Arizona Proposition 206, Paid Sick Leave and Existing PTO Plans

Paid Sick Leave

Home » Arizona Proposition 206 » Arizona Proposition 206, Paid Sick Leave and Existing PTO Plans


The passing of Prop 206 in Arizona created new payroll changes to businesses everywhere, including Arizona paid sick time laws. After Arizona Proposition 206 was approved, companies statewide have worked hard to adjust to the minimum wage raise and increased Arizona paid sick time law. Arizona’s minimum wage was raised to $10.00 an hour in 2017 and resides at $12.00 an hour in 2020. Additionally, employees were given an extra 24 to 40 hours of paid sick leave each year.

These changes have impacted Arizona businesses and impacted yearly goals and budget planning. By knowing more about state law changes, your company can balance your production income and employment numbers. Here is all you need to know about existing PTO plans to help your business thrive.

What is Considered Paid Sick Leave?

So what is considered paid sick time? In Arizona, paid sick leave is defined by multiple terms. “Sick time” can refer to time that an employee needs to take preventative measures for their physical or mental illness or health condition. This includes taking time off for medical diagnoses, treatments, public health emergencies, or if an employee needs to take care of a physically or mentally ill family member.

These paid sick leave laws also permit absence to obtain appropriate professional care due to domestic or sexual violence, abuse, or stalking. Additionally, the onset of COVID-19 has created opt-out laws and even mandatory sick pay for employees who have come in contact with the virus.

What the New Laws Include:

The new Arizona paid sick time laws that began July 1, 2017 apply to all companies regardless of their number of employees. All Arizona employees will accrue one hour of paid sick leave for every 30 hours worked, and depending on whether you have more or less than 15 employees, you can cap their maximum annual accrual at 24 or 40 hours total. The biggest changes of the last two years are all COVID related, including childcare leave and precautionary sick time allocation for all at-risk employees.

Any unused earned accrued sick time can be carried over into the following year. However, if a new employee is on a 90-day probation period they cannot apply the accrual. And lastly, this new law pertains specific employee protections that declare it unlawful for an employer to retaliate or discriminate against an employee.

Arizona Prop 206 Sick Leave and PTO Rules:

While the long-term effects of these laws are not necessarily negative, they have provided challenges for employers and employees alike. One of the cons of Prop 206 is that it created more financial responsibility for business owners to handle than before. Business owners have to be wary about denying an employee’s request for PTO because it can be used against them if the employee is fired later on. An ex-employee can make a claim that they were refused an attempt to utilize a benefit of their employment.

Prop 206 changes have been especially challenging for smaller businesses that have to find new employees to replace those who are taking their sick leave. Furthermore, some employers already have an earned time off policy that combines vacation and sick leave all in one.

arizona sick time laws

With that in mind, these laws have been put in place to create higher-quality job opportunities and better production for both employees and employers. Similarly, there are many statutory provisions that have allowed employees and employers to bypass the PTO law. For example, you can completely get rid of the accrual method of earned sick leave by providing the full amount to your employee at the beginning of the year.

This law also allows the employer to pay its employee earned or unused paid sick leave rather than forwarding it into the next year. By providing early notice and verified documentation of proper sick leave use, businesses can avoid keeping track of PTO or losing work opportunities due to absent employees.

Pros and Cons of PTO Law Change

These new laws are not inherently good or bad for employees or their workers. Like most financial legislature in the business world, understanding and application is critical. The PTO portion of prop 206 creates more liability and active work for business owners. This is because record-keeping and proper accrual, documentation, and applying sick leave is more protected by the government in the event an employee is terminated and wants to contest any of these items.

On the plus side for both parties, there are still ways around using the PTO and having a full allotment for the year paid as a stipend. This must be done with proper verification, but it relieves both the employer and employee of tracking and deducting these PTO hours at year-end.

In short, there is protection and benefit, but negligence will prove costly for businesses and employees alike.

How Your Business Will Be Affected

New business law changes can be intimidating to all employers depending on your company’s size and policies. The Arizona paid sick time laws have posed potential legal challenges for businesses both during a pandemic and in the future. You should always keep your employees’ pertinent information on record to be able to back up your claims.

Arizona sick time law FAQ’s

How does sick time work in Arizona?

Employees accrue sick leave at the beginning of each calendar year.  They must be paid the correct hourly rate (which is especially important for workers with multiple rates) upon a granted request.

If there is a denial, it must be properly documented so as to avoid penalties or legal action later.

Are employers required to pay out PTO in Arizona?

While the answer to this question is ‘no’, it is important to understand how to protect all parties involved. The ‘use-it or lose-it’ style PTO policy must be extremely specifically documented and presented to your employees before they beign working.

This is going to be contingent on your company’s PTO policy, which is different from paid sick leave.

Is PTO required by law in Arizona?

Once more, this is not a requirement, but must be defined within a contract of employment. Paid Sick Leave (PSL) was made mandatory via Prop 206, but that is a different domain.

Make sure that any PTO policy covers all life-cycles of employment, including pre-employment, use during a job, or separation/termination pay outs.

Can you cash out sick time in Arizona?

The cash out of sick time is an option, but the policy is typically at the organization’s discretion. Businesses are only legally obligated to provide a minimum of 40 hours per year. Employers also have the option of providing rollover of hours.

Do you get paid for unused sick days in Arizona?

Employees can not cash out sick leave if they are let go, fired, or otherwise leave a business.

How can Arizona’s paid sick leave law help during COVID-19?

Because Arizona was one of the earliest states to adopt PSL laws, it also is one of the more progressive for help during Covid-19. There are public health emergency laws, and the mandated accrual rate of 1 hour per 30 worked will help employees bring in more income during Covid-19. This can be especially important when a virus is active and could force employees to miss extended workdays.

Stay on top of business laws, employee data, and more with Paytech

PayTech can help you keep track of all of your employee data, hours worked, and PTO accrued or used. Whether you are looking for payroll solutions, HR support, or assistance with accounting and tax, PayTech will provide reliable services and keep you covered.

If you want to learn more about the changes your company will need to make in 2020 to keep up with prop 206 and new COVID-19 laws, please reach out. Let’s start a conversation about the future.


Ready for Award-Winning HR,
Payroll, and Accounting
Solutions with PayTech?


Latest Tips from Our Blog

Owner happy infront business

COVID-19 EIDL Loans Deferred Until 2022


ShareAs 2020 turned into a year of social and economic lockdown, the United States government created multiple forms of economic stimulus to aid businesses through…

Docter smiling with a patient

The Employer’s Guide to COBRA Continuation Coverage


ShareIf you are providing health benefits for your employees and one of them leaves, there are circumstances in which COBRA continuation coverage allows for them…

Photos of someone getting vaccine

Can an Employer Require A Covid Vaccine?


ShareThe United States is working rapidly to deploy as many vaccines as possible to allow workplaces and social settings to be open in a normal…