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Arizona Proposition 206, Paid Sick Leave and Existing PTO Plans


The new year has brought many new changes to businesses everywhere, including Arizona paid sick time laws. Due to Arizona Proposition 206 being approved in the election, companies statewide have been working hard to adjust to the minimum wage raise and increased Arizona paid sick time law. Arizona minimum wage was raised to $10 an hour and employees were given an extra 24 to 40 hours of paid sick leave each year. These changes will impact AZ businesses if they are not prepared to alter their yearly goals and budget plan. Knowing more about state law changes will help a balance between 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? If you are new to the business world as an employer or employee, Arizona paid sick leave is defined by multiple terms. “Sick time” can refer 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 time laws also permit absence to obtain appropriate professional care due to domestic or sexual violence, abuse, or stalking.

What the New Law Includes:

The new Arizona paid sick time laws that begin July 1, 2017, will 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. Any unused earned sick pay 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.

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Pros & Cons of PTO Law Change

While the criteria of this newly implemented law is not necessarily negative, it will provide challenges for employers and employees alike. One of the cons of Prop 206 is that it creates more financial responsibility for business owners to handle than before. Business owners will 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 are especially frustrating for smaller businesses who will 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. It is unclear how these companies will be affected by this law change, and whether or not their 40 accrued hours will be applied towards vacation time or PTO only.

On the upside, there are many statutory provisions that will allow employees and employers to bypass the PTO law with a few exceptions. 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 new 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.

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 law could pose potential legal issues for businesses in the future, which is why you should always keep your employee’s important information on record. 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. Learn more about the changes your company will need to make in order to make up for Prop 206 by contacting one of our team members at 602.900.8807.

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