Small Business Employee Rights


All businesses with 15 or more employees are subject to federal labor laws. The standards and regulations from these federal laws are enforced by the Department of Labor’s Wage and Hour Division (WHD), and the US Equal Employment Opportunity Commission (EEOC). Each state is allowed the freedom to enact stricter employment laws that further benefits employees, but all states are held to the minimum standards set forth by federal law. In the state of Arizona, labor laws are established by ARS Title 23, and enforced by the Industrial Commission of Arizona (ICA).

While there are a number of rights afforded to small business employees, most of them can be boiled down to five core categories:

  • The right to fair compensation
  • The right to a workplace free from discrimination
  • The right to reasonable accommodations
  • The right to family and medical leave
  • Protection against employer retaliation

The right to fair compensation

Every employee has the right to be paid for time-worked. The federal minimum wage and requirements for overtime pay are established in the Fair Labor Standards Act (FLSA) of 1938. The law dictates a federal minimum wage of $7.25/hour, and requires employers to pay 1.5-times the minimum wage for overtime. By extension, that means employees who work more than 40 hours a week should receive at least $10.87/hour for overtime. Employers cannot ask employees to work “off-the-clock,” either at work or at home. This only applies to employees paid by the hour, though. Salaried employees are generally considered exempt from the FLSA, and are not guaranteed additional compensation for overtime.

In Arizona, ARS 23-363 imposes a higher minimum wage of $10.00/hour for state residents. The bill also plans to elevate the minimum wage to keep up with the rising cost of living. The state’s schedule is as follows:

  • Raise the minimum wage to $10.50/hour in 2018
  • Raise the minimum wage to $11.00/hour in 2019
  • Raise the minimum wage to $12.00/hour in 2020
  • For 2021+, the minimum wage will continue to rise based on the consumer price index

The state of Arizona also imposes additional compensation requirements for tipped employees. The federal government defines tipped employees as those who receive more than $30 in tips per month, and the FLSA allows employers to pay tipped employees a base wage as low as $2.13/hour as long as the employee’s combined wages and tips are higher than the minimum wage of $7.25/hour. Tipped employees in Arizona are guaranteed a base wage no lower than $3/hour less than the minimum wage (currently $7.00/hour, but that will rise with the scheduled increases in the minimum wage).

The right to a workplace free from discrimination

All employees are entitled to a workplace free from discrimination. Employers are prohibited from making important decisions such as hiring, firing, pay, and benefits, based on factors such as race, color, religion, sex, age, national origin, or disability. This right is enforced by the US Equal Employment Opportunity Commission (EEOC), and are established by the following federal laws:

Sexual harassment in the workplace is also considered a form of discrimination, and is therefore under the purview of the EEOC. While all forms of sexual harassment are prohibited, the EEOC specifically investigates four types of sexual harassment:

  • Unwelcome sexual advances
  • Requests for sexual favors
  • Verbal or sexual conduct that interferes with the ability to do your job
  • Verbal or sexual conduct that creates an intimidating, hostile, or offensive work environment

The right to reasonable accommodations

In addition to protection against discrimination, federal law requires employers to provide reasonable accommodation for an employee’s disability or religion. As long as the employer is not placed under undue hardship, all employees have the right to request and receive reasonable accommodations for these matters.

The ADA stipulates that employers are obligated to reasonably accommodate for an employee’s actual or perceived disability under two conditions. First, the employee needs to be able to fulfill the job’s responsibilities with or without reasonable accommodations. Second, the employer can’t be required to take on an undue burden in the course of providing the accommodation.

Reasonable accommodations would be defined as modifications to the work environment that allow a disabled employee to operate on equal terms with employees who are not disabled. While an employer is not required to provide the employee’s preferred accommodations, they are required to actively engage with the employee to discuss the nature of their disability and brainstorm ways to accommodate for their disability. Any accommodations that place an undue financial burden on the employer, or a disruption to the employer’s business operations, are considered unnecessary. Under those parameters, examples of reasonable accommodations include:

  • Physical modifications to the workplace
  • Adjusting workplace rules, practices, and policies
  • Offering appropriate leave for treatment and rehabilitation
  • Restructuring a job’s responsibilities
  • Modifying the employee’s schedule
  • Transferring the employee to a job with comparable compensation and benefits

The right to family and medical leave

Under the Family Medical Leave Act (FMLA) of 1993, employers are required to provide unpaid leave for family and medical reasons to employees who have been with the company for at least one year, and have worked at least 1,250 hours during that year. During the period of unpaid leave, the employer is required to retain the employee’s job and group health insurance coverage. Employees are entitled to up to 12 weeks of unpaid leave, whether their absence is continuous or intermittent. Family or personal medical purposes that merit FMLA include:

  • The birth, adoption, or foster care of a child
  • Care for a newborn child who is less than one year old
  • Care for an immediate family member (spouse, child, parent) with a chronic health condition
  • A personal chronic health condition that renders the employee unable to fulfill their job responsibilities

Additionally, employees whose spouse, child, parent, or next-of-kin are a member of the armed forces may qualify for military caregiver leave. Such employees are entitled up to 12 weeks of leave due to urgent circumstances regarding active-duty service-members, and up to 26 weeks of leave if the service-member suffers a serious illness or injury.

Protection against employer retaliation

This right goes hand-in-hand with the previous four employee rights. If an employee files a complaint regarding the violation of any employee’s rights or otherwise illegal activity, the employer cannot take retaliatory measures such as demotion or discharge. An employee who is party to a formal complaint or lawsuit can be disciplined for causes unrelated to the matter (such as fraud, job-abandonment, or violation of company policies), but their participation in the complaint cannot be a factor. The EEOC investigates cases of employer retaliation, and the organization specifically names the following actions as protected activities:

  • Filing a complaint, or serving as a witness in a formal investigation or lawsuit
  • Lodging a complaint with a manager or supervisor about discrimination or harassment
  • Answering questions in the course of an employer-led investigation into alleged harassment
  • Refusing to follow orders that would result in discrimination
  • Asking managers or coworkers about salary information to uncover potentially discriminatory wages
  • Requesting accommodation for a disability or a religious practice
  • Resisting sexual advances, or intervening to protect others from unwelcome sexual advances

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

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