Solving your payroll and HR issues with insights, answers, and action.

  • Startup
  • Payroll/Taxes
  • Human Resources
  • Employee Benefits
  • Business Insurance
  • Compliance
  • Marketing
  • Funding
  • Accounting
  • Management
  • Finance
  • Payment Processing
  • Taxes
  • Overtime
  • Outsourcing
  • Time & Attendance
  • Analytics
  • PEO
  • Outsourcing
  • HCM
  • Hiring
  • Onboarding
  • Recruiting
  • Retirement
  • Group Health
  • Individual Insurance
  • Health Care
  • Employment Law
  • Tax Reform

Arizona Paid Sick Leave Law Now in Force

  • As of July 1, 2017, Arizona became the most recent state in the nation with a paid sick leave law after Connecticut, California, Massachusetts, Oregon, and Vermont. The state of Washington’s paid sick leave will be effective on January 1, 2018.
  • Paid sick time requirements apply to nearly all Arizona employers.
  • Eligible workers can accrue up to 40 hours of paid sick leave annually.
  • Covered Arizona employers must adhere to new notice, posting, and recordkeeping rules.
  • Arizona employers that fail to comply with the law’s provisions face penalties.

New law passed along with increase to state minimum wage

Proposition 206, The Fair Wages and Healthy Families Act, was approved by voters last November, setting higher minimum wage rates and mandating that eligible employees working for covered employers receive up to 40 hours of paid sick leave annually.

The Arizona Fair Wages and Healthy Families Act:

  • Established new state minimum wage levels that took effect January 1, 2017 — $10 an hour for non-tipped employees, $7 an hour for tipped employees;
  • Provided for eligible employees to begin accruing paid sick time as of July 1, 2017; and
  • Required covered employers to comply with certain notice, posting, and recordkeeping requirements as described in the law.

The Fair Wages and Healthy Families Act also gave the Industrial Commission of Arizona (AZICA) authority to enforce and implement the Act’s minimum wage and earned paid sick time requirements. Employers that are found to have retaliated against employees who exercise their right to take sick leave may be subject to fines of up to $150 per day.

Impact to businesses

The voter-approved benefit, part of a package that also increased the state’s minimum wage, affects nearly all businesses and nonprofits employing at least one Arizona worker — including companies not based in the state. That means any corporation, proprietorship, partnership, joint venture, limited liability company (LLC), trust, association, political subdivision of the state, individual, or other entity acting directly or indirectly in the interest of an employer in relation to an employee. However, the definition does not include the state of Arizona or the United States. Even small businesses exempt from the minimum wage requirements are subject to the Act’s earned paid sick-time requirements.

Recent update

On June 27, 2017, Arizona released a Notice of Supplemental Proposed Rulemaking, further clarifying and expanding upon the earlier draft regulations — including definitions for equivalent paid time-off, carryover and front-loading policies, and revisions to the notice and recordkeeping requirements.

The AZICA has also released and then updated frequently asked questions, which provide insight and clarify how the agency intends to enforce the new paid sick-leave law.


The act has now gone into effect in the absence of final regulations. But Arizona employers are cautioned that although they should ensure full compliance with the supplemental regulations, they should continue to monitor AZICA’s website for the release of final regulations, additional and/or revised frequently asked questions and further guidance and be prepared to make changes in their policies and processes for continued compliance.

Paychex will continue to monitor developments related to the Fair Wages and Health Families Act and provide updates to this article following the release of final regulations.



Tammy Tyler

Tammy Tyler is a senior compliance analyst with a focus on employment law at Paychex, Inc., a leading provider of integrated solutions for payroll, HR, retirement, and insurance services.

This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
View More in ComplianceView All Categories