Since 2017, the Arizona Paid Sick Leave Law, officially called the Arizona Sick Time Law, has been in effect. It requires employers to provide paid sick leave to employees throughout the state. Employers should have an Arizona Paid Sick Leave Policy to maintain compliance with Arizona labor laws and PTO requirements.
Here’s everything you need to know to help ensure your business follows Arizona paid time off (PTO) laws and create a sick time policy to effectively manage paid and unpaid employee sick time, from eligibility to time-off requests to tracking balances and carryover rules.
Arizona Paid Sick Leave Law Overview
Updated: September 14, 2026
The Arizona Paid Sick Leave Law, also known as the Arizona Sick Leave Law, and its requirements are a component of the Fair Wages and Healthy Families Act, or Proposition 206, which instituted two new core requirements for employers operating in the state:
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Arizona State Minimum Wage Updates
Arizona minimum wage, effective 2017 through 2020, after which any annual increases are based on changes to the cost of living. As a quick overview, here is the confirmed wage increase schedule;
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January 1, 2020 - $12.00 per hour
- January 1, 2021 - $12.15 per hour
*First cost of living increase - January 1, 2022 - $12.80 per hour
*Based on cost of living increase announced in September 2021 - January 1, 2023 - $13.85 per hour
- January 1, 2024 - $14.35 per hour
- January 1, 2025 - $14.70 per hour
- January 1, 2026 - $15.15 per hour
- January 1, 2027 - $15.65 per hour*
* = Estimate based on available calculations using the latest CPI data released in August 2026 and Arizona Statutes that determine minimum wage increases (may be subject to change at a later date)
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Employee Entitlement to Arizona Earned Paid Sick Time
As of July 1, 2017, most employees became entitled to accrue paid sick time. For existing employees, this began on July 1, while any newly hired employees who started on or after July 1 began accruing sick time once they started their employment.
NOTE: “Earned Paid Sick Time” also refers to equivalent paid time off.
Arizona Paid Sick Leave Law Notice or Poster
The first thing companies should do to comply with Arizona PTO posting requirements is to ensure employees are aware of the legislation and their rights under Arizona's Paid Sick Leave Law. There MUST be an Arizona-specific sick leave poster or notice published in a conspicuous location within the workplace that is accessible to employees. You can use a pre-approved Industrial Commission of Arizona version of this Earned Paid Sick Time Notice.
Alternatively, if you don’t have one already, you can get an all-in-one Arizona labor law poster that includes details of this in addition to other areas of employees’ rights that require notices like Workers’ Compensation, Notice of Unemployment Insurance, Minimum Wage, Safety & Health Protection under OSHA, etc. Subscribing to a labor law poster service can help your business stay compliant with the latest legislation updates as soon as they're in effect.
Arizona Paid Sick Leave Law Requirements
Arizona PTO requirements for sick time can be broken down into two core categories:
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Sick Time Requirements by Employee Size
All-sized employers need to comply with the legislation; the only item in question for your company is how much sick time is required to provide. And the amount of sick time that employees have the right to attain or accrue is based on the size of your organization:
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Less Than 15 Employees – must allow employees to accrue or use 24 hours of paid sick time each year for every 30 hours worked
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15 or More Employees – must allow employees to accrue or use 40 hours of paid sick time each year for every 30 hours worked
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Eligible Employee Types
Companies of ALL sizes need to comply with the Arizona Paid Sick Leave Law, but not necessarily all employees need to be provided with sick leave. Not only are full-time employees eligible for this entitlement, but part-time, temporary, and seasonal staff are also eligible. In virtually all scenarios, employees have the right to sick leave, so your best course of action is to provide it to everyone. There are only a few exceptions in terms of which employees do not need to be provided with sick time, such as those employed by a parent or sibling, babysitters, and Arizona / US government employees.
Check out this 4-step Arizona sick leave compliance checklist to ensure you’re complying with this portion of the Fair Wages and Healthy Families Act today.
Creating Your Arizona Sick Leave Policy
There are two primary ways to set up a sick time policy or amend your existing time-off policy in Arizona to comply with the legislation:
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Lump-Sum Sick Time Off:
This type of policy would provide the full 40 hours of sick time required for an employee at the beginning of the accrual year. If all time is exhausted, the employee must wait until next year for a new balance. At the end of the year, any unused time will NOT need to be carried over.
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Accrued Sick Time Off:
In this policy type, sick time is awarded at the rate of one hour per 30 hours of worked time. Once the employee has reached a total of 40 hours earned for the year, they will stop accruing. At the end of the year, any unused time will be carried over.
NOTE: The policy itself can be more complex than this, as there are tons of protections for the employees to ensure companies do not restrict their rights to use PTO.
It’s also important to review your employee handbook or your overall attendance and time off policy to ensure it doesn’t include terms about enforcement when employees are using sick leave that would be non-compliant with the law. For example, if your attendance policy says, “miss two days, and you’re fired” or “give us notice four hours before a shift, or you’ll be punished”, these are not in compliance with the reasonable use of protected sick leave. You could also include a separate, more lenient notice policy for use of sick leave, but enforce a stricter policy when employees do not have protected leave available for use.
For employers looking to create or seeking additional guidance for their own paid leave policies, consider learning these tips and best practices for creating paid time off policies and insights on managing PTO rollover.
Calculating Arizona Sick Time Pay Rates
Payroll processing and documentation can be a challenge with Arizona sick time. Employers must make sure that earned sick time used is paid out at the employee's hourly pay rate. It can never be less than the Arizona state minimum wage (and no tip credit may be applied). Keep in mind that for employees working in certain cities, the minimum wage rate can vary. Currently, there is a Flagstaff Minimum Wage Law and Tucson Minimum Wage Law in effect.
Additionally, your systems and processes need to follow these pay rate guidelines:
- For Employees With a Single Hourly Rate: This is the same hourly rate that the employee would have earned for the period in which earned paid sick time is used, but is in no case less than minimum wage.
- For Employees with Multiple Hourly Rates: This is the hourly rate the employee would have earned, if known, for each hour of earned paid sick time used. If this is not known, an employer should use the weighted average of all hourly rates of pay during the previous pay period.
- For Salaried Employees: This is the wages an employee earns during each pay period covered by the salary, divided by the number of hours agreed to be worked during each pay period.
Pay Rules for Employees Paid on a Commission, Piece-Rate, or Fee-for-Service Basis
Calculating Arizona Sick Time pay rates for commission, piece-rate, or fee-for-service employees is the most complex and is the hourly rate of pay previously agreed upon by the employer and the employee, which can be
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A minimum hourly rate for work performed or
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An hourly rate for payment of earned paid sick time, which, here’s where it gets complex, can be:
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The wages that the employee would have been paid, if known, for the time during which earned paid sick time is used, divided by the number of hours of earned paid sick time used.
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A reasonable estimation of the commission, piece-rate, or fee-for-service compensation that the employee would have been paid for the period of time in which the earned paid sick time is used, divided by the number of hours of earned paid sick time used.
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The hourly average of all commission, piece-rate, or fee-for-service compensation that the employee earned during the previous 90 days.
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Arizona Sick Time Management and Recordkeeping
There are a multitude of ways to manage Arizona sick time and maintain your records. However, the solution you choose for managing employment records such as sick leave documentation and how much automation can be leveraged will directly correlate with the amount of time and manual effort you need to spend on managing and complying with the Arizona Paid Sick Leave Law.
Manual Arizona Sick Leave Processes
Tracking current sick time balances and accrual amounts manually can be done, but this is not ideal. It would require a considerable amount of time to manage and can be quite complicated.
In this scenario, you’d likely be leveraging a lump-sum sick time off policy. You’d need to maintain spreadsheets for sick time balances. Requests from employees to utilize sick time would come in manually, potentially via paper, email, or text message. You’d need to react to these as they come in and update spreadsheets as these requests come in. If not, these requests can be lost and not entered into payroll in a timely manner. There’s no means of reporting or determining live balances for employees to view, either, which means they’ll be continuously requesting this. In terms of pay rate calculations, it would take a while to process payroll accurately.
Semi-Automated Arizona Sick Leave Processes
This process would likely involve tracking your paid sick time accruals in your payroll software and ensuring you’re updating time off as requests come in through a time and attendance system. You’ll need to ensure your payroll process accounts for how to enter paid sick leave to display properly on checks and reduce balances. Then you’ll want to ensure your accrual balances are either displayed on employees’ paychecks or a statement is provided to your employees with each check issued.
Fully Automated Arizona Sick Leave Processes
Automating sick leave processes is the ideal solution for managing sick leave in Arizona. A unified, cloud-based Human Capital Management (HCM) solution provides closed-loop administration for Arizona sick leave compliance. Depending on the solution leveraged, employees can have real-time access to view up-to-date sick time balance information (accrued, current balance, amount taken) and request time off through their workplace time clock system, their computer, or their smartphone. Then, managers or administrators can approve this time off through their computer or smartphone. This time off is then automatically deducted from employee balances and passed to payroll seamlessly, ensuring leave is paid at the accurate rate of pay with the correct earning codes, making compliance quick and easy.
And if an employer fails to maintain these required records, it will be presumed that the employer did not pay the required earned paid sick time and is subject to the penalties laid out below.
Arizona Paid Sick Leave Law Non-Compliance Penalties
Arizona Paid Sick Leave Law Fines
There are a few different fines you should be aware of. To start, if a company retaliates against an employee for taking sick time in Arizona (e.g., firing), they are required to pay penalties sufficient to compensate the employee and deter future violations. At a minimum, this is $150 for each day that the violation continued or until legal judgment is final. Then there are civil penalties for the first violation or for not posting the required notice (mentioned above) of at least $250, and each subsequent or willful violation is at least $1000. In addition to the fines, special monitoring and/or inspections can also be imposed on the company.
Legal Fees
According to a study by Hiscox regarding the likelihood of an employee lawsuit, the average cost to defend against employment-related charges is $125,000, which includes attorney’s fees and settlement costs. However, the median cost of judgments was about $200,000, and one in four cases was a judgment of $500,000 or more. Remember, not only are you paying your legal fees, but you’re paying for the employee’s or ex-employee's legal fees as well. Donald Peder Johnsen of Gallagher & Kennedy confirmed that even if $1 of unpaid sick time is proven, an employee’s attorney will collect 100 percent of their fees. This means that lawyers will be highly motivated to pursue cases that are brought to them.
Negative Publicity
Government bodies that oversee and enforce Arizona paid sick leave are quick to try non-compliers in an effort to set an example and refine definitions in the law. In many cases, a company involved in a civil case regarding Arizona paid sick leave can often be publicized locally and even nationally. It should be no surprise to employers that even one story about a sick leave non-compliance incident can hurt the company's reputation significantly.
Arizona sick leave compliance aside, there’s an 11.7 percent chance that companies based in the U.S. have an employment-related charge filed against them, according to Hiscox.
All it takes is one incident to go public for your company to see the consequences. Additionally, while public sentiment decreases, so does the company's employee morale, which can directly impact recruiting and especially retention efforts.
Frequently Asked Questions
Get Help Managing Arizona Sick Leave
Compliance can be difficult, but it doesn’t have to be. Do yourself a favor and schedule a compliance check with Inflection HR today. We are experts in Arizona payroll, HR, and time and labor management. Being headquartered in Gilbert, we’re experts on Arizona laws and compliance, from Arizona Mini-COBRA to minimum wage. We help companies create and implement policies and best practices for clients across the state. Feel free to contact us if you have any questions.
