Traps await the unwary under Arizona’s minimum wage law

Arizona voters first approved a state minimum wage in 2006. That ballot proposition included a provision for annual adjustments based on the federal consumer price index (CPI). In 2016, voters approved another ballot proposition that accelerated the rate of increase in the minimum wage for several years and maintained the indexed adjustment scheme for future increases.

Minimum wage law has broad coverage

Almost all employers and employees in Arizona are covered by the state’s minimum wage law. The only exceptions are for persons employed by a parent or sibling, casual babysitters, state and federal government employees, tipped employees (who may be paid $3 less than the minimum per hour), and businesses with less than $500,000 in gross annual revenue that are exempted from federal minimum wage law.

What employers sometimes fail to appreciate about this broad coverage is that, unlike many other state minimum wage laws, Arizona’s law applies to employees who are exempt from the minimum wage and/or overtime provisions of the federal Fair Labor Standards Act (FLSA).

Exempt employees with low salaries

Compliance with Arizona’s minimum wage law has historically not been problematic for salaried, exempt executive, professional, and administrative employees who are paid at least the FLSA minimum salary—currently $684 per week ($35,568 annually).