The following FAQ's were taken from an FAQ document posted by the Industrial Commission of Arizona
What is Arizona’s minimum wage?
Under the Fair Wages and Healthy Families Act (the “Act”), the minimum wage in 2018 is $10.50 per hour; $11.00 per hour in 2019; and $12.00 per hour in 2020. On January 1, 2021, the Arizona minimum wage will increase each year by the cost of living.
Employers subject to the Act are required to pay each employee wages not less than the applicable minimum wage for each hour worked. For more information about which employers are subject to Arizona’s minimum wage laws, see Which employers are subject to the Arizona’s minimum wage laws? Minimum wage must be paid for all hours worked, regardless of the frequency of payment and regardless of whether the wage is paid on an hourly, salaried, commissioned, piece rate, or any other basis.
Note: Employers are permitted to pay employees receiving tips up to $3.00 per hour less than the minimum wage, provided that the employees earn at least minimum wage for all hours worked each week (when tips are included).
Which employers are subject to Arizona’s minimum wage laws?
Arizona’s minimum wage laws apply to all “employers.” Arizona law defines an “employer” in the minimum wage context as any corporation, proprietorship, partnership, joint venture, limited liability company, trust, association, political subdivision of the state, individual or other entity acting directly or indirectly in the interest of an employer in relation to an employee, but does not include the state of Arizona, the United States, or a small business.
“Small businesses” are excluded from the definition of employer and are exempt from the minimum wage requirements. Arizona law defines a “small business as any corporation, proprietorship, partnership, joint venture, limited liability company, trust, or association that has less than five hundred thousand dollars in gross annual revenue and that is exempt from having to pay a minimum wage under section 206(a) of title 29 of the United States Code.” Section 206(a) of title 29 of the United States Code is a subsection of the federal Fair Labor Standards Act (FLSA) that requires employers whose employees or enterprises are engaged in “commerce” to pay their employees a minimum wage.
Under the FLSA, “commerce” is a broad term that refers to any form of commercial interstate interaction. “Commerce” includes (but is not limited to) taking payments from out-of-state customers; processing payments that come from out-of-state banks or credit card issuers; using a telephone, fax machine, U.S. Mail, or email to communicate with someone in another state; driving or flying to another state for job duties; and loading, unloading, or using goods that come from an out-of-state supplier (assuming that the goods were purchased from the out-of-state supplier).
Due to these restrictive requirements, few businesses in today’s economy would qualify as exempt from having to pay minimum wage under either the FLSA or Arizona minimum wage statutes. Examples of small businesses that the ICA Labor Department has determined may meet the exemption are barbers and janitors who buy all of their supplies locally and accept only cash or checks from Arizona banks.
Are any employers or employees exempted from Arizona’s minimum wage laws?
Unlike the federal Fair Labor Standards Act (which governs the payment of minimum wage on a federal level), Arizona’s minimum wage laws have very few exemptions. The following are exempt from Arizona’s minimum wage requirements:
A person who is employed by a parent or a sibling.
A person who is employed performing babysitting services in the employer’s home on a casual basis.
A person employed by the State of Arizona or the United States government.
A “small business” grossing less than $500,000 in annual revenue, if that small business is not required to pay minimum wage to any of its employees under the federal Fair Labor Standards Act. NOTE: This exclusion for small businesses under Arizona minimum wage law is very limited. Given current economic realities, most Arizona businesses who gross less than $500,000 will still be subject to the Arizona minimum wage laws.
Does the Arizona minimum wage apply to part-time or temporary employees?
Yes. Arizona’s minimum wage laws make no distinction between full-time, part-time, or temporary employees.
Does the Arizona minimum wage apply to independent contractors?
Except for the exemptions described here, the Arizona minimum wage laws apply only to the payment of wages to employees. Arizona’s minimum wage laws do not apply to independent contractors.
Does the Arizona minimum wage apply to volunteers?
No. An individual that works for another person without any express or implied compensation agreement is not an employee under Arizona minimum wage laws. This may include an individual that volunteers services for civic, charitable, or humanitarian reasons that are offered freely and without direct or implied pressure or coercion from an employer, provided that the volunteer is not otherwise employed by the employer to perform the same type of services as those for which the individual proposes to volunteer.
Is an employer subject to Arizona’s minimum wage laws required to pay at least minimum wage for all hours worked?
Yes. Minimum wage must be paid for all hours worked regardless of the frequency of payment and regardless of whether the wage is paid on an hourly, salaried, commissioned, piece rate, or any other basis. If in any workweek the combined wages of an employee are less than the applicable minimum wage, the employer must pay, in addition to sums already earned, no less than the difference between the amounts earned and the minimum wage as required under Arizona’s minimum wage laws.
Is the Arizona minimum wage the same for both adult and minor employees?
Yes. The Fair Wages and Healthy Families Act makes no distinction made between adults and minors in Arizona’s minimum wage laws.
Watch for part 2 on Arizona Minimum Wage.