In November 2016, Arizona voters passed the Fair Wages and Healthy Families Act (known as Proposition 206 or “Prop 206”), which provides for annual incremental increases to the minimum wage in Arizona beginning January 1, 2017, and mandatory accrual of a minimum amount of paid sick time benefits each year, beginning July 1, 2017. Specifically, Prop 206 will eventually raise Arizona's minimum wage to $12 per hour by 2020 and will allow most Arizona employees to accrue one hour of paid sick leave for every thirty hours worked up to a minimum annual accrual of 24 hours (for employers with less than 15 employees) or 40 hours (for employers with more than 15 employees).
In December 2016, the Arizona Chamber of Commerce and Industry led a challenge – supported by multiple business groups – against Prop 206, alleging the measure violated a state constitutional requirement that any voter initiative that costs the state money must identify a funding source. The state is expressly exempt under Prop 206, but proponents of the challenge argued the higher wage requirements forced the state to spend more on contracts with third-party health and social service providers, thereby indirectly imposing more state spending.
The Arizona Supreme Court disagreed and upheld the Proposition. In an Order issued late on March 14, 2017, Chief Justice Scott Bales reported the seven-member court unanimously rejected the argument that Prop 206 is unconstitutional.
Arizona employers – to the extent that have not done so already – must now take steps to ensure compliance with all portions of Prop 206. In addition to payment of an increased minimum wage that went into effect January 1, 2017 ($10/hr for 2017), employers must develop, implement, and educate their workforce by July 1, 2017 regarding a sick time off (STO) policy that complies with the minimum requirements of Prop 206. The Proposition does permit employers to roll sick time into a paid time off (PTO) policy. Because of the many complexities regarding accrual, use, documentation, and notice required under Prop 206, Arizona employers should consult with a qualified employment lawyer to develop and implement a compliant policy.
Farhang & Medcoff has extensive experience in employment law matters, including special knowledge regarding Prop 206 and developing employer handbooks and provisions to address the requirements of state and federal laws and regulations. Please contact Roscoe Mutz, Lia Keller, Ali Farhang, or Tim Medcoff with any legal needs related to your business.