Preparing for Proposition 206 Implementation

Preparing for Proposition 206 Implementation

With the recent approval of Proposition 206, many Arizona employers find themselves needing to revamp their payroll and sick leave procedures. The changes go into effect January 1, 2017, and it’s imperative that employers and small business owners understand what will be required of them under Proposition 206.

What is Proposition 206?

Proposition 206 raises the minimum wage in Arizona to $12 per hour by 2020. Proposition 206 also entitles employees to earn one hour of paid sick leave for every 30 hours worked, with time limits based on the size of the employer. It also broadens the conditions under which paid sick leave may be taken.

You’ll Need to Plan for Wage Increases

The first key component of Proposition 206 is the minimum wage increase, which could stress small companies who rely on minimum wage workers. The minimum wage will increase from $8.05 per hour in 2016, to $10 per hour by 2017, and incremental increases to $12 an hour by 2020. For comparison, the federal minimum wage is $7.25 per hour.

Proposition 206 increases the minimum wage in Arizona to:

  • $10.00 per hour on January 1, 2017
  • $10.50 per hour on January 1, 2018
  • $11.00 per hour on January 1, 2019
  • $12.00 per hour on January 1, 2020

After 2020, Arizona’s minimum wage will increase, according to increases in the cost of living.

Proposition 206 also preserves the employer’s right to pay $3 per hour less than minimum wage to an employee who regularly receives tips or gratuities, such as food servers.

You Need a System in Place to Manage Sick Leave

Beginning in July 2017, you’ll need to have a process in place for managing paid sick time (PST). Arizona law previously did not require any private or municipal employers to provide PST for their employees. Under Proposition 206, however, private employers and municipalities would be subject to the following requirements, starting on July 1, 2017.

Employees accrue a minimum of one hour paid sick leave per 30 hours worked, within the following guidelines:

  • Employers with 15 or more employees must permit employees to accrue up to 40 hours of PST per year and to allow them to use up to 40 hours of accrued PST per year.
  • Employers with fewer than 15 employees must permit employees to accrue up to 24 hours of PST per year and to allow the use of up to 24 hours of accrued PST per year.

Some additional requirements to consider: Part-time and temporary workers are considered employees and are entitled to PST.  Employees are protected from retaliation and PST absences may not count against them.

Employers may not require employees to find their replacements as a condition for receiving PST leave. Also, unused accrued sick leave carries over from one year to the next.  Accrued paid sick leave does not need to be paid to terminated employees.

Proposition 206 also specifically outlines a number of situations for which an employee may use paid sick time, including when:

  • The employee has a mental or physical illness
  • The employee needs to care for a family member who has a mental or physical illness
  • A public health emergency arises
  • An employee must address issues related to domestic violence

If your business currently does not have a paid sick leave system in place, or if you’re struggling to find ways to increase your payroll to meet the new minimum wage requirements, it’s imperative that you begin implementing new procedures right away to meet the Arizona law deadlines.

Don’t wait to put your system in place. I can help you create system and processes that make this easy. Schedule your consultation today.

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