6 Things All Arizona Businesses Should Know About Prop 206, Minimum Wage, and Paid Sick Leave

You've likely been hearing about the recently passed initiative Prop 206 that is slated to take effect on January 1, 2017. The new law will require businesses to take a look at their wages and sick leave policies and make updates to coordinate with the new regulations. Here are 6 things every business should know about the new law, and what it means for their business: 

1. Prop 206 (or the Fair Wages and Healthy Family Initiatives) grants both a phased-in minimum wage increase & mandatory paid sick time for employees statewide.

2. The phased-in minimum wage increase schedule will take place over the next 4 years:

  • $10 minimum wage on January 1st, 2017
  • $10.50 minimum wage on January 1st, 2018
  • $11 minimum wage on January 1st, 2019
  • $12 minimum wage on January 1st, 2020 

3. Tipped employees can earn $3 less per hour than the minimum wage if their employer can prove the employee is earning at or more than the minimum wage when tips are counted and averaged. Tipped employee phased-in increase:

  • $7 minimum wage on January 1st, 2017
  • $7.50 minimum wage on January 1st, 2018
  • $8 minimum wage on January 1st, 2019
  • $9 minimum wage on January 1st, 2020

4. Beginning on July 1, 2017, businesses in Arizona with 15 or more employees must provide workers with up to 40 hours of accrued annual paid sick leave. Businesses with fewer employees will have to provide 24 hours.

  • EXEMPTION: Small Businesses ($500,000 > gross annual revenue AND are not engaged in interstate commerce) are exempt from this.
  • Employees eligible for paid sick leave: Full-time, part-time, and temporary employees

5. Accruement rate for paid sick leave is one hour per 30 hours worked until they reach the cap. 

  • Employers are not required to pay out the accrued sick time if employee was terminated
  • Employers can’t discipline workers who take accrued leave in accordance with the law or retaliate against employees who report perceived violations of the law

6. The circumstances under which an employee may use paid sick time are as follows: 

  •  Mental or physical illness of the employee; 
  •  To care for a family member’s mental or physical illness; 
  •  A public-health emergency; and 
  •  Domestic violence, sexual violence, or stalking.

Bonus Tips

Creating a Paid Sick Time policy in your employee handbook? Contact a Local First AZ lawyer if you need help creating one: Click here for full list.

You can also read the full Prop 206 measure here.

Finally, view our panel discussion recording for more information: What You Need to Know: Prop 206 & Arizona Businesses: