What Are Arizona’s Paid Sick Leave Laws in 2025?

Arizona enacted its Fair Wages and Healthy Families Act in 2017, introducing a uniform statewide rule for paid sick leave. Known formally as earned paid sick time, the law replaced a patchwork of employer-specific policies with consistent standards that apply to nearly every worker.

Local governments such as Tucson and Flagstaff go further by adopting stricter requirements. When city rules are more generous to employees than the state baseline, employers must follow whichever law provides greater protection. This dual layer means HR managers, payroll specialists, and business owners must track compliance at both state and local levels to avoid penalties.

For companies, compliance is more than just a legal checkbox. Paid sick leave allows employees to stay home when ill, care for family members, or manage emergencies without losing wages.

Getting it right fosters trust, reduces absenteeism costs, and protects your business from enforcement action. This guide explains how Arizona’s paid sick leave law works, who it covers, and what you must do to comply.

Understanding earned paid sick time in Arizona

Arizona law uses the phrase earned paid sick time to describe the benefit. The term matters: this is not an optional perk offered at an employer’s discretion; it is a right that employees accumulate through their work.

Coverage is broad. The statute applies to nearly every employee category, whether someone works full-time, part-time, seasonally, or temporarily. If they are on your payroll and performing work in Arizona, they are generally eligible. For HR teams, that means your policy cannot draw distinctions between types of employees when it comes to eligibility for earned paid sick time.

Employers should also be mindful that earned paid sick time is distinct from vacation or personal leave. While you may choose to combine all forms of time off into a single PTO bank, you must ensure that your plan still provides at least the minimum sick leave entitlement required by Arizona law. That means clear documentation, transparent accrual tracking, and communication to employees about how much time is available specifically for sick leave purposes.

Find out how paid sick leave laws differ by state.

Which employers must provide paid sick leave?

The law applies to:

• All private employers in Arizona, regardless of size
• Public employers, unless federal law explicitly exempts them
• Out-of-state employers with employees performing work in Arizona

In other words, coverage is nearly universal. A business with just a handful of employees must still comply. Similarly, a company based in another state but employing Arizona residents cannot avoid compliance by citing its headquarters’ location.

This universality simplifies the employee experience but increases the compliance burden for employers who operate across multiple states. Multi-state companies must juggle different accrual caps, usage rules, and posting requirements. In practice, many organizations create state-specific addenda within their handbooks so Arizona employees understand their rights without confusion.

Who isn’t covered?

Despite broad coverage, certain groups fall outside the law. These include:

• Independent contractors
• Certain federal employees, where federal statutes override state regulations
• Volunteers, who are not paid workers under the Act.

For employers, this distinction highlights the importance of worker classification. Misclassifying an employee as an independent contractor can trigger compliance issues beyond sick leave, including payroll taxes and wage-and-hour violations. If your workforce includes a mix of employees and contractors, double-check your classifications to ensure that everyone entitled to sick time under the law is receiving it.

See also: Comprehensive Guide to Payroll Taxes in Arizona

When can sick leave be used?

Employees may use earned sick time for a wide range of purposes. These include:

• Their own illness, injury, medical care, or preventive care
• Caring for a family member with illness, injury, or preventive care needs
• Issues related to domestic violence, sexual assault, or stalking
• Public health emergencies, such as workplace or school closures due to communicable disease

This broad list underscores the law’s intent: to give employees flexibility to address health and safety needs without worrying about lost wages. Employers should anticipate both planned uses (such as scheduled medical appointments) and unplanned ones (such as emergencies) and ensure their policies allow for both.

See also: An Employer's State-by-State Guide to Paid Sick Leave in the US

Accrual rules: how sick time builds up

The accrual system is simple in design but strict in application. Employees earn one hour of sick time for every 30 hours worked. Caps on accrual depend on employer size:

• Employers with fewer than 15 employees: capped at 24 hours per year.
• Employers with 15 or more employees: capped at 40 hours per year.

Employers also have the option to frontload the full annual amount at the beginning of the year. This approach avoids tracking accruals hour by hour and eliminates year-end carryover obligations. However, if you choose to rely on accruals rather than frontloading, you must ensure your system calculates hours precisely for each employee.

Accrual applies equally to part-time staff. For example, a part-time employee who works 20 hours a week will earn sick time more slowly than a full-time employee, but the same formula of one hour per 30 hours worked still applies. Payroll teams should automate this calculation to reduce errors.

Usage limits based on employer size

Usage mirrors accrual caps. Employers with fewer than 15 employees may limit usage to 24 hours per year, while those with 15 or more employees must allow up to 40 hours. Employers may also impose a 90-day waiting period, meaning employees can only begin using paid sick leave after 90 days of employment.

Employers should document the exact date when each employee becomes eligible, communicate it during onboarding, and configure payroll systems so leave requests are handled consistently.

Carryover and payout policies

Arizona law requires employers to allow carryover of unused sick time into the following year. The amount carried over is subject to the same caps: 24 hours for small employers and 40 hours for larger ones.

Employers can avoid carryover by frontloading the full annual amount at the beginning of the year.

Unlike vacation pay, there is no requirement to pay out unused sick leave when employment ends. However, if an employee is rehired within nine months, the employer must reinstate any previously accrued but unused sick time. This reinstatement requirement means employers should retain sick leave records after termination and have a process for restoring balances upon rehire.

Calculating pay for sick leave

Non-exempt employees must be paid at their regular hourly rate for the hours of sick leave taken. Exempt employees must be paid in the same way as for other forms of paid leave, consistent with salary rules.

Payment must be included in the employee’s next regular paycheck. Employers cannot delay payment or issue it separately from normal payroll. For organizations with complex pay structures, such as commission-based roles or jobs with multiple pay rates, it is important to clarify how the “regular rate” is determined for sick time purposes. Document this method in your payroll procedures to ensure consistency.

Find out more about the difference between exempt vs. non-exempt employees.

Recordkeeping and enforcement

Compliance depends heavily on documentation. Employers must:

• Track accrual and usage for each employee
• Show current balances on wage statements or in a separate written notice
• Retain all sick leave records for at least four years

Employers without proper records may face penalties, back pay orders, and potential damages.

Investing in a payroll or HR system that automates recordkeeping reduces risk and ensures that balances and usage are visible both to employees and to regulators if needed.

Notice and posting requirements

Transparency is another key component of compliance. Employers are required to:

• Display the official earned paid sick time poster issued by the Industrial Commission in a conspicuous location
• Provide written notice at the time of hire, explaining employees’ rights under the law

These obligations apply regardless of company size. Failure to display the poster or issue the notice can result in fines, even if you are otherwise following accrual and usage rules.

Anti-retaliation and job protection

The law includes strong anti-retaliation protections. Employers cannot fire, discipline, or penalize employees for using earned sick time. Employees must also be allowed to return to their jobs after taking leave.

If an employer takes adverse action against an employee within 90 days of their exercising sick leave rights, the action is presumed retaliatory unless the employer can prove otherwise.

Additional notes for Arizona employers

Employers should be aware of two additional factors:

• Local ordinances: Tucson and Flagstaff may impose stricter requirements than the state law, which employers must follow if hiring in those locations
• Coordination with other laws: Sick leave rules should be aligned with other policies, such as family leave or PTO programs

Proactive alignment of policies helps prevent conflicts and makes it easier for managers to administer leave consistently.

Staying compliant with Arizona’s paid sick leave law

Arizona’s earned paid sick time law is detailed, covering accruals, carryovers, posting, and recordkeeping. Employers who fail to keep up can face penalties and reputational damage. To stay compliant, employers should:

• Comprehensive sick leave management with tracking for accruals and usage, documentation, carryover, and reinstatement when employees return
  Full-service payroll, HR, tax, and compliance across federal, state, and local levels, including Arizona’s earned paid sick time requirements
• Support from certified professionals, licensed advisors, and dedicated HR business partners and payroll managers
• Exclusive Aetna International benefits plans for W-2 employees working or traveling abroad
• Access to over 60 domestic benefits plans with Fortune 500-level coverage
• State-specific trainings, HR policies, and on-demand HR support
• Additional features that simplify compliance and workforce management

For organizations with employees in multiple states, compliance becomes even more complex. That’s where Deel PEO comes in. Deel provides local expertise to track state and city-level changes, automates accruals and carryovers, and keeps records accurate and accessible. By outsourcing the compliance burden, employers can focus on supporting their workforce while Deel ensures every requirement is met.

Request a demo with Deel today and see how our PEO can keep your business confident and compliant.