If you own a business, you need to understand your payroll expenses. This not only means those expenses that come out of typical situations, but those that might come from more extreme circumstances. If you have employees that are typically working more than forty hours per week, understanding Arizona overtime laws is crucial for many reasons including avoiding penalties, fees and lawsuits.
Arizona Overtime Laws
While there are no specific state-regulated overtime laws, Arizona follows the federal laws on overtime, which can be somewhat complex. Below are some of the most common questions that business owners have about overtime.
What is overtime pay?
Overtime pay is defined as a type of compensation given to employees who work more than forty hours in a single work week. Under current federal regulations, employees are to be paid one and a half times their normal pay for each hour worked over the limit. Not every employee is entitled to overtime pay, though. Employees who are exempt from overtime pay are not, however, always employees who are on salary. In fact, many salaried employees are just as entitled to overtime pay as their hourly counterparts, though the pay calculations for these individuals may be a bit more difficult.
Are employers required to pay overtime in Arizona?
Overtime payment is regulated by a federal law. As such, Arizona employers are required to pay overtime to employees. Arizona does, however, have its own classes of employees who are considered exempt from overtime payments, including drivers and executives. Outside of the few exempt classes, though, Arizona employees get the same overtime protections as their peers in other states. While Arizona can make decisions on eligibility and can even offer overtime pay to more classes of employees, it cannot legislate any overtime laws that override the federal rules as they stand today.
What is the overtime minimum wage in Arizona?
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.
Is mandatory overtime in Arizona legal?
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.
Federal overtime laws for salaried employees
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.
Federal overtime laws for hourly employees
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.
Overtime laws for tipped employees
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.
Can you let an employee go for refusing to work overtime?
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.
What is the maximum hours of overtime an employee can work per week?
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.
How to calculate overtime pay?
Calculating overtime pay is very straightforward. The employer simply multiplies the employee’s base hourly pay by one point five. If the employee makes twenty dollars per hour, for example, the employer will have to pay thirty dollars per hour for each hour worked over the forty hours per week limit.
Who is exempt from paying overtime?
Only employers of employees who are classified as exempt can avoid paying overtime. Arizona overtime laws defines exempt employees as those working in a few fields, including transportation and in-home care, as well as those who are independent contractors or outside salespeople.
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