The passing of Proposition 206, referred to as the Healthy Working Families Initiative, raises the minimum wage in Arizona from $8.05 an hour incrementally over the next four years to $12 an hour. Businesses, especially small businesses, need to be aware of all aspects of the new wage and hour measure, which goes into effect January 1, 2017.

First, the $3 an hour credit for tipped workers will not change, as long as an employer can prove that its tipped employees are earning minimum wage or above with tips included. Below is the schedule for wage increases for both hourly and tipped workers

  • January 1, 2017: $10 an hour, $7 an hour for tipped workers
  • January 1, 2018: $10.50 an hour, $7.50 an hour for tipped workers
  • January 1, 2019: $11 an hour, $8 an hour for tipped workers
  • January 1, 2020: 12 an hour, $9 an hour for tipped workers

In addition to the minimum wage increase, the new initiative mandates the amount and nature of paid sick time (PST) each employer must provide beginning July 1, 2017. All full-time, part-time and temporary workers employed by private companies and municipalities must be allowed to accrue a minimum of one hour of PST for every 30 hours worked as follows:

  • Employers with 15 or more employees must allow employees to accrue and use up to 40 hours of PST per year
  • Employers with fewer than 15 employees must allow employees to accrue and use up to 24 hours of PST per year

Another stipulation includes carry overs for unused PST; however, employers are not required to pay out unused PST to employees whose employment is terminated. In addition, employers may require employees hired after July 1, 2017 to wait 90 days from date of hire before using any accrued PST.

Prop 206 also defines the situations for which PST can be used, including when an employee has a mental or physical illness or is caring for a family member with mental or physical illness, when a public health emergency arises, and when an employee must address issues related to domestic violence.

If you have not started to plan for the impact Prop 206 would have on your business, time is running out.