In November, Arizona voters approved Proposition 206, which increases Arizona’s minimum wage to $10.00 per hour and requires Arizona employers to provide paid sick time to all employees. The law imposes multiple obligations on employers, many of which are set forth below.
- The new $10.00 hourly minimum wage is effective January 1, 2017. The hourly minimum wage continues to increase incrementally to $10.50 on January 1, 2018, to $11.00 on January 1, 2019, and to $12.00 on January 1, 2020.
- The paid sick leave requirement becomes effective on July 1, 2017.
- The employee’s paid sick leave begins to accrue on July 1, 2017 or on the employee’s first day of employment, whichever is later.
What Is Paid Sick Leave?
Sick leave is defined to include:
- the employees’ mental or physical illness, injury or health condition; the employees’ need for medical diagnosis, care, or treatment of a mental or physical illness, injury, or health condition; and an employee’s need for preventative medical care;
- care of a family member with a mental or physical illness, injury, or health condition; care of a family member who needs medical diagnosis, care, or treatment of a mental or physical illness, injury, or health condition; and care of a family member who needs preventative care;
- close of the employer’s place of business due to a public health emergency; an employee’s need to care for a child whose school or place of care has been closed due to a public health emergency; or care of oneself or one’s family member who is exposed to a communicable disease and that person’s presence in the community may create a health risk to others; and
- absence necessary due to domestic violence, sexual violence, abuse or stalking, provided the leave is to allow the employee or the employee’s family member to obtain medical care, victim services, counseling, relocation, or legal services.
How Much Paid Sick Leave Does an Employee Accrue Annually?
- Employees of employers with 15 or more employees accrue a minimum of one (1) hour of earned paid sick leave for every 30 hours worked. The employee shall not, however, be entitled to accrue or to use more than 40 hours of paid sick leave in a given year, unless the employer sets a higher limit.
- Employees of employers with fewer than 15 employees accrue a minimum of one (1) hour of earned paid sick leave for every 30 hours worked. The employee shall not, however, be entitled to accrue or to use more than 24 hours of paid sick leave in a given year, unless the employer sets a higher limit.
- Employees exempt from overtime under Section 213(a)(1) of the Fair Labor Standards Act are assumed to work 40 hours each workweek, unless their normal workweek is less than 40 hours. In that case, the employee accrues paid sick leave based on her or his normal workweek.
- Employers may provide all earned paid sick leave that an employee is expected to accrue within the year at the beginning of that year.
When and How Can an Employee Start to Use Accrued Paid Sick Leave?
- The employee may use the accrued sick time as she or he earns it.
- The law permits employers to require those employees hired after July 1, 2017 to wait a 90-day probationary period before using their accrued paid sick leave.
- An employee may use accrued paid sick time in either hourly increments or the smallest increment the employer’s payroll system uses.
- If the employee’s need to use the paid sick leave is foreseeable, the employee must make a good-faith effort to give advance notice to the employer and to schedule the leave in a way that does not “unduly disrupt” the employer’s operations.
- Employers that wish to require employees to provide advance notice of their intent to use paid sick leave when the need is not foreseeable must maintain written policies informing employees of this notice requirement. If an employer does not maintain such a written policy, the employee shall not be denied the right to use the accrued paid sick leave on the grounds that the employee failed to provide the notice.
- Arizona’s new paid sick leave law likely overlaps with the unpaid leave requirements of the Family and Medical Leave Act (“FMLA”). The Arizona law does not limit or otherwise affect the applicability of an employee’s rights under FMLA, and those rights may run concurrently with FMLA leave subject to the limitations set forth under FMLA and its regulations.
The earned paid sick time shall carry over to the following year subject to the 40-hour or 24-hour limitations. Alternatively, the employer may payout accrued unused sick leave at the end of the year and provide the employee with an amount of earned paid sick leave that meets or exceeds the legal minimum amounts for the employee to use immediately at the beginning of the next year.
Must Employers Pay Out Unused Accrued Sick Leave at the Time of Employment Termination?
Under Arizona law, employers may maintain policies requiring employees to forfeit accrued and unused paid leave if the employees have the “reasonable expectation” that they will lose the accrued and unused leave upon termination of employment. Therefore, employers should maintain clear written policies informing employees about whether or not the employer pays out accrued and unused paid leave upon termination of employment. Notably, Proposition 206 neither requires employers to pay out unused paid sick leave accrued under the law, nor appears to alter the “reasonable expectation” standard.
Employers are required to notify employees of their right to paid sick leave. The notice must be provided in English, Spanish, and any other language “deemed appropriate” by the Industrial Commission of Arizona. The Industrial Commission of Arizona is required to create and make available model notices.
Non-Discrimination and Non-Retaliation
Proposition 206 prohibits employers from discriminating or retaliating against employees who exercise their rights under Arizona’s wage laws, including the new right to paid sick leave.