In Arizona, employers are not required to provide paid vacation time. However, under so-called Prop 206, employers are required to provide paid sick time. Employees must accrue 1 hour of paid sick time for every 30 hours worked, up to a maximum of 24 hours per year for businesses with fewer than 15 employees and up to a maximum of 40 hours per year for businesses with 15 or more employees.
Many employers simply offer the maximum at the outset of each calendar year which is perfectly permissible and avoids the logistical headache of tracking accrual. Unused paid sick time must rollover to the following calendar year or be paid out at the end of the year. Employers can also “loan” paid sick time and deduct it from the following year. Most importantly, paid sick time can only be used for the purposes set forth in ARS 23-373 (azleg.gov). These uses include mental or physical illness or caring for a family member with the same.
If an employer has a paid vacation policy that meets the minimum requirements of ARS 23-372 (azleg.gov) (Prop 206), then a separate paid sick leave policy is not required. However, it is advisable to have a distinct paid sick leave policy to keep that time separate and within legal requirements relative to time off or paid time off used for other purposes.
We frequently advise small businesses on navigating complex employment policies, including those related to paid vacation, paid sick leave and other issues such as FMLA. We also draft employee handbooks that cover all of these important topics and more. An employee handbook is imperative to conveying a clear policy to employees and ensuring legal compliance.