As anticipated, on January 1, 2017, the Arizona minimum wage increased from $8.05 per hour to $10.00 per hour. The remaining scheduled increases are as follows:
$10.50 per hour effective, January 1, 2018;
$11.00 per hour effective January 1, 2019; and
$12.00 per hour effective January 1, 2020.
Employers may continue to pay tipped employees $3.00 less per hour, so long as their combined wages plus tips are not less than the new minimum wage rate.
Recently, the Industrial Commission of Arizona (ICA) released its Frequently Asked Questions (FAQs) About Minimum Wage and Earned Paid Sick Time. The FAQs include information on the employers covered by the Ordinance and posting and recordkeeping requirements. Among other things, it explains that Arizona’s minimum wage laws apply to all “employers,” and “small business” are excluded from the definition of employer and are exempt from the minimum wage requirements.
In Arizona, a “small business [i]s 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 is exempt from having to pay the minimum wage pursuant to the provision of the Fair Labor Standards Act that sets forth the requirement that the business’s employees or the enterprise be engaged in “interstate commerce.” Interstate commerce broadly refers to any form of commercial interstate interaction, including (but 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/or 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. If your business meets the above requirements; however, your business maybe able to avail itself of the exemption.
Please contact your Human Resources Business Partner and/or your Payroll Services Representative if you have any questions.