Arizona’s New Minimum Wage

Prop 206 brought many changes in 2017, including an increase in the minimum wage from $10.00/hour to $10.50/hour. The minimum wage will continue to increase at the start of each year until 2020. Flagstaff is the exception to this rule, where the minimum wage is now $11.00/hour.

Paid Sick Time in Full Effect

Significantly, 2017 was also the year that Prop 206 introduced the paid sick time requirement. The rule went into effect on July 1, 2017, and provides that for every 30 hours worked, employees earn 1 hour of paid sick time.  For employers with 15 or more employees, the accrual of paid sick time is capped at 40 hours per year for each employee, and employers with 14 or fewer employees are capped at 24 hours per year.

Unused, accrued paid sick time carries over to the following year, but the 24 and 40-hour caps still apply to carry over. Alternatively, employers can choose to pay out unused, accrued paid sick time at the end of the year. The pay-out provision is thwarted, however, by the Act’s language that simultaneously requires employers to “provide the employee with an amount of earned paid sick time that meets or exceeds the requirements of [Prop 206] that is available for the employee’s immediate use at the beginning of the subsequent year.” In effect, an employer who chooses to “pay out” sick time at the end of year also earns that employee that amount of paid sick time to be immediately available at the start of the year.

For those employees hired before July 1, 2017, they begin accruing and can use their paid sick time as soon as they wish. Employers may require employees hired after July 1, 2017 to wait 90 days to use their accrued paid sick time, although they begin accruing paid sick time immediately.

For more information on paid sick time requirements, visit

Federal Employment and Labor Law Updates

Employers should also pay attention to potential changes in federal employment and labor laws in 2018. For example, the Department of Labor (DOL) is expected to revisit whether or not it will update overtime regulations pursuant to the Fair Labor Standards Act (FLSA). Specifically, the DOL is expected to change the minimum amount employers must pay executive, administrative, and professionals to be exempt from overtime and minimum wage requirements. The current pay cut-off to be considered exempt is $455 per week.

2018 could also change the definition of “joint employer.” In 2017, House Republicans passed the Save Local Business Act, which would amend two labor and employment statutes to clarify when an entity can be deemed a “joint employer.” The legislation clarifies that two or more employers must have “actual, direct, and immediate” control over employees to be considered joint employers. The Senate is expected to consider the bill this year.

For advice on how Prop 206 impacts your Arizona business, contact Emma J. Chalverus or Scott F. Gibson at the Tempe law firm of Davis Miles McGuire Gardner, PLLC. You can reach them at (480) 344-0965. This article does not create or constitute an attorney-client relationship, is not intended as a solicitation, and is not intended to convey or constitute legal advice.