Proposition 206 – What Employers Need to Know

by Sean Donovan

On November 8, Arizona voters adopted Proposition 206, which increases the state minimum wage and requires employers to provide paid medical leave to workers. Details of the Prop. 206 provisions are as follows:

Arizona Minimum Wage Increase

Prop. 206 increases the existing state minimum wage of $8.05 per hour to $10.00 in 2017, $10.50 in 2018, $11.00 in 2019 and $12.00 in 2020. Beginning in 2021, the state minimum wage will increase each year by the cost of living. Businesses with employees that receive tips may pay workers up to $3.00 per hour less than the minimum wage, as is currently the law.

Paid Medical Leave

Beginning on July 1, 2017, Prop. 206 also requires employers to provide employees with “earned paid sick time” for the following:

  • an employee’s medical care
  • an employee’s mental illness
  • an employee’s physical illness
  • an employee’s injury or condition
  • an employee’s need to care for a family member with a mental illness
  • an employee’s need to care for a family member with a physical illness
  • an employee’s need to care for a family member with an injury or condition
  • a family member who needs medical care
  • a public health emergency
  • an absence due to abuse of a child or vulnerable adult
  • domestic violence
  • sexual violence or stalking

A small business currently exempt under the state minimum wage law would be covered as an employer for the purposes of the sick time requirements. A person receiving public benefits who is engaged in work activity as a condition of receiving public assistance is covered as an employee for purposes of the sick time requirements. A person who is employed by a parent or a sibling or who is employed performing babysitting services in the employer’s home on a casual basis would not be covered as an employee.

Employees earn at least 1 hour of sick time for each 30 hours worked; employees in companies with fewer than 15 employees are not entitled to accrue or use more than 24 hours of sick time each year. Employees in companies with 15 or more employees are not entitled to accrue or use more than 40 hours of sick time each year.

An employer may select higher limits for accruing or using sick time. An employee may use sick time as it accrues, except that an employer may require an employee hired after July 1, 2017, to initially wait 90 days before using accrued sick time. Unused sick time does carry forward to the following year. The employer may elect to pay the employee for the unused sick time at the end of the year and provide the employee with the required amount of sick time for use in the following year. An employee is not entitled to payment for 24 unused sick time upon leaving employment.

The employee is not required to find a replacement worker to cover the hours for which sick time is taken. The employer can require reasonable documentation for three or more consecutive days of sick time. An employer would not be allowed to interfere with, restrain or deny any rights protected under Prop. 206, nor could an employer retaliate or discriminate against an employee because the employee exercised those rights.

Prop. 206 contains additional employer notice and recordkeeping requirements and enforcement and civil penalty provisions. An employer is required to treat information regarding health, domestic violence, sexual violence, abuse and stalking as confidential. The Industrial Commission of Arizona will enforce and implement the sick time statutes.

Lastly, local governments are not prohibited from enacting a law providing for greater paid sick time rights. Employers may adopt a more generous sick time policy. The sick time requirements would not apply to employees covered by a current collective bargaining agreement or to a valid collective bargaining agreement if the requirements are expressly waived in the agreement.


Employers should note the dates on which the new requirements take effect.

Jan. 1, 2017
The Arizona Minimum Wage increases to $10.00/hour.

July 1, 2017
Employers must implement “earned paid sick time.”

Jan. 1, 2018
The Arizona Minimum Wage increases to $10.50/hour.

Jan. 1, 2019
The Arizona Minimum Wage increases to 11.00/hour.

Jan. 1, 2020
The Arizona Minimum Wage increase to $12.00/hour.

Jan. 1, 2021
The Arizona Minimum Wage adjusts annually with the Consumer Price Index.

Should you have questions about the new laws or any other business issues, please contact the Tempe Chamber of Commerce at (480) 736-4280.

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