On November 8th the people of Arizona passed The Fair Wages & Healthy Families Act, Prop 206. This initially raises the minimum wage in Arizona to $10 per hour starting on  January 1st, 2017. The new law also included an annual fifty cent per hour increases through January 1st 2020 and cost of living increases thereafter. It could be very expensive to ignore this law because it provides that if an employee is not paid at lease the minimum wage then they could recover twice the underpaid wages plus court costs and attorney fees.

Currently, Arizona has no paid time off requirement for any workers but Prop 206 has added a requirement that employers accrue paid sick pay for their employees.  This requirement does not kick in until July 1st 2017 and there are some differences in the way this will be awarded based on the size of the employer.

We expect that employees will accrue 1 hour of sick leave for every 30 hours worked. Employers with less than 15 employees will be able to cap this accrual at 24 hours per year.  For employers with 15 or more employees the cap will be 40 hours annually. We believe that paid time off will begin accruing on July 1, 2017 and it applies to all employees even part time and temporary.

Unused accruals will carry forward to the next year but the amount that can be used in any given year is still limited to the capped amount. If employees leave and are rehired within nine months any unused accrual will be reinstated. There is no waiting period for using accrued leave except for people hired after July 1st, 2017 can be forced to wait for 90 days before using any of this benefit.  Employers are not required to pay for unused leave when terminating an employee. If an employer decides to pay out unused leave at the end of the year they can do so however, the employee will still be entitled to the full amount of the annual accrual as of January 1st.

The definition of sick time is very broad and the employer can only require proof if the time off is three days or more.  Any health reason qualifies as does taking care of any family member. There are also certain specific legal reasons that qualify including domestic violence or a school, daycare closure ordered by a public official.

There are limited exceptions to the new law. These are small employers with less than $500,000 in annual receipts and of course the Federal and State government are exempt.

This law has serious implications for Arizona employers and we do not pretend to understand all of the effects or rules required to implement new policies to comply. The proposition can be viewed in its entirety at http://apps.azsos.gov/election/2016/general/ballotmeasuretext/I-24-2016.pdf  Please do not use this article as an authority but simply as a heads up.  The penalties for non-compliance are very serious and we are certain to learn more before the sick pay portion takes effect.