On this page
- Arizona Sick Time Basics and Who the Law Covers
- How Much Arizona Sick Time Employees Earn
- When Employees Can Start Using Paid Sick Time
- Carryover, Front-Loading and Year-End Payouts
- Using Your Existing PTO Policy for Arizona Sick Time
- Approved Reasons to Use Paid Sick Time in Arizona
- Who Counts as a Family Member Under Arizona Sick Time Law
- Sick Time Requests, Documentation and Confidentiality Rules
- How to Pay Arizona Sick Time and Show It on Pay Stubs
- Sick Time When an Employee Leaves, Transfers or Is Rehired
- Arizona Posting, Notice and Recordkeeping Requirements
- Retaliation Protections Under Proposition 206
- Arizona Minimum Wage for 2026 and 2027
- Tracking Arizona Sick Time Balances
- Frequently Asked Questions
Arizona sick time rules apply to almost every private employer in the state, including a business with a single employee. Under Proposition 206, the Fair Wages and Healthy Families Act, your employees earn paid sick time as they work, and you pay at least the Arizona minimum wage, which goes up every January.
This guide covers what Arizona employers need to know for 2026: how sick time builds up, the 24 and 40 hour caps, carryover and front-loading, approved uses, pay stub and posting rules, and the 2026 and 2027 minimum wage rates.
Key Takeaways
- Employees earn at least 1 hour of paid sick time for every 30 hours worked, starting on their first day of work.
- If you have fewer than 15 employees, you can cap sick time at 24 hours a year. With 15 or more employees, the cap is 40 hours a year.
- Full-time, part-time and temporary employees all earn sick time, and salaried exempt employees are treated as working 40 hours a week.
- Each paycheck or pay stub has to show the employee's available sick time, the sick time used so far this year, and the sick pay received so far this year.
- You must keep payroll records of hours worked, wages and sick time paid for 4 years.
- Arizona's minimum wage is $15.15 an hour in 2026 and rises to $15.65 on January 1, 2027. Tipped employees can be paid up to $3 an hour less when tips make up the difference.
- Any adverse action within 90 days of an employee using sick time or asserting their rights is presumed to be retaliation.
What's New for 2026
Arizona's minimum wage went from $14.70 to $15.15 an hour on January 1, 2026, so the lowest cash wage for a tipped employee is now $12.15 an hour.
Coming in 2027: the Industrial Commission of Arizona (ICA) posted its 2027 minimum wage poster on September 25, 2026. The state minimum wage will be $15.65 an hour starting January 1, 2027, and the lowest tipped cash wage will be $12.65. Put up the new poster and update pay rates before your first 2027 payroll.
The sick time rules themselves (the accrual rate and the 24 and 40 hour caps) are the same as when the law took effect in 2017.
Arizona Sick Time Basics and Who the Law Covers
Arizona voters approved Proposition 206 in November 2016. It raised the state minimum wage starting in 2017 and created earned paid sick time, which every covered employer has had to provide since July 1, 2017.
Earned paid sick time is paid time off your employees can use when they or a family member are sick, need medical care, are affected by a public health emergency, or need time off related to domestic violence, sexual violence, abuse or stalking.
Employers Covered by Arizona Sick Time Law
The sick time law has no small business exemption. It covers private employers of every size, including the few small businesses that are exempt from the state minimum wage. The State of Arizona and the federal government are not covered as employers.
Employees Who Earn Sick Time
- Full-time, part-time and temporary employees all earn sick time.
- Salaried employees who are exempt from federal overtime rules earn sick time too. The law treats them as working 40 hours a week, or their normal workweek if it's shorter.
- No job type or salary level is excluded.
A few people fall outside the law: someone employed by their parent or sibling, a person doing casual babysitting in the employer's home, and employees of the State of Arizona or the federal government. Independent contractors aren't employees, so they don't earn sick time from you.
How Much Arizona Sick Time Employees Earn
Employees accrue at least 1 hour of paid sick time for every 30 hours they work. Accrual starts on the first day of work. What changes with the size of your business is the yearly cap.
| Your business size | Minimum accrual rate | Yearly cap on earning and using sick time |
|---|---|---|
| Fewer than 15 employees | 1 hour for every 30 hours worked | 24 hours a year |
| 15 or more employees | 1 hour for every 30 hours worked | 40 hours a year |
These are minimums. You can always offer a faster accrual rate or a higher cap.
How to Count Your Employees
Count every full-time, part-time and temporary employee who works in Arizona. Employees who work outside the state don't count toward the 15.
If your headcount moves above and below 15, use the 40-hour cap if you had 15 or more employees on payroll for some part of a day in each of 20 different calendar weeks this year or last year. The 20 weeks don't have to be in a row.
Choosing Your 12-Month Sick Time Year
The caps apply per "year," which the law defines as any regular, consecutive 12-month period you choose. That can be the calendar year, your fiscal year or each employee's hire anniversary. Pick one, put it in writing and use it consistently.
Example: a part-time cashier at a 10-person shop works 25 hours a week.
Sick time earned in week 1: 25 hours ÷ 30 = 0.83 hour
Sick time earned after 4 weeks: 100 hours ÷ 30 = 3.33 hours
Hours of work needed to reach the 24-hour cap: 24 × 30 = 720 hours
Weeks to reach the cap: 720 ÷ 25 = 28.8 weeks
Result: she earns the full 24 hours in about 29 weeks. If the shop had 15 or more employees, she'd keep accruing until she reached 40 hours (1,200 hours of work, or 48 weeks).
TIMECLICK TIP
Accrual is based on hours actually worked, so your sick time balances are only as accurate as your time records. Track hours for every employee, including part-time and temporary staff, and check balances against the 24 or 40 hour cap each pay period.
When Employees Can Start Using Paid Sick Time
Employees can use sick time as soon as it accrues. You may make a new hire wait until their 90th calendar day of employment before they use it, but you don't have to. You can also lend sick time to an employee before they've earned it, if you choose.
Employees can take sick time in hourly increments, or in the smallest increment your payroll system uses for absences, whichever is smaller. If your payroll tracks time in 15-minute blocks, an employee can use 15 minutes of sick time for a short appointment.
Carryover, Front-Loading and Year-End Payouts
Unused sick time carries over to the next year. You have three ways to handle it, and you can pick the one that's simplest for your business.
| Option | How it works | Carryover required |
|---|---|---|
| Accrue and carry over | Employees earn sick time as they work, and unused hours roll into the next year. | Yes |
| Front-load | You give the full 24 or 40 hours at the start of the year, ready to use right away. | No |
| Pay out at year end | You pay employees for unused hours at the end of the year and give them a full year's amount at the start of the next year. | No |
How Carryover Works With the Yearly Cap
Carryover doesn't raise the yearly limit on use. The ICA gives this example for an employer with 15 or more employees:
- An employee earns 40 hours in Year 1 and uses none of it.
- The 40 hours carry into Year 2, and the employee earns another 40, so the balance can reach 80 hours.
- The employee can still use only 40 hours in Year 2.
- Only 40 unused hours carry into Year 3.
For an employer with fewer than 15 employees, the same pattern applies with 24 hours: the balance can reach 48 hours, but the employee can use only 24 hours a year, and only 24 hours carry forward.
How Front-Loading Works
To front-load, you put the full yearly amount in each employee's bank at the start of the year. If you give at least 40 hours (15 or more employees) or 24 hours (fewer than 15), you don't have to track accrual or carry anything over. For new hires, the ICA lets you front-load on their 90th day, based on a reasonable estimate of the hours they'll work through the end of the year.
WATCH OUT
The no-carryover benefit only applies when you front-load at least the full 24 or 40 hours. If you give less than that at the start of the year, unused hours still carry over.
Using Your Existing PTO Policy for Arizona Sick Time
You don't need a separate sick bank if your paid time off (PTO) policy already gives employees at least as much paid time, and they can use it for the same reasons and under the same conditions the sick time law sets. You can run one combined PTO bank or track sick time separately.
If your PTO policy gives less time, or limits how employees can use it for sick time reasons, update the policy so it meets the law.
WATCH OUT
Common PTO rules, such as two weeks' advance notice or manager approval, can't stop an employee from using the time for a sick time reason. Review your PTO rules with the sick time law's notice and documentation limits in mind.
Approved Reasons to Use Paid Sick Time in Arizona
Employees can use earned paid sick time for any of these reasons:
- The employee's own mental or physical illness, injury or health condition, including diagnosis, treatment and preventive medical care such as routine checkups.
- Caring for a family member with an illness, injury or health condition, or who needs diagnosis, treatment or preventive care.
- A public health emergency, when a public official closes the workplace or a child's school or place of care, or when health authorities decide the employee's or family member's presence would put others at risk because of exposure to a contagious disease.
- Absences related to domestic violence, sexual violence, abuse or stalking of the employee or a family member, such as medical care, victim services, counseling, relocation or legal proceedings.
Who Counts as a Family Member Under Arizona Sick Time Law
Arizona's definition of family is broad. It includes:
- Children of any age: biological, adopted or foster children, stepchildren, legal wards, a domestic partner's children, and anyone the employee raised as a parent.
- Parents: biological, foster, step or adoptive parents and legal guardians of the employee, the employee's spouse or the employee's domestic partner, plus anyone who acted as a parent when they were children.
- A spouse or registered domestic partner.
- Grandparents, grandchildren and siblings of the employee or the employee's spouse or domestic partner, including foster, adoptive and step relatives.
- Anyone else related by blood or affinity whose close association with the employee is the equivalent of a family relationship.
Sick Time Requests, Documentation and Confidentiality Rules
Requests for Sick Time Employees Can Plan Ahead
Employees can ask for sick time orally, in writing, electronically or any other way you accept. When possible, they should say how long they expect to be out. For planned time off, like a scheduled surgery, employees should make a good-faith effort to tell you in advance and schedule it so it doesn't unduly disrupt your business.
Call-In Rules for Unexpected Absences
You can set notice rules for sudden absences, like calling a manager before the shift starts. The rules must be in a written policy, and you have to give employees a copy. If you haven't, you can't deny sick time because an employee didn't follow the rules.
Replacement Workers
You can't require an employee to find someone to cover their shift as a condition of using sick time.
Doctor's Notes and Other Documentation
You can ask for reasonable documentation only when an employee uses sick time for 3 or more consecutive workdays. A note signed by a health care professional counts. For absences related to domestic violence, sexual violence, abuse or stalking, the employee can choose what to provide from several types of documents, including their own written statement.
You can't require the documentation to explain the nature of the health condition or the details of the incident.
Keeping Health and Safety Information Confidential
You can't make an employee share details about their own or a family member's health, or about domestic violence, sexual violence, abuse or stalking, as a condition of using sick time. Any such information you do have must be kept confidential. You can share it only with the employee, or with their permission.
How to Pay Arizona Sick Time and Show It on Pay Stubs
Pay sick time at the employee's normal hourly rate, with the same benefits (including health care benefits) they'd get for hours worked. The hourly rate for sick time can never be lower than the Arizona minimum wage.
Each regular paycheck, or a pay stub or attachment that goes with it, has to show three things:
- The sick time the employee has available to use this year.
- The sick time the employee has used so far this year.
- The pay the employee has received as sick time so far this year.
The ICA counts a paper or electronic pay stub that's easy for employees to see.
Example: an employee paid $18 an hour at a business with fewer than 15 employees has earned the full 24 hours and uses 8 hours for a doctor's visit and recovery day.
Sick pay for this period: 8 hours × $18 = $144.00
Pay stub line 1, sick time available to use: 24 − 8 = 16 hours
Pay stub line 2, sick time used this year: 8 hours
Pay stub line 3, sick pay received this year: $144.00
Sick Time When an Employee Leaves, Transfers or Is Rehired
- You don't have to pay out unused sick time when an employee quits, retires or is let go. You can if you want to.
- If you rehire someone within 9 months of when they left, you must restore their unused sick time, and they can use it right away. The ICA won't enforce this if you paid out the unused time when they left and they accepted the payment.
- Employees who move to a different location, division or entity within your business keep their sick time.
- If a new owner takes over your business, employees who stay keep their earned sick time and can still use it.
Arizona Posting, Notice and Recordkeeping Requirements
Required Workplace Posters
The ICA publishes two posters that cover this law, both in English and Spanish, on its Posters Employers Must Display page:
- The Fair Wages and Healthy Families Act minimum wage poster, which the ICA updates every year with the new rate.
- The Earned Paid Sick Time poster.
Post them in a spot employees can easily see. The ICA's FAQ says employers with less than $500,000 in gross annual revenue are exempt from the posting requirement, but posting is free and it also helps you meet the notice rule below.
Written Notice to Employees
At hire, give each employee your business name, address and phone number in writing. You also have to give written notice of their sick time rights, covering:
- Their right to earn and use paid sick time, and how much they earn.
- The terms for using it.
- That retaliation for using sick time is illegal.
- Their right to file a complaint, and how to reach the ICA.
Posting the ICA's sick time poster (its model notice) satisfies this requirement.
Records to Keep for 4 Years
Keep payroll records showing the hours each employee worked each day and the wages and sick time you paid. Hold them for 4 years. If you don't have the records, the law presumes you didn't pay the required wages or sick time, and it's up to you to prove otherwise.
| Violation | Penalty under A.R.S. 23-364 |
|---|---|
| Recordkeeping or posting violation, first time | At least $250 |
| Recordkeeping or posting violation, repeat or willful | At least $1,000 for each violation |
| Unpaid minimum wage or sick time | The unpaid amount, plus interest, plus an extra amount equal to twice the unpaid amount |
| Retaliation | At least $150 for each day the violation continues |
Retaliation Protections Under Proposition 206
You can't interfere with, retaliate against or discriminate against an employee (or former employee) for using their rights under the law. Protected activities include asking for or using sick time, filing a complaint, telling others about a possible violation, taking part in an investigation and telling coworkers about their rights. The protection applies even if the employee was mistaken, as long as they acted in good faith.
If you take an adverse action against someone within 90 days of a protected activity, the law presumes it was retaliation. You can only overcome that with clear and convincing evidence of a legitimate reason.
WATCH OUT
Attendance point systems are a common problem. Your absence control policy can't count protected sick time as an absence that leads to discipline, demotion, suspension or firing.
Employees can file a complaint with the ICA Labor Department or file a lawsuit. A lawsuit must be filed within 2 years of the last violation, or 3 years if the violation was willful. Employees can't waive these rights, even in a signed agreement.
Arizona Minimum Wage for 2026 and 2027
Proposition 206 also sets Arizona's minimum wage. Since 2021, the rate goes up every January 1 by the rate of inflation over the 12 months from August to August, measured by the Consumer Price Index (CPI) and rounded to the nearest 5 cents.
- 2026: $15.15 an hour, based on inflation from August 2024 to August 2025.
- 2027: $15.65 an hour starting January 1, 2027, based on inflation from August 2025 to August 2026.
Cities and towns can set a higher minimum wage, and Flagstaff and Tucson both do. If your employees work inside Flagstaff or Tucson city limits, pay the local rate.
| Where employees work | Minimum wage | Lowest cash wage for tipped employees |
|---|---|---|
| Arizona statewide, 2026 | $15.15 | $12.15 |
| Arizona statewide, starting January 1, 2027 | $15.65 | $12.65 |
| City of Tucson, 2026 | $15.45 | $12.45 |
| City of Flagstaff, 2026 | $18.35 | $18.35 (no tip credit) |
Flagstaff and Tucson set new rates each January. Check the City of Flagstaff and City of Tucson minimum wage pages for their 2027 rates. Flagstaff has announced that its rate will go from $18.35 to $18.95 an hour in 2027, with no tip credit.
A small business is exempt from the state minimum wage only if it has less than $500,000 in gross annual revenue and isn't required to pay the federal minimum wage. Very few businesses qualify, and those that do still have to provide paid sick time.
Tipped Employee Pay Rules in Arizona
You can pay a tipped employee up to $3 an hour less than the minimum wage (a tip credit), as long as their cash wage plus tips equals at least the full minimum wage for every hour worked each week. To take the tip credit, you need to:
- Tell the employee in writing before you start taking the tip credit.
- Keep records showing that wages plus tips met the minimum wage each week.
- Count tips in the workweek they were earned.
- Apply the tip credit only to hours spent in the tipped job.
Example: a server works 30 hours in a week in 2026 at the $12.15 tipped cash wage.
Cash wages: 30 hours × $12.15 = $364.50
Minimum the server must receive: 30 hours × $15.15 = $454.50
Tips needed to cover the gap: $454.50 − $364.50 = $90.00
If the server's tips that week are only $60, you owe an extra $30.00 in wages.
For tipped wage rules in other states, see our tipped minimum wage by state guide.
Tracking Arizona Sick Time Balances
Most time clock and payroll programs can hold a sick time bank for each employee and do the math for you. Arizona allows several ways to fill that bank: by hours worked, by pay period, or as a front-loaded yearly amount. When an employee uses sick time, it comes out of the bank and shows up on their pay stub.
Whatever method you use, follow these steps to stay compliant:
- Decide on your 12-month sick time year and your method (accrual, front-loading or year-end payout), and write it into your policy.
- Set the right cap for your size: 24 hours a year for fewer than 15 employees, or 40 hours a year for 15 or more.
- Give every new hire your business name, address and phone number, plus written notice of their sick time rights.
- Put up the current ICA minimum wage and earned paid sick time posters, and replace the minimum wage poster each year.
- Show available sick time, sick time used and sick pay received on every pay stub.
- Keep time and payroll records for 4 years.
- Update pay rates for the new minimum wage before each January 1.
If you have employees in other states, our PTO laws by state guide covers each state's paid leave rules.
Frequently Asked Questions
Quick answers to the questions Arizona employers ask most about sick time and minimum wage.
Do small businesses in Arizona have to offer paid sick time?
Yes. Arizona's sick time law covers private employers of every size. Businesses with fewer than 15 employees can cap sick time at 24 hours a year instead of 40.
Do salaried employees earn sick time in Arizona?
Yes. Exempt salaried employees are treated as working 40 hours a week for accrual, or their normal workweek if it's shorter. At 1 hour per 30 hours worked, that's about 1.33 hours a week.
Does unused sick time roll over in Arizona?
Yes, unless you front-load the full 24 or 40 hours at the start of each year, or pay out unused hours at year end and give a full year's amount at the start of the next year. Even with carryover, employees can use only 24 or 40 hours a year.
Do I have to pay out unused sick time when an employee quits or is fired?
No. Arizona doesn't require you to pay out unused sick time when employment ends for any reason. If you rehire the person within 9 months, you must restore their unused balance, unless you paid it out when they left and they accepted the payment.
Can I require a doctor's note for sick time in Arizona?
Only when an employee uses sick time for 3 or more consecutive workdays. Even then, the note can't be required to explain the nature of the illness or condition.
Can new employees use sick time right away?
They start earning it on their first day. You can make them wait until their 90th calendar day before they use it, or let them use it sooner.
What is the tipped minimum wage in Arizona?
In 2026, the lowest cash wage for a tipped employee is $12.15 an hour ($3 less than the $15.15 minimum wage). Starting January 1, 2027, it's $12.65. Tips must bring total pay up to the full minimum wage each week. Flagstaff doesn't allow a tip credit, and Tucson's tipped cash wage is $12.45 in 2026.
Can my PTO policy replace Arizona sick time?
Yes, if it gives at least as many paid hours and employees can use them for the same reasons and under the same conditions as the sick time law. If it falls short, update the policy.
For more information about Proposition 206, see the Industrial Commission of Arizona's minimum wage and earned paid sick time FAQs.
This guide is general information and isn't legal advice. For your specific situation, contact the Industrial Commission of Arizona or an employment attorney.
Not using TimeClick yet? Try our time clock software free. Simple setup, secure offline data, and built for small businesses. No credit card required.
Start Your Free TimeClick Trial Today
