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Prop 206 Provides Minimum Wage Increases and Paid Sick Time

Prop 206 Provides Minimum Wage Increases and Paid Sick Time

In November of 2016, Arizona voters approved Proposition 206. Prop 206, also known as the Fair Wages and Healthy Families Act, amends the Arizona Minimum Wage Act to provide for incremental increases to minimum wage for Arizona workers beginning on January 1, 2017. This act also requires, beginning July 1, 2017, Arizona workers accrue and have the legal right to use a minimum amount of Paid Sick Time benefits each year.

Minimum Wage Increase:

For Arizona workers who are not otherwise exempt from the state’s minimum wage requirements, the act implements incremental increases to minimum wage as outlined below:

  • $10.00 per hour on and after January 1, 2017 ($7.00 per hour plus tips for tipped employees);
  • $10.50 per hour on or after January 1, 2018  ($7.50 per hour plus tips for tipped employees);
  • $11.00 per hour on or after January 1, 2019 ($8.00 per hour plus tips for tipped employees);
  • $12.00 per hour on or after January 1, 2020 ($9.00 per hour plus tips for tipped employees); and,
  • Continued incremental increased based on the cost of living on January 1st of each following year.

Mandatory Paid Sick Time:

Employers that do not currently have a Paid Sick Time (PST) policy must implement a policy by July 1, 2017.  The Act also requires that employers must provide notice to employees on the amount of an employee’s accrued PST, the amount of PST used, and the amount of pay that has been received as earned PST.

Key Provisions:

  • Paid Sick Time Defined – The Act defines PST as “time that is compensated at the same hourly rate and with the same benefits, including health care benefits, as the employee normally earns during hours worked.”
  • Minimum Accrual of Paid Sick Time – PST accrues at a rate of no less than one hour for every 30 hours actually worked.
  • Accrual Caps – If an employer has 15 or more employees, its employees can accrue a maximum of 40 hours of PST per year, unless the employer selects a higher limit.  If an employer has fewer than 15 employees, the maximum an employee can accrue is 24 hours of PST per year, unless the employer selects a higher limit.
  • Use of PST – An employee may use earned PST as it is accrued.  An employer is required to permit employees to use their accrued PST in either hourly increments or “the smallest increment that the employer’s payroll system uses to account for absences or use of other time[,]” whichever is smaller.  The statute provides for the use of PST in the event of an employee’s own illness or injury, a family member’s illness or injury, and in other situations.
  • Requesting PST – An employee’s request for PST “may be made orally, in writing, by electronic means or by any other means acceptable to the employer.”  If possible, an employee’s leave request must include the expected duration of the leave.  If an employee’s need to use leave is “foreseeable,” employees must make a “good faith effort” to give their employers advance notice and schedule their absences in a way that lessens the impact on the employers’ businesses, much like an employee’s obligation when using FMLA leave.  For “unforeseeable leave,” employers may require that employees give notice of the leave if the notice requirements are clearly set forth in writing and that written description is disseminated to the employee.  The statute does not appear to place restrictions on the procedures an employer may require for notice of unforeseeable leave, but an employer should be hesitant to place an unreasonably onerous burden on employees to give notice of unforeseeable leave.
  • Requesting Verification of the Reason for PST Use – The statute permits an employer to request “reasonable documentation” that earned PST is used for a proper purpose only where an employer seeks to use three or more consecutive work days of PST.

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