Employment Law for Contractors
Passage of Prop. 206 Raises Arizona’s Minimum Wage,
Imposes Paid Sick Leave
While the minimum wage increase has garnered most of the attention, the new paid sick leave requirement may pose the greater burden for many Arizona employers.
This article appeared in the December 2016 issue of
Lang & Klain's "Construction Advisor" and was updated January 3,
2017, and July 1, 2017
to the Construction Advisor
Construction Advisor index
2016, Arizona voters approved Proposition 206, which raises
Arizona’s minimum wage to $10 per hour and requires employers to
provide paid sick leave to all employees, full-time and part-time.
On January 1,
2017, the minimum wage in Arizona increased to $10 per hour
(from $8.05). It will increase each year thereafter, to
$10.50 in 2018, $11.00 in 2019, and $12.00 in 2020, after which it
will be adjusted annually for inflation.
The minimum wage
levels are $3.00/hour less for employees who earn tips (provided the
employee is earning at least minimum wage after tips are counted).
Paid Sick Leave
minimum wage hikes in Prop. 206 have received most of the publicity,
the requirement for paid sick leave may prove to be a bigger
strain for many private employers, who were not previously required by
Arizona law to provide such a benefit.
July 1, 2017, when Arizona workers began to accrue one hour of
paid sick time for every 30 hours worked. Accrual began on the
employee’s first day of employment or July 1, 2017, whichever was
employee may begin to use his/her paid sick time as it is accrued,
the employer can require an employee hired after July 1, 2017, to
wait until the 90th calendar day after they began working before
using their accrued paid sick time.
The paid sick
leave requirement applies to all employers, but the amount of the
requirement depends on the size of an employer’s work force:
Employers with fewer than 15 employees are required to allow
employees to accrue and use a minimum of 1 hour of paid sick leave
for every 30 hours worked for up to 24 hours per year.
Employers with 15 or more employees must allow employees to use and
accrue a minimum of 1 hour of paid sick leave for every 30 hours
worked for up to 40 hours per year.
Everyone, including an owner, who performs
work for the employer for compensation whether salary, wages or commissions
is considered an employee for purposes of determining the size of the
company’s work force.
For purposes of
paid sick leave accrual, employees who are exempt from receiving
overtime pay are assumed to work 40 hours per week. If their normal
work week is less than 40 hours, paid sick leave accrues based on
their normal work week.
have unused paid sick leave at the end of a year may carry over the
unused accrual to the next year, unless their employer chooses to
pay them for their unused sick time.
For some employers, there may be one glimmer of good news: Under
the new statute (A.R.S. § 23-372), if the employer is providing enough paid time
off to cover the minimum amount of paid sick time, and if the employer allows
its workers to use that time off in the same way and for the same purposes as
paid sick leave, then the employer does not need to provide additional paid sick
Commission of Arizona, which already provided minimum wage
enforcement, is charged with enforcing the paid sick leave
Employers are required to comply with certain recordkeeping, posting
and other requirements of minimum wage provisions. Failure to
comply carries a minimum $250 fine for the first violation and at
least $1,000 for a subsequent violation. Those penalties also
apply to violations of the paid sick leave provisions.
Employers are also required to keep payroll records showing compliance with the
new law for four years. Failure to do so will raise a rebuttable
presumption that the employer did not comply with the minimum wage
and paid sick leave requirements.
fail to pay the proper wages or earned paid sick leave will be
required to pay the employee the unpaid balance of the wages or
earned paid sick leave owed, including interest, plus an additional
amount equal to twice the underpaid wages or earned paid sick leave.
For many employers, both of Prop. 206's provisions are likely to increase overhead and drive
up prices. In particular, the paid sick leave requirement will force
many smaller employers to deal with new record-keeping requirements
along with the added costs.
make sure that their employee
handbooks and policies accommodate the new law and that they are complying with the new requirements.
If you have
questions about either provision of Prop. 206, contact Lori Guner at 480-947-1911 or
 For employers with more than 15
employees, the paid sick leave requirements apply to
salaried and hourly employees.