Running payroll for a small business can be stressful and time-consuming, even if you understand most payroll laws. If you are guessing some of them, they can increase fees, penalties, and legal implications. You should know some comprehensive items for Arizona overtime laws and talk with an outsourced payroll service if you use one.
In this guide to Arizona Overtime Laws, we’ll be covering:
Increasing your knowledge about payroll processing will make it easier and more efficient to run while reducing the risk of adverse outcomes.
Federally and in Arizona, overtime pay is defined as wages given to employees who work for over forty hours in a single week. According to current federal laws (which supersede any state rulings), hours that qualify as overtime are to be paid at “time and a half pay,” which is 1.5 times their standard rate.
While not all employees are eligible for overtime pay, it is commonly believed that salaried employees are always exempt from receiving overtime. Several distinctions need to be made per the federal laws before you can safely rule out a salaried employee from being eligible for overtime.
Arizona overtime laws are governed by federal policy. For salaried workers, there are three factors to look at when determining whether or not they are entitled to overtime:
An employer can still pay exempt employees overtime in Arizona – though it will be in the form of a bonus or other lump sum that is not qualified as time-and-a-half pay. This would still be outside the demands of federal law, though; exempt employees are not ever technically owed overtime pay.
Overtime pay is regulated by federal laws, which means Arizona employers must pay overtime to eligible employees. In Arizona, there are employee classifications that are exempt from overtime wages. These can include drivers, executives, and certain administrative employees. However, any Arizona decisions on eligibility cannot override federal overtime laws.
For employers, this means that having a clear definition of every role in your company will help you decide whether an employee is entitled to overtime pay or not.
Arizona’s overtime minimum wage can currently be calculated as the state’s current minimum wage times one and a half. As the current minimum wage in the state is $10.50 per hour, overtime minimum wage is $15.75. It should be noted that Arizona’s legislature has passed laws that will raise the minimum wage over the next few years, so the overtime minimum wage will also be raised. To keep up on the local economic impacts of the Arizona minimum wage increase for 2022 read here.
Under current Arizona laws, mandatory overtime is legal. With that said, an employer who requires you to work more than forty hours per week must also provide you with overtime pay for those extra hours that you are required to work. Mandatory overtime may not, however, be required of those employees who have signed a contract that limits their hours.
Salaried employees are often exempt from being paid overtime. A three-pronged test has been devised to determine if a salaried employee might be entitled to overtime pay, though. Exempt employees must be paid at least $23,600 per year, receive a salary, and they must perform certain exempt job duties. If an employee fails to meet any of these criteria, they must be paid overtime pay even though they are on salary.
The federal law that governs overtime for hourly employees is the Federal Labor Standards Act. Under the FLSA, employees who work more than forty hours per week and who are not part of an exempted class must be paid one and a half times their hourly pay for each hour that they work over forty hours in a week. This may not be averaged over the course of two weeks and the overtime pay must be given to the employee during his or her normal pay period.
Things work a little differently for tipped employees. While employers can pay tipped employees an hourly wage that’s below the minimum wage for their first forty hours, this isn’t the wage that’s used to calculate overtime pay. Overtime must be calculated based on the actual minimum wage rather than the lesser amount that is typically paid to a tipped employee.
Because there are no Arizona overtime laws that forbid working overtime, it’s perfectly legal to fire an employee for refusing overtime hours. This is the case for all at-will employees, but might not be true for contracted employees. While Arizona’s at-will employment statutes hold true for the vast majority of employees, it’s important to remember that the language of a contract will dictate what is and is not possible for an employer to do insofar as contracted employees are concerned.
While the forty-hour work week is standard across the United States, the FLSA does not mandate a maximum number of hours that an employee can be expected to work. Every hour worked beyond forty hours per week has to be compensated according to overtime rules, but there is no upper limit on the number of hours worked. If an employer is endangering his or her employees’ health with his or her hourly requirements, though, he or she might be found liable in court.
Overtime laws can be hard to understand, and they can change based on the year, your state, and the type of business you run. However, some overtime payroll myths are easily dispelled:
Myth
Reality
