Arizona’s Fair Wages and Healthy Families Act
A.R.S. 23-360 et.seq & A.R.S 23-370 et.seq.
Arizona voters passed Proposition 206 in November, 2016. The most publicized portion of the then proposed law involved a staged increase to the minimum wage for employees in the state. With its passage and the enactment of A.R.S. 23-360 et.seq, effective January 1, 2017, the minimum wage requirements for all full-time, part time, temporary, and seasonal employees in Arizona increased to $10.00 with annual increases of $0.50 per hour until January 1, 2011 when minimum wage will increase from $12.00 using cost of living increases, if any, based upon the Consumer Price Index. There remain certain exceptions, most notably, the tipped employee exemption.
The lesser known portion of Proposition 206 addressed a mandatory paid sick time (“PST”) requirement imposed on all Arizona employers beginning July 1, 2017. These provisions are codified in & A.R.S 23-370 et.seq. The basic PST requirements are as follows:
Accrual of PST
- PST accrual is one Hour of PST for every 30 hours worked by an employee (full –time, part time, temporary, seasonal, commissioned, exempt or non-exempt):
- Alternatively, employers may provide each employee with a “lump sum” of PST at the beginning of each year, capped at 24 or 40 Hours, at the employer’s option, depending upon the number of employees
- Less than 15 Employees: Employees may accrue and use up to 24 Hours of PST annually
- 15 or More Employees: Employees may accrue and use up to 40 hours of PST annually
Use of PST
- Current employees can use PST as soon as it is accrued, by the hour, or the “smallest time increment” used by the employer to track time
- A new employee can be required to complete a 90-day probationary period before the employee is allowed to use any accrued PST
- The value of PST is based upon “the rate the employee would have earned if employee had actually worked, e.g., hourly rate for hourly employees and for salaried employees (calculated using a conversion formula) – for tipped employees or commissioned employees, average the total of hourly rate (if any), commissions and overtime (if any) paid of the last 90 days
- Employees may take PST to care for themselves or a family member regarding:
- mental or physical illness, injury or health condition, or need to seek diagnosis, care, or treatment of a condition; or for their preventative care;
- needed treatment or to relocate, obtain legal services or counseling because they are victims of domestic violence, abuse, sexual violence, or stalking; and
- specific instances when businesses or schools are closed because of a public health emergency, or when care is required for the employee or a family member who has been exposed to a communicable disease
- A “family member” is defined broadly to include spouses, registered domestic partners, children (regardless of age), parents (including stepparents and parents-in-law), grandparents, siblings, or any other individual whose relationship with the employee is equal to a familial relationship
- An adverse action against an employee within 90 days of the employee asserting a PST right is presumed to be employer retaliation against the employee which can be overcome only by clear and convincing evidence otherwise
- An employee can be required to provide “reasonable” documentation as to the basis for using PST only after PST is taken for three or more consecutive workdays,
- Employers may not inquire into the details of the health information, the domestic violence or the special circumstances and must keep such information confidential
- PST requests may be made “orally, in writing, by electronic means, or by any other means acceptable to the employer”
- For foreseeable use of PST, the employee shall make a good faith effort to provide advanced notice
- For unforeseeable circumstances, the employee is required only to provide notice pursuant to a written policy provide by the employer
- Employees cannot be required by the employer to search for and find a replacement employee as a condition of using PST
PST Carry Over
- Earned and unused PST shall be carried over to the following year, subject to the limitations on usage of either 24 or 40 hours PST per year.
- Alternatively, an employer may pay an employee for unused earned PST at the end of a year and provide the employee with an amount of earned PST that meets or exceeds the 24 or 40 hours PST per year that is available for the employee’s immediate use at the beginning of the subsequent year.
- Employees are not entitled to be paid for any accrued, unused PST upon leaving employment, whether as the result of a voluntary or involuntary termination
- However, an employee reinstated within nine months of discharge is entitled to have all accrued and unused PST reinstated
Some employers have been lulled into believing that they need do nothing if their “existing paid time off (PTO) policies meet or exceed mandatory PST requirements” because the statute indicates that such employees are “not required to provide additional paid sick time”. However, that is not necessarily true. There are additional statutory provisions addressing employer notice and accounting requirements. And, employers may wish to institute a PST policy to comply with the new law and, or design procedures for employees to follow when requesting PST. If you are befuddled by all this and/or want to ensure that you, as an employer, are in compliance with Arizona’s Fair Wages and Healthy Families Act, contact Marian Abram or Mimi Petro at to discuss these details further.