Federal and Arizona State Minimum Wage Laws
Many aspects of wages, including payment of minimum wage, are controlled by both federal (the Fair Labor Standards Act) and state laws. When the requirements of federal and state laws differ, employers must follow the law most beneficial to employees. Arizona’s minimum wage is higher than the federal minimum wage (which currently is $7.25), hence Arizona’s minimum wage applies to Arizona employees.
Arizona recently passed the Fair Wages and Healthy Families Act (the “the Arizona Act”) establishing a new state minimum wage each year through 2020, with annual raises thereafter based on the increase in the cost of living. As of January 1, 2018, almost without exception all employees in Arizona – whether full-time, part-time or temporary – must be paid at least $10.50 an hour for all hours worked (and more for overtime hours, which is not discussed in this article). Arizona will increase the minimum hourly rate to $11 in 2019 and to $12 in 2020. Each year after that, Arizona’s minimum wage will increase in line with cost of living increases. Although the Arizona Act also requires that every employee be allowed to accrue and then use paid sick leave for a wide range of reasons outlined in the law, this article addresses only minimum wage requirements. [Earned paid sick leave is addressed in separate articles on our website.]
An employee may not agree to work for less than Arizona’s minimum wage; the minimum wage obligation cannot be waived by any oral or written agreement, or in an employment contract. Minimum wage must be paid for all hours worked, regardless of the frequency of payment and regardless of whether the wage is paid on an hourly, salaried, commissioned, piece rate, or any other basis. If in any workweek the wages paid for the hours an employee worked are less than the applicable minimum wage, the employer must pay, in addition to sums already earned, an amount sufficient to bring the employee’s weekly wage up to the current minimum wage. An exception Arizona recognizes to the minimum wage rule is that employers may pay employees receiving tips up to $3.00 per hour less than the minimum wage, provided that the tips the employee earns in each workweek bring him/her up to at least minimum wage. Arizona employers need to be aware that in contrast to federal law, which in some limited circumstances allows a lower hourly rate to be paid to youth employees for a limited period of time (among other potential exceptions), Arizona does not distinguish between adults and minors when it comes to minimum wage.
Employers subject to Arizona’s minimum wage law must comply with notice, posting, and recordkeeping requirements. Penalties for violations of the Arizona minimum wage law can be substantial. An employer who violates the Act’s recordkeeping and posting requirements is subject to a civil penalty of at least $250 for the first violation and at least $1000 for each subsequent or willful violation. Special monitoring and inspections may also be imposed. Additionally, if an employer fails to maintain required records, the employer will be presumed to have not paid the required minimum wage (or earned paid sick time) in a disputed case. An employer has the right to rebut this presumption with evidence that the employer paid the employee the required minimum wage.
We are available to help employers craft policies to comply with state and federal wage law. If you are an employee and believe you have not been paid in compliance with this or any other state or federal law, we can help. The wage and hour attorneys at Faulkner Law Offices, PLLC have decades of experience in helping employers and employees comply with these complex laws.