Arizona Labor Laws


With all the time we spend at work, it’s no surprise that employment law is such a major issue in the United States. There’s unfortunately no shortage of employers out there looking for opportunities to cheat their employees to save a few bucks. Even the best employers can become a nightmare to deal with when it comes time to part ways, with squabbles over unpaid bonuses, severance packages, broken promises.

When you’re in a battle with your employer over compensation or fair treatment, it helps to understand the laws that protect you. It’s even more helpful to have an Arizona employment attorney by your side who can leverage these laws to ensure you’re paid what you rightly earned.

Minimum Wage

Arizona’s minimum wage exceeds the federal minimum wage of $7.25 an hour. As of January 2019, the current minimum wage in Arizona is $11 an hour. The minimum wage will increase to $12 an hour in January 2020, after which it will continue to rise each year based on inflation and the rising cost of living (ARS 23-363). The exact increase applied each year will be calculated based on the one-year change in the Consumer Price Index.

Tipped employees are permitted to receive a base hourly wage up to $3 less than the Arizona minimum wage, but the employee’s total pay after tips must meet or exceed the state’s minimum wage. To qualify as a tipped employee, the employee must receive tips on a consistent and recurrent basis (it doesn’t have to be constant), and the employer cannot control how the tip is used. Examples of qualifying tipped employees include barbers, bartenders, bellhops, busboys, car wash attendants, hair stylists, valets, waiters, and waitresses.

If you are a tipped employee, your employer is required to provide notice when you are hired or assigned to a new position that you will be paid the tipped minimum wage. Each pay period, the employer must then provide written notice of the hourly wage deduction taken as a tip credit. Should you discover that your total paycheck after tips does not exceed the current minimum wage, you have the right to file a wage complaint and seek unpaid wages.

Overtime Pay

Arizona labor laws do not address overtime, deferring the matter to federal overtime laws established by the Fair Labor Standards Act. Under the FLSA, employers are required to pay employees 1.5x their standard wage for time worked over 40 hours a week. 

While there are some states that dictate overtime pay on a daily basis (e.g. working over 8 hours a day results in overtime, or working on weekends is automatically overtime), federal law doesn’t distinguish daily hours. Contrary to popular opinion, federal overtime laws do not apply to holidays, either. While it’s common practice for employers to pay 1.5x wages for working on a holiday, they are not required to do so.

Vacation Time

Employers in Arizona are not required to offer paid or unpaid vacation time. However, an employer who chooses to offer a vacation time program is bound to the terms of the program for all employees. 

In the absence of applicable laws, Arizona courts have ruled in favor of the company when it comes to “use it or lose it” policies and accumulation caps. Again, the terms of the program established in company policy and employment contracts sets the rules, and the company is bound to follow those rules.

When an employee separates from an employer, the employer is only obligated to pay out accrued vacation time with the final paycheck if company policy requires it. In the absence of a clear company policy, the employer is under no obligation to pay out the monetary value of unused vacation time when an employee is terminated or laid off.

Paid Sick Time

Under ARS 23-372, Arizona employers are required to provide all employees paid sick leave. That includes full-time, part-time, exempt, and non exempt employees. At a minimum, employees must accrue one hour of earned paid sick time for every 30 hours worked. Salaried employees who are considered exempt under the FLSA are assumed to work 40 hours a week for accrual purposes. 

Arizona law also dictates an annual minimum for paid sick time. Employers with 15 or more employees are required to offer a minimum of 40 hours of paid sick time per year, while employees with less than 15 employees are only required to give a minimum of 24 hours of paid sick time per year. Accumulated sick time must carry over each year, though the employer is allowed to impose an annual cap providing the cap meets the statutory minimum. Alternately, the employer can pay out unused sick time at the end of each year instead of carrying over accumulated sick time.

New employees begin accruing paid sick time immediately, but employers are allowed to impose a 90-day waiting period before a new employee can use accumulated sick time. Employees may use accumulated sick time for themselves or for the care of family members under the following circumstances:

  • Medical care (doctor’s appointment, hospital visit, physical therapy, etc.)
  • Mental illness, physical illness, injury, or other health conditions
  • Public health emergencies
  • Absences stemming from abuse, stalking, sexual violence, or domestic violence

Employers may request a doctor’s note from employees who miss three or more consecutive work days. However, the employer cannot consider qualified absences covered by sick time for negative actions, including discipline or termination.

Severance Pay

Unfortunately, there are no state or federal laws requiring severance pay to employees. On a similar note, employers are not required to pay out unused vacation time or paid sick time when an employee separates from the company.

However, while employers aren’t obligated to offer severance pay, they are expected to honor any severance packages, bonuses, and benefit payouts promised by company policy or an employment contract. Simply put, if your employer promised a severance package or benefit payout when you joined the company, the employer is bound to honor those promises according to the terms of the agreement.

Call our Employment Law team at (480) 464-1111 to discuss your case today.

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