Sekure Payment Experts has been fielding numerous questions from our merchants in Arizona regarding minimum wage requirements, so we’d thought we’d dedicate a post to this all-important issue. Arizona’s minimum wage—which sits at $12.15 an hour—is among the country’s highest. It’s worth noting, however, that the actual rate depends on the municipality, the employer, and the nature of the work. Here’s an overview of minimum wage and paid sick time requirements in The Grand Canyon State.
Backgrounder
On November 8, 2016, voters in Arizona passed Proposition 206, known as the Fair Wages and Healthy Families Act. The purpose of Proposition 206 was twofold: (1) progressively increase Arizona’s minimum wage from $8.05 per hour in 2016 to $12 in 2020 and subsequently increase the amount to keep pace with cost-of-living expenses and (2) require employers to provide paid sick time to employees. It’s also worth noting that all employees—including temporary and part-time workers—are subject to Proposition 206.
What’s changed in 2021
Arizona’s minimum wage, which is now $12.15 an hour (15 cents added in 2021 to keep pay in line with inflation) puts it neck and neck with Maine at the seventh highest in the United States. And as mentioned in the intro, the minimum wage is higher in some cities in Arizona, such as Flagstaff and Tucson, where employers must pay $15 an hour, well above the federal minimum wage of $7.25 an hour.
Minimum wage exceptions
There are a few exceptions to Arizona’s minimum wage. For example, workers whose pay includes tips can be paid a maximum of $3 per hour less than non-tipped employees. However, total weekly compensation must meet or exceed the minimum wage. If the employee does not earn this baseline amount after tips, the employer must make up the difference.
Additional exceptions include the following:
- Casual babysitters and people employed by a parent or sibling
- People who work for the State of Arizona and the federal government
- Employees of small businesses that gross under $500,000 in annual revenue
Don’t forget paid sick time…
In addition to introducing new minimum wage requirements, Proposition 206 also made changes entitling employees to earn paid sick time (PST). Employers must accumulate at least one hour of paid sick leave for every 30 hours worked. Specifically:
- Employers with 15 or more employees have to allow employees to accrue a maximum of 40 hours of PST a year
- Employers with fewer than 15 employees are required to allow employees to accrue up to 24 hours of PST each year
Importance of compliance
As an employer, you likely began paying the higher rate on January 1, 2021. And if you haven’t, then you should address the situation immediately: failure to comply with wage laws, even unintentionally, can have serious consequences.
For example, employers who fail to comply with paid sick time requirements may face $250 penalties for their first infraction and over $1,000 for additional violations. In addition to these penalties, employees must be paid the PST owing along with interest.
As an employer, you are also required to put up posters in the workplace to inform employees about their rights. If you haven’t done this yet, posters are available here.
The takeaway
Wages and labor law can be a complicated matter. As an employer, if you are unsure of your obligations when it comes to minimum wage and paid sick time, contact your local state officials or consider seeking legal counsel. If the higher minimum wage is eroding your bottom line, get in touch with a Sekure Payment Expert today, and they’ll help you save money on processing costs.
