Everything About Overtime Laws in Arizona

Share

Business owners have a lot to keep track of and might not have the time to inform themselves on all the laws that affect their workers. Overtime law is a great example. But have no fear – we at actiTIME have collected everything there is to know about overtime law in Arizona. So kick back, relax, and let the experts tell you a thing or two!

Overtime laws in Arizona

What Are the Overtime Laws in Arizona?

When it comes to overtime laws, each state has a choice. They can follow the Fair Labor Standards Act (FLSA), which was passed nationwide in 1938, or they can supplement it with their own specific pieces of legislation. Arizona hasn’t added any extra laws, and so employees who work overtime hours follow FLSA standards to the letter. If you want a refresher on how overtime works, feel free to read our introductory post here.

Every company needs to define their workweek – this is the first step to calculating overtime. Arizona defines a workweek as seven days made up of 24 hours each. It can start on any day, and different employees in the same company (janitors, accountants, managers) can have different workweek regimes. But once a position’s workweek is decided on, it can’t be changed.

The FLSA stipulates that workers earn one overtime hour for every hour worked over forty in a workweek. If an employee works different hours every week, these can’t be averaged out:

Yes
Week 1:
44 hours
Week 2:
36 hours
Total:
76 regular hours
+ 4 overtime hours
No
Week 1:
44 hours
Week 2:
36 hours
Total:
80 regular hours

While some states also count any hours worked more than 8 in one workday as overtime, Arizona does not.

How Do I Calculate Overtime Pay in Arizona?

Employers have two options for compensating overtime hours worked:

  • Overtime pay rate: each hour is paid out at 1.5x the regular pay rate.
  • Compensatory time: for each hour of overtime worked, the employee can take 1.5 hours of paid time off.

Once a worker has accumulated 240 hours of compensatory time, overtime has to be paid out at 1.5x the regular rate of pay.

All these rules can seem like a lot to handle, but keeping track of overtime rates and pay is rather simple.

In Arizona, the minimum wage is $12.00 an hour. This means that overtime rates of pay will be at least $18.00. If someone is working a minimum wage job, their monthly stub could look something similar to this:

Week 1:
Week 2:
Week 3:
Week 4:
Regular hours:
Overtime hours:
Total:
30 hours (30 regular)
51 hours (40 regular + 11 overtime)
28 hours (28 regular)
41 hours (40 regular + 1 overtime)
148 x $12.00 = $1776.00
12 x $18.00 = $216.00
$1992.00

The system, once you get used to it, gets easier to handle. There are one or two more factors, though, that you need to remember when doing your calculations.

A major factor to keep in mind is commission, especially in the case of retail employees. For many salespeople, commission payouts form a large part of their salary, and thus must be taken into account when calculating both regular and overtime rates of pay.

It’s simpler than it sounds. Just take the amount earned at the base rate of pay and combine it with the commissions earned in a workweek. Then you divide it by hours worked. Here’s an example commission calculation for a minimum wage salesperson:

Week 1:
Regular pay:
40 hours x $12 ($480) + commission ($275) = $755
$755 / 40 = $18.88

In weeks where overtime hours are worked, the calculation might be:

Week 2:
Regular pay:
Overtime pay:
Total regular hours:
Total overtime hours:
Total:
41 hours x $12 ($492) + commission ($250) = $742
$742 / 41 = $18.10
$18.10 x 1.5 = $27.15
40 x $18.10 = $724
1 x $27.15 = $27.15
$751.15

Once you’ve figured out how commission affects overtime pay, the next factor to work into your calculations are bonuses. All you have to do is take your employee’s bonus period (the amount of time a specific bonus is relevant to), add the money earned at their base rate to the bonus itself, and then divide that by the hours worked. What you’re left with is the worker’s regular rate of pay.

In the case where a worker receives a $1000 bonus during a month where they’ve worked 160 hours with a minimum wage salary, their regular pay rate calculation would look like this:

160 hours x $12 = $1920 

Regular hours: ($1920) + bonus ($1000) = $2920
Regular rate: $2920 / 160 = $18.25
Overtime rate: $18.25 x 1.5 = $27.38

You can now calculate your employee’s overtime pay for this month using the regular pay rate that you found above:

Week 1:
Week 2:
Week 3:
Week 4:
Total pay:
36 hours (36 x $18.25) = $657
47 hours (40 x $18.25 [$730] + 7 x $27.38 [$191.66]) = $921.66
40 hours (40 x $18.25) = $730
37 hours (37 x $18.25) = $675.25
$2983.91

In Arizona, overtime can’t be paid later than 16 days after the end of the relevant pay period. In case the 16th day is a holiday, the payment must be made beforehand.

Who Is and Isn’t Qualified for Overtime Pay in Arizona?

Not all employees are entitled to overtime pay under the FLSA. This is because the laws were written to protect certain workers (often manual laborers) from exploitation.

There are two conditions that define whether an employee can receive overtime pay rates – at least one of them must be fulfilled:

  • Weekly earnings are under $455 (meaning $23,660 a year);
  • They work in a position not covered in the exemption list below.

The FLSA lists a number of positions that automatically qualify for overtime in spite of otherwise disqualifying factors. This list includes first responders (paramedics, firefighters, police, etc), paralegals and nurses.

The FLSA also includes a list of positions that are automatically exempt from overtime regulations when they earn more than $455 weekly:

Executives (who manage more than two people full-time);
Administrative workers;
Non-manual professional workers (artists, teachers, programmers);
External salespeople;
Independent contractors;
Certain transportation and agricultural workers;
Certain live-in employees.

Any additional questions regarding exemptions can be resolved by consulting the FLSA and Arizona state law.

Track Overtime Using actiTIME!

Overtime law in Arizona differs a bit from national and other state-specific standards, and familiarizing yourself with them helps your workers get paid fairly and saves you from the legal trouble that comes with making a mistake.

Which is why we at actiTIME have done all the work for you. Our products and resources simplify the process and help you get back to doing what you do best.  Read on to find out more.

Boost your business with actiTIME, sign up for free trial