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Arizona Paid Sick Leave Explained: Two Caps, No Exemption
Arizona requires earned paid sick time from every employer under the Fair Wages and Healthy Families Act, A.R.S. 23-371. Employees accrue one hour for every 30 hours worked. The annual entitlement is 40 hours at employers with 15 or more employees and 24 hours below that. There is no small-employer exemption.
Arizona's earned paid sick time came out of Proposition 206, the same ballot measure that rewrote the state minimum wage, and both live in the Fair Wages and Healthy Families Act at A.R.S. 23-371 and following. That shared origin is worth knowing because the same agency administers both and the same workplace notice usually carries both.
The rule itself is short. Every employer is covered, whatever its size. Accrual is one hour for every 30 hours worked. The annual entitlement is 40 hours at 15 or more employees and 24 hours below that. There is no unpaid tier and no exemption.
What Arizona requires
| Paid sick leave mandate | None statewide for private employers |
|---|---|
| Governing rule | Your written policy, enforced as written |
| State paid family and medical leave | None. Federal FMLA only, unpaid, at 50+ employees |
| Minimum wage | $15.15 |
| Overtime | Federal FLSA rules (weekly over 40) |
| Coverage below the 20-employee COBRA line | Arizona Continuation of Small Group Coverage, up to 18 months [Ariz. Rev. Stat. section 20-2330 (Continuation of small group coverage)] |
Twenty-four hours is a full entitlement, not a reduced one
Arizona is one of only two states, with Alaska, that runs a 24-hour annual figure. It is easy to read as a lesser version of the 40, and in practice it behaves differently: three days of absence for a full-time employee exhausts it entirely, so a small Arizona employer will reach the end of the statutory balance in a single ordinary illness.
The accrual rate is identical either side of the 15-employee line, so what actually changes when an employer crosses it is the ceiling, not the speed. An employer that grows past 15 during the year needs to lift the cap rather than restart the accrual.
Carryover, or pay it out and front-load
The default is carryover: unused hours roll into the next year, with annual use still limited to the tier amount. Arizona also allows a clean alternative. The employer may pay the employee for unused hours at year end and then make the full annual entitlement available for immediate use at the start of the next year.
The second half of that sentence is the part that gets dropped. Paying out the balance and then requiring the employee to accrue again from zero is not the alternative the statute permits, it is a shorter entitlement. The pay-out and the front-load travel together or not at all.
Notice, documentation and the 90-day wait
Accrual starts at the beginning of employment and use opens on the ninetieth day. For foreseeable leave an employer may require advance notice and may ask the employee to make a reasonable effort not to disrupt operations. For unforeseeable leave, notice as practicable is the standard.
Documentation may be required only once an absence runs three or more consecutive days, and the employer may not require the employee to explain the nature of the condition. An absence policy that escalates to a certification requirement on day one has no application to these hours.
What Arizona does not add on top
There is no Arizona paid family and medical leave contribution programme, no state temporary disability insurance and no municipal paid sick leave ordinance sitting above the state rule in Phoenix, Tucson or Flagstaff. Federal FMLA applies unchanged at 50 or more employees, unpaid.
That makes Arizona one of the more contained mandate states to administer: one statute, two caps, one agency. The exposure for a national employer is not complexity, it is the 24-hour tier, which a payroll system configured to a single 40-hour national rule will silently over-provide and a system configured to exempt small employers will not provide at all. HR outsourcing here is mostly about getting the tier test right and reviewing it as headcount moves.
FMLA, remote-hire exposure and voluntary policy drafting: paid leave fundamentals.
For Arizona specifically: the accrual and carryover rules above are statutory in Arizona, not discretionary, the wage floor those hours are paid at is $15.15, and below the federal 20-employee COBRA threshold Arizona still requires continuation coverage for up to 18 months. HR outsourcing in Arizona keeps that in the handbook and in payroll.
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Frequently Asked Questions
Does Arizona require paid sick leave?
No. Arizona has no statewide requirement for private employers, so whatever your handbook says is the enforceable rule, including on carryover and payout. Hours you do pay are paid at $15.15.
What pay rate applies to leave hours in Arizona?
Minimum wage in Arizona is $15.15. Overtime: Federal FLSA rules (weekly over 40). Paid leave hours generally do not count toward the overtime threshold because they are not hours worked.
Does health coverage continue after separation in Arizona?
Federal COBRA applies at 20 or more employees. Below that, Arizona has its own continuation law, the Arizona Continuation of Small Group Coverage, running up to 18 months (Ariz. Rev. Stat. section 20-2330 (Continuation of small group coverage)).
Does Arizona run a paid family and medical leave programme?
No. Federal FMLA is the only family and medical leave floor in Arizona: 12 workweeks, unpaid, at employers with 50 or more employees.
Does Arizona paid sick time apply to a very small employer?
Yes. Arizona has no floor. A two-person business accrues earned paid sick time at the same rate as a two-thousand-person one, and the only difference is that the annual entitlement is 24 hours rather than 40. Arizona sits with New Jersey, Colorado and New Mexico in reaching every employer in the state.
Why do Arizona paid sick time and the minimum wage move together?
Because they came from the same ballot measure. Proposition 206 created the Fair Wages and Healthy Families Act, which set both the state minimum wage and earned paid sick time in one instrument, and the Industrial Commission of Arizona administers both. An Arizona employer reviewing one is usually looking at the notice that covers the other.
What can Arizona earned paid sick time be used for?
Beyond the employee own illness, injury or preventive care, it covers the same needs for a family member, absence arising from domestic violence, sexual violence, abuse or stalking, and closure of the workplace or of a child school or place of care by public health order. Refusing a public-health closure day is the same breach as refusing a sick day.
Can an Arizona employer pay out unused sick time instead of carrying it over?
Yes, as an alternative to carryover. The employer may pay the employee for unused hours at the end of the year and then provide the full annual entitlement, available for immediate use, at the start of the new year. Doing one without the other, paying out and then making the employee accrue again from zero, does not satisfy the statute.
Is this a PEO?
No. No co-employment and no employer-of-record change: your company stays the employer. HR outsourcing, powered by isolved.
Anthony leads HR outsourcing strategy at Business Executive Group, a national HR outsourcing firm serving employers across every state. BEG HR outsourcing is powered by isolved, with certified HR professionals building and maintaining state-correct leave policy as laws change.
Source: Industrial Commission of Arizona, Labor Department. Compare every state on paid sick leave by state. General leave information, not legal advice.
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