382.01.

B. Any noticed provided under this section shall include all of the following:

1. The employee's right to family and medical leave insurance benefits under this article and the terms under which it may be used.

2. The amount of family and medical leave insurance benefits.

3. The procedure for filing a claim for benefits.

4. The right to job protection and benefits continuation under section 23-382.06.

5. That discrimination and retaliatory personnel actions against a person for requesting, applying for or using family and medical leave insurance benefits is prohibited under section 23-382.07.

6. That the employee has a right to file a complaint for violations of this article.

7. The contact information for the commission where questions about rights and responsibilities under this article can be answered.

C. An employer shall also display and maintain a poster in a conspicuous place accessible to employees at the employer's place of business that contains the information required by this section in English, Spanish and any language that is the first language spoken by at least five percent of the employer's workforce, provided that such notice has been provided by the commission. The director may adopt rules to establish additional requirements concerning the means by which employers shall provide such notice.

D. In any case in which the necessity for leave under this article is foreseeable, the employee shall provide the employer with at least thirty days' notice before the date the leave is to begin, or, if such notice is not possible, the employee shall provide such notice as is practicable. In any case for which the necessity for leave under this article is not foreseeable, the employee shall provide such notice as is practicable.

E. The amount of family and medical leave available to an employee and the amount of family and medical leave taken by an employee to date in the year shall be recorded in, or on an attachment to, the employee's regular paycheck.

F. Any employer that violates the recordkeeping, posting or other requirements that the commission establishes under this section is subject to a civil penalty of at least $250 for a first violation, and at least $1,000 for each subsequent or wilful violation and, if the commission or court determines appropriate, may be subject to special monitoring and inspections. END_STATUTE

START_STATUTE23-382.10. Benefits appeals

A. The director shall establish a system for appeals in the case of a denial of family and medical leave insurance benefits.

B. Judicial review of any decision with respect to family and medical leave insurance benefits is allowed in a court of competent jurisdiction after a party aggrieved by the decision has exhausted all administrative remedies established by the director.

C. The director shall implement procedures to ensure confidentiality of all information related to any claims filed or appeals taken to the maximum extent allowed by applicable laws. END_STATUTE

START_STATUTE23-382.11. Erroneous payments and disqualification for benefits

A. A covered individual is disqualified from family and medical leave insurance benefits for one year if the individual is determined by the director to have wilfully made a false statement or misrepresentation regarding a material fact, or wilfully failed to report a material fact, to obtain benefits under this article.

B. If family and medical leave insurance benefits are paid erroneously or as a result of wilful misrepresentation, or if a claim for family and medical leave insurance benefits is rejected after benefits are paid, the commission may seek repayment of benefits from the recipient. The director shall exercise the director's discretion to waive, in whole or in part, the amount of any such payments for good cause. END_STATUTE

START_STATUTE23-382.12. Elective coverage

A. A self-employed person, including a sole proprietor, partner or joint venturer, may elect coverage under this article for an initial period of not less than three years. The self-employed person must file a notice of election in writing with the director, as required by the commission. The election becomes effective on the date the self-employed person files the notice. As a condition of election, the self-employed person must agree to supply any information concerning income that the commission deems necessary.

B. A self-employed person who has elected coverage may withdraw from coverage within thirty days after the end of the three-year period of coverage, or at such other times as the director may prescribe by rule, by filing written notice with the director. The withdrawal shall take effect not sooner than thirty days after the self-employed person files the notice. END_STATUTE

START_STATUTE23-382.13. Family and medical leave insurance program; rules

A. The commission shall establish and administer a family and medical leave insurance program and, on or before January 1, 2026, shall pay family and medical leave insurance benefits as specified in this article.

B. The commission shall establish reasonable procedures and forms for filing claims for benefits under this article and shall specify the supporting documentation that is necessary to support a claim for benefits, including any documentation required from a health care provider for proof of a serious health condition.

C. The commission shall notify the employer within five business days after a claim is filed pursuant to this article.

D. The commission shall use information sharing and integration technology to facilitate the disclosure of relevant information or records, if an individual consents to the disclosure as required under the laws of this state.

E. Information contained in the files and records pertaining to an individual under this article is confidential and not open to public inspection, other than to public employees in performing their official duties. However, the individual or an authorized representative of the individual may review the records or receive specific information from the records on the presentation of the individual's signed authorization.

F. The director shall adopt rules as necessary to implement this article. END_STATUTE

START_STATUTE23-382.14. Federal income tax

If the United States internal revenue service determines that family and medical leave insurance benefits under this article are subject to federal income tax, the commission must advise an individual filing a new claim for family and medical leave insurance benefits, at the time of filing such claim, of all of the following:

1. That the United States internal revenue service has determined that benefits are subject to federal income tax.

2. That requirements exist pertaining to estimated tax payments.

3. That the individual may elect to have federal income tax deducted and withheld from the individual's payment of benefits in the amount specified in the federal internal revenue code.

4. That the individual is allowed to change a previously elected withholding status. END_STATUTE

START_STATUTE23-382.15. Family and medical leave insurance fund

A. The family and medical leave insurance fund is established consisting of contributions received pursuant to section 23-382.04 and any other monies. The commission shall administer the fund. Expenditures from the fund may be used only for the purposes of the family and medical leave insurance program, including conducting the public education campaign pursuant to section 23-382.17. Only the director or the director's designee may authorize expenditures from the fund.

B. Whenever, in the judgment of the commission, there is in the family and medical leave insurance fund an amount of monies of more than the amount deemed by the commission to be sufficient to meet the current expenditures properly payable from the fund, the state treasurer may invest, reinvest, manage, contract, sell or exchange investments acquired with such excess funds in the manner prescribed by the laws of this state on notice from the commission. END_STATUTE

START_STATUTE23-382.16. Annual report

Beginning September 1, 2026 and each September 1 thereafter, the commission shall submit a report to the governor, the president of the senate and the speaker of the house of representatives, and shall provide a copy of the report to the secretary of state, that includes all of the following:

1. The projected and actual program participation by section 23-382.01 category.

2. The gender of the beneficiaries.

3. The premium rates.

4. The family and medical leave insurance fund balances.

5. Outreach efforts.

6. For leave taken under section 23-382.01, paragraph 2, subdivision (b), the family members for whom leave was taken to provide care. END_STATUTE

START_STATUTE23-382.17. Public education

The commission shall conduct a public education campaign to inform employees and employers regarding the availability of family and medical leave insurance benefits. Outreach information shall be available in English, Spanish and other languages spoken by more than five percent of this state's population. The commission shall use monies from the family and medical leave insurance fund established by section 23-382.15 to finance the public education campaign. END_STATUTE

START_STATUTE23-382.18. Sharing technology

The commission is encouraged to use state data collection and technology to the extent possible and to integrate the family and medical leave insurance program with existing state policies. END_STATUTE

Sec. 2. Rulemaking

All rules necessary to implement this act shall be adopted within one hundred twenty days after the effective date of this act.

Sec. 3. Severability

If a provision of this act or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the act that can be given effect without the invalid provision or application, and to this end the provisions of this act are severable.

Sec. 4. Emergency

This act is an emergency measure that is necessary to preserve the public peace, health or safety and is operative immediately as provided by law.