While most election coverage has focused on the presidential candidates, voters across the country also ushered in pivotal changes at the state level on November 8. In Arizona, some of the most significant changes will stem from Proposition 206, which passed with a comfortable 60 percent voting margin. Also known as the Healthy Working Families Initiative, Prop. 206 will raise the state minimum wage to $10 per hour beginning January 1, 2017, and incrementally to $12 per hour—a nearly 50 percent increase from its current rate of $8.05—by 2020. The law will also require employers to grant workers paid sick leave.
The minimum wage will be $10.50 per hour beginning in 2018 and $11 beginning in 2019. After plateauing at $12 in 2020, the rate will be adjusted each year to keep pace with cost of living. Employees who earn income from tips may receive $3 less per hour than the minimum wage, as long as their employers can prove that their regular wages and tips combined equal the minimum.
Prop. 206 also includes a generous paid sick leave requirement. Employers with fewer than 15 employees must grant each worker a minimum of 24 hours of paid sick time per year, and those with 15 or more employees must provide at least 40 hours per year. The law broadly defines “sick time,” giving employees the right to claim it if they are experiencing physical or mental illness, domestic violence, sexual violence, stalking, the need to care for a family member, or in the event that there is a public-health emergency.
Although the ascent to a $12 minimum wage will happen gradually, employers—particularly small businesses—must begin planning for the additional costs the law will impose upon them. Depending on their profit margins, businesses may need to consider options such as limiting the hours of existing workers, scaling back hiring efforts, laying off workers, or raising prices.
As your organization adjusts to the effects of Prop. 206 and other new laws governing employers, CBR offers guidance to help you ensure compliance and minimize costs. With the first increase in the minimum wage occurring on January 1, 2017, now is the time to begin preparing. Contact the HR experts at CBR today!