How does Prop 206 impact Arizona businesses?
Arizona voters recently passed Proposition 206, changing the law related to mandatory sick time and minimum wage.
First, under the new rules, starting July 1, 2017, most employees of Arizona businesses shall:
1) Accrue a minimum of one hour of paid sick time for every 30 hours worked up to a maximum of 40 hours, but businesses may limit the use to not more than 40 hours of paid sick time per year;
2) Unused accrued sick time will carry over from one year to the next, but businesses are not required to pay accrued paid sick leave to employees whose employment is terminated for any reason; and
3) Employees hired after July 1, 2017, can be required to wait until the 90th calendar day after employment begins before using accrued paid sick time.
Additionally, the business may loan earned sick time to an employee in advance of accrual by such employee, and, alternatively to the year-over-year carry over, the company may pay an employee for unused earned sick pay from one year to the next. Domestic violence related absences shall qualify for the use of the sick pay.
Next, Proposition 206 amended A.R.S. § 23-363 (the Minimum Wage statute) by increasing Arizona’s current $8.05 minimum wage as follows:
1) $10 per hour on January 1, 2017;
2) $10.50 per hour on January 1, 2018;
3) $11 per hour on January 1, 2019; and
4) $12 per hour on January 1, 2020.
Beginning January 1, 2021, and on January 1 of successive years, Arizona’s minimum wage shall increase with the cost of living
Finally, in additional to the current requirement that Arizona businesses maintain records of payroll, they also must keep records of the sick time accrual and use. Failure to pay the required sick time subjects the business to liability for interest on the amounts owed and double damages, but this is limited by two to three year status of limitations for negligent and intentional violations, respectively.