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:
- What is overtime pay?
- Overtime minimum wage
- Overtime for Salaried & Hourly Employees
- Federal and state overtime laws
- Arizona overtime laws FAQs
Increasing your knowledge about payroll processing will make it easier and more efficient to run while reducing the risk of adverse outcomes.
How Does Overtime Work in Arizona?
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.
Do Salaried Employees Get Overtime Pay in Arizona?
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:
- Salaried vs. Non-Salaried Employees: If an employee gets paid hourly, they are not on salary by definition. Almost all hourly employees receive overtime pay.
- Federal Pay Threshold: Each year, a set number of dollars exempts a salaried employee from receiving overtime pay. Suppose a salaried employee makes below this amount in gross income. In that case, they are eligible for overtime – and Arizona employers typically follow the federal law while still requiring that salaried employees make at least the state minimum wage of $12.80.
- Classification of Employee: The type of work that an employee does will affect overtime eligibility. Particular professional, administrative, or high-end decision-making jobs will be exempt from overtime requirements. Examples of this are teachers, lawyers, or C-suite executives.
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.
Are employers required to pay overtime in Arizona?
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.
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.
Common Overtime Pay Myths
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:
- A salaried employee is always exempt from overtime.
- Job titles affect overtime pay eligibility.
- Employees can choose to be non-exempt from overtime pay.
- Salaried employees can receive overtime depending on their job and wage.
- It’s not your job title but your job duties that determine overtime eligibility.
- Business owners in Arizona are accountable for adequately compensating their employees. An employee cannot decide their own exempt or non-exempt overtime status.
Arizona Overtime Law FAQs
Knowing how to pay overtime properly can save you lots of money, stress, and legal fees. Here are some commonly asked questions regarding Arizona overtime Laws:
- How To Calculate Overtime Pay?
Overtime wages are straightforward: whatever that employee’s base hourly rate is for their job is multiplied by 1.5. For example, if an employee earns $20 per hour, their overtime rate becomes $30 per hour.
- What is the Overtime Minimum Wage in Arizona?
Arizona’s minimum wage will move to $12.80 beginning in 2022. This means that the overtime minimum wage is $19.20, as this is 1.5 x $12.80.
- Is Mandatory Overtime in Arizona Legal?
Mandatory overtime is legal in Arizona, according to current state laws. If an employer requires an employee to work more than 40 hours per week, they must also provide overtime pay for the hours necessary. Specific contracts can also limit employee hours, but they must be stipulated beforehand and in writing.
- What are the Maximum Hours of Overtime an Employee can Work per Week?
The 40-hour workweek is standard across the United States, but there is no upper limit on overtime worked. However, legal regulations restrict the number of hours an employee can work to preserve their health and well-being.
- Can You Fire an Employee for Refusing to Work Overtime in Arizona?
As there are no Arizona state laws prohibiting over time, it is legal to fire an employee for refusing assigned hours that they are eligible to. It is crucial to make sure that they are not exempt via their contract and are at-will employees so as not to endanger your business with wrongful termination.
If you have any questions regarding overtime laws or eligibility, make sure to consult an HR or payroll professional. Getting your employees paid correctly and on time can save you thousands of dollars and prevent legal ramifications.
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At PayTech, we’re serious about helping businesses save time and money while reducing stress. We have decades of experience providing payroll solutions to help small businesses and would love to help if you have questions regarding overtime laws.
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