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In November 2016, Arizona voters passed a ballot initiative (Proposition 206) for a statewide sick time law and annual increases to the minimum wage.  The new law, entitled the Fair Wages and Healthy Families Act, takes effect on July 1, 2017.  The purpose of this article is to provide an overview of the law’s paid sick time requirements and the steps employers should be taking to ensure compliance with those requirements.

Take note that the following information is intended as a summary only.  Employers are strongly encouraged to seek legal counsel should they have additional questions regarding the new law’s requirements.  Additionally, employers should be aware that certain requirements may be subject to changes or further clarification as the courts and the Industrial Commission provide additional guidance on the new law.

What is Paid Sick Time?

The new law requires employers to provide paid sick time to all full-time, part-time, and temporary employees.  Paid sick time, which must be compensated at the employee’s current pay rate, may be used for the following reasons:

  • An employee’s medical care, illness, injury, or health condition
  • Care of an employee’s family member with an illness, injury, health condition, or need for medical care
  • A public health emergency
  • Issues related to domestic violence, sexual violence, abuse, or stalking affecting the employee or employee’s family member

The law broadly defines “family member” to include children and stepchildren of any age, parents and stepparents, spouses and domestic partners, grandparents, siblings, in-laws, and other individuals related by either blood or affinity whose close association with the employee is the equivalent of a family relationship.

What Arizona employers are subject to the paid sick time requirements?

Virtually all employers, including small businesses, are subject to the law’s requirements.  State and federal employers are exempt.

How much sick time does the law provide employees?

Regardless of the size of the employer, employees must accrue paid sick time at the rate of no less than one hour for every 30 hours worked.

Employees working for employers with 15 or more employees are entitled to accrue and use up to a maximum of 40 hours of paid sick time per year.

Employees working for employers with less than 15 employees are entitled to accrue and use up to a maximum of 24 hours of paid sick time per year.

Accrual of paid sick time begins July 1, 2017.  Employees may use paid sick time as soon as it is accrued; however, employers may require employees hired after July 1, 2017 to wait 90 calendar days after the start of employment before using accrued paid sick time.

What if an employer already provides paid time off to employees?

If employers already have policies that provide paid time off in an amount that meets or exceeds the law’s minimum requirements (and that can be used for the same purposes specified by the law), they are not required to provide additional paid sick time to employees.

Additionally, the law does not prohibit or discourage employers from implementing more generous paid leave policies, i.e., providing employees with paid time off above the law’s minimum requirements.

What if an employee has unused paid sick time at the end of the year?

The new law provides employers with two options regarding an employee’s accrued, unused paid sick time:

  • Employers may allow employees to carry over any accrued, unused paid sick time into the next year; or
  • Employers may pay employees for the accrued, unused paid sick time at the end of the year and provide those employees with an amount of paid sick time that meets or exceeds the requirements of the law and that is available for the employee’s immediate use at the beginning of the subsequent year.

Regardless of what option an employer chooses, employees are still only entitled to use the amount of paid sick time required under the law (up to a maximum of 40 hours per year) unless the employer has provided a higher limit.

Employers are not required to pay an employee for any accrued, unused paid sick time upon termination of the employee’s employment.  If the employee is rehired by the employer within nine months of the termination of employment, however, the employee’s previously-accrued paid sick time must be reinstated.

How does an employee request use of paid sick time?

Employees may submit requests to use paid sick time orally, in writing, electronically, or by any other means acceptable to the employer.  When the need to use paid sick time is foreseeable, an employee must make a good faith effort to provide advance notice and should attempt to schedule such time in a manner that is not unduly burdensome to the employer’s operations.  When the need to use paid sick time is not foreseeable, an employer may only require advance notice if it has previously given the employee a written policy outlining the procedures for providing advance notice.

Employers cannot require that employees find a replacement worker when requesting use of paid sick time.

Can employers require employees to document or discuss the details of a need to use paid sick time?

In the event that an employee uses paid sick time for three or more consecutive work days, employers may require reasonable documentation that the paid sick time was used for one of the reasons specified under the law.

Employers cannot require employees to specify the relevant health issue or the details of domestic violence, sexual violence, abuse, or stalking that gave rise to the need to use paid sick time.

Are employers required to give employees notice of their rights under the new law?

At the commencement of an employee’s employment or by July 1, 2017, whichever is later, employers must provide employees written notice of the following:

  • The fact that employees are entitled to paid sick time
  • The amount of paid sick time that their employees are entitled to accrue
  • The terms of using paid sick time
  • That retaliation against employees who request or use paid sick time is prohibited
  • That each employee has the right to file a complaint if paid sick time is denied or if the employee is subject to retaliation for requesting/using paid sick time
  • The contact information for the Industrial Commission

Industrial Commission Labor Department

800 West Washington Street

Phoenix, Arizona 85007

(602) 542-4515

The notice should be posted alongside other required workplace notices/posters.

Are there other recordkeeping requirements?

Employers must provide employees with the following information either in or on an attachment to the employee’s paycheck:

  • The amount of paid sick time available for use by the employee
  • The amount of paid sick time taken by the employee to date in the year
  • The amount of pay the employee has received as paid sick time to date in the year

What are the consequences for failing to comply with the law’s requirements?

The law prohibits discrimination and retaliation against employees who use or request paid sick time. Paid sick time counts as a protected absence and cannot lead to any disciplinary or adverse action against an employee. The law creates a rebuttable presumption that any adverse employment action taken within 90 days of an employee’s use of paid sick time is retaliatory.  An employer must show by clear and convincing evidence that the adverse employment action was not in retaliation for the employee’s use of paid sick time.

Employers who fail to comply with the law’s requirements are subject to the following:

  • Civil lawsuits brought by the state and/or employees
  • Payment of double the wages owed to an employee, plus interest
  • Employee attorney fees and costs
  • Civil penalties
  • State monitoring and inspections

What should employers do to prepare for the new law?

  • Employers should review current time off policies to ensure that they meet the requirements of the new law. Policies that include “use it or lose it” requirements, as well as policies that prohibit employees from accruing paid sick time until after a specified period of time, do not comply with the new law.  Employers and/or legal counsel should revise existing policies to ensure compliance.
  • Prior to July 1, 2017, employers should provide notice to employees of their rights under the new law.
  • Employers should work with their payroll companies or payroll departments to develop a method for tracking and reporting employees’ paid sick time.
  • Employers should provide training to supervisors on the new law’s requirements.
  • Employers are strongly encouraged to consult with legal counsel regarding questions or concerns about complying with the new law.