Arizona Raises Minimum Wage, Requires Paid Sick Time in 2017

On November 8, 2016, Arizona voters passed Proposition 206, or the Fair Wages and Healthy Families Act, which increases Arizona’s minimum wage from $8.05 per hour in 2016 to $12 per hour by the year 2020. The Act also requires that employers provide paid sick time to employees beginning in July 2017.

Minimum Wage

The Act increases the minimum wage in Arizona based on the following schedule:

  • $10 per hour on January 1, 2017;
  • $10.50 per hour on January 1, 2018;
  • $11 per hour on January 1, 2019;
  • $12 per hour on January 1, 2020.

After 2020, the minimum wage increases according to increases in the cost of living. Employers may still pay up to $3 per hour less than the minimum wage to employees who customarily and regularly receive tips or gratuities.

Paid Sick Time

Beginning July 1, 2017, all private employers and municipalities will be required to provide paid sick time to employees, subject to the following requirements:

  • Employees must accrue a minimum of one hour of paid sick leave per 30 hours worked.
    • Employers with 15 or more employees must permit employees to accrue up to 40 hours of paid sick time per year and must allow employees to use up to 40 hours of accrued paid sick time per year.
    • Employers with fewer than 15 employees must permit employees to accrue up to 24 hours of paid sick time per year and must allow employees to use up to 24 hours of accrued paid sick time per year.
  • Paid sick time begins to accrue at the commencement of employment, or on July 1, 2017, whichever is later. Employers may require that employees hired after July 1, 2017 wait until after their 90th calendar day of employment before using accrued paid sick time.
  • An employer with a PTO policy that provides for an amount of leave that is sufficient to meet the accrual requirements of the Act, and that may be used for the same purposes as outlined in the Act, is not required to provide additional paid sick time.
  • Part-time and temporary workers are considered “employees” and are entitled to paid sick time.
  • Situations for which an employee may use paid sick time include:
    • An employee’s mental or physical illness, injury or health condition;
    • Care of a family member with a mental or physical illness, injury or health condition;
    • Public health emergencies; and
    • Absences necessary due to domestic violence, sexual violence, abuse or stalking.
  • Employees are protected from retaliation and may not have absences that qualify for paid sick leave counted against them under absence control policies.
  • Paid sick time must be provided upon the request of an employee, which may be made orally, in writing, by electronic means, or by any other means acceptable to the employer:
    • When the need for leave is “foreseeable,” employees are required to “make a good faith effort to provide notice to the employer” in advance of the leave and make a “reasonable effort” to schedule the time off “in a manner that does not unduly disrupt the operations of the employer.”
    • When the leave is “not foreseeable,” employees are not required to provide prior notice, unless the employer has a written policy containing procedures for providing notice.
  • Unused accrued sick leave carries over from one year to the next, but accrued paid sick leave does not need to be paid to employees upon termination.

Employers will need to update their minimum wage posters for 2017. For assistance in updating your paid-time-off policies to comply with the Act, please contact an MSEC attorney.