On November 8, 2016, Arizona voters approved Proposition 206, the Minimum Wage and Paid Sick Time Off Initiative, by a 59% to 41% margin.  Effective January 1, 2017, the Arizona minimum wage increases to $10.00 per hour.  The minimum hourly wage increases to $10.50 on January 1, 2018, $11 on January 1, 2019, and $12 on January 1, 2020.  Beginning January 1, 2021, and every January 1 thereafter the minimum hourly wage will increase by the increase in the cost of living increase per the U.S. consumer price index.

The paid sick time component is effective July 1, 2017. The new law includes the following sick time provisions:

  • For every 30 hours worked the employee accrues one hour of sick time.

  • If an employer employs 15 or more employees the employer may cap maximum annual accrual of paid sick time at 40 hours.

  • If an employer employs less than 15 employees the employer may cap maximum annual accrual of paid sick time at 24 hours.  Note:  This means that an employer that has ONE employee is subject to this sick leave accrual law.

  • An employee that is exempt under the Fair Labor Standards Act of 1938 is deemed to work 40 hours per week when calculating paid sick time accrual unless the employee’s normal work week is less than 40 hours.  When an exempt employee works a less than 40 hours the employee’s accrued sick time is based on the actual hours worked.

  • If an employee does not use sick time accrued during a year the unused amount will be carried forward to the next year unless the employer adopts a procedure that eliminates the carry forward.

  • New employees are subject to a 90-day probationary period that provides the employee is not entitled to any compensation for accrued and unused sick time during the probationary period if the employee is fired before the expiration of the 90 day period.