Arizona Wage Payment Laws

When an employer’s principal place of business is located and payroll system is centralized outside of Arizona, it may designate one or more days each month as fixed paydays for the following employees, except employees whose salaries are subject to provisions of collective bargaining agreements:

• who are exempt from overtime by the Fair Labor Standards Act and
• supervisors as defined by the National Labor Relations Act.

For employees of school districts or of the Arizona state schools for the deaf and the blind, employers may prorate the annual salary in any number of payments, and the employee may select whether to have the salary prorated or paid during the actual months worked.

If the employee elects to have their salary prorated, they may choose to have the employer pay all payments still due at the close of the school attendance year in either a lump sum or paid within a period of two (2) months after the close of the fiscal year.

If the employee’s salary is prorated, the employer may prorate the employee’s salary under the contract into equal payments and paid beginning with the first pay period that the employee works. AZ Statute 23-351(C)(2)

An employer must pay all wages due to employees at the end of the pay period subject to the following conditions. AZ Statute 23-351(C)

• Employers may pay employees their standard wages at a different time than they pay overtime wages and exception pay.
• Employers may satisfy the requirement to pay employees, except for school district employees or persons employed by employee leasing firms that contract with school districts, all their standard wages due by:
  • personally delivering the wages to the employee not later than five (5) business days after the end of the pay period.
  • Placing the wages in the United States mail not later than five (5) business days after the end of the pay period to be delivered to addresses designate by the employee.
  • Personally delivering the wages to the employee not later than ten (10) day after the end of the most recent pay period if the employer’s payroll system is centralized outside of Arizona.

  School districts or employee leasing firms that contract with school districts must pay employees no later than seven (7) business days after the end of the pay period. AZ Statute 23-351(C)(1) For employee leasing firms, this exception to the general rule only applies to employees who are placed at a school district and not to any other employees who are employed by the leasing firm. AZ Statute 23-351(J)

  For purposes of this section, an employee leasing firm is a company that places its contracted, leased, and co-employed employees in administrator, certified, classified or extracurricular positions with a school district. AZ Statute 23-351 (K)

  Manner of Wage Payments

  An employer may pay employee wages, except their final wages, by:

  • cash
  • negotiable bank check
  • for state or political subdivisions of Arizona, warrants payable on demand and bearing the same date as the payday
  • direct deposit
  • payroll card account, if the employer offers direct deposit and the employee does not consent to direct deposit and does not designate a financial institution to which wage could be directly deposited

  For purposes of the payment of wages, financial institution is defined as a member of the federal deposit insurance corporation (FDIC) or any other comparable federal or state agency. AZ Statute 23-351(H)

  An employer may pay an employee’s final wages in lawful money of the United States by negotiable check, draft, money order or warrant, in the case of the state or any political subdivision, dated not later than the day upon which the check, draft, money order or warrant is given.

  The employee must be able to immediately redeem the check, draft, money order or warrant in cash at a bank or other financial institution, payable on demand or by deposit in a financial institution of employee’s choice.
  AZ Statute 23-353(C)

  Direct Deposit

  An employer may pay an employee by direct deposit if the employee has consented in writing. An employer cannot deny employment to anyone for refusing to consent to direct deposit. Moreover, an employee has the right to revoke their consent to direct deposit at any time before the employer transmits their wages to the financial institution. An employee’s consent to direct deposit does not constitute a prior assignment of wages to the financial institution.

  If an employer establishes a direct deposit system of wage payment, the employee must be able to make at least one free withdrawal from the account for each direct deposit.

  An employer must provide employees whose wages are directly deposited a written or electronic statement of their earnings and withholding for each deposit.

  Payroll Card

  An employer may pay an employee by payroll card if the employer offers direct deposit and the employee does not consent to direct deposit and does not designate a financial institution to which wage could be directly deposited.

  If an employer establishes a payroll card system of wage payment, the employee must be able to make at least minimum one free withdrawal from the account for each deposit to the payroll card but not more frequently than once per week.

  An employer must provide employees whose wages are paid by payroll card a written or electronic statement of their earnings and withholding for each deposit. An employer must also provide a list of all the fees associated with the payroll card account to employees who are paid by payroll card.

  Payment upon Separation from Employment

  Employees who are fired, discharged, terminated, or permanently laid off

  When an employer discharges an employee, the employer must pay the employee all wages due within seven (7) working days of the discharge or by the next regular payday, whichever is sooner. AZ Statute 23-353

  Employees who quit or resign

  When an employee voluntarily leaves or quits employment with an employer, the employer must pay the employee by the next regular payday. The employee can request the wages be paid by mail. AZ Statute 23-353

  Employees who are suspended or resigns due to a labor dispute (strike)

  When an employee voluntarily leaves or quits employment with an employer, the employer must pay the employee by the next regular payday. The employee can request the wages be paid by mail. AZ Statute 23-353

  Employees who are temporarily laid off

  Arizona does not have any laws specifically addressing the payment of wages to employees who are laid off. However, because it is the employer who is causing the separation of employment, it is fair to assume the rule related to payment of discharged employees would apply.

  Thus, when an employee is temporarily laid off, the employer must pay the employee all wages due within seven (7) days of the discharge or by the next regular payday, whichever is sooner. AZ Statute 23-353

  Wages in Dispute

  An employer may withhold portions of an employee’s wages when there is a reasonable good faith dispute as to the amount of wages due, including the amount of any counterclaim or any claim of debt, reimbursement, recoupment, or set-off asserted by the employer against the employee. AZ Statute 23-352

  Deductions from Wages

  An employer may not withhold or deduct any wages from an employee’s paycheck, unless:

  1. required or empowered to do so by state or federal law,
  2. the employee has consented in writing, or
  3. there is a reasonable good faith dispute as to the amount of wages due, including the amount of any counterclaim or any claim of debt, reimbursement, recoupment or set-off asserted by the employer against the employee.

  Cash Shortages; Breakage, Damage, or Loss of Property; Dishonored Checks

  An employer may deduct wages from an employee’s paycheck only with written consent by the employee for the following:

  • cash shortages
  • breakage, damage, or loss of the employer’s property
  • dishonored or returned checks

  In accordance with federal law, an employer may not make deductions from an employee’s paycheck if it would cause the employee to earn less than federal minimum wage, including deductions for uniforms, tools, or other items necessary for employment with the employer. DOL Fact Sheet #16.

  Political Purposes

  An employer may not deduct any payment from an employee’s paycheck for political purposes unless the employee provides written or electronic authorization each year for the deduction. AZ Statute 23-361.02(A) For purposes of this rule, political purposes include supporting or opposing any candidate for public office, political party, referendum, initiative, political issue advocacy, political action committee, or another similar group. AZ Statute 23-361.02(I)

  This rule to does not apply to any of the following:

  • A single deduction for nonpolitical purposes.
  • Deductions for savings or charitable contributions.
  • Deductions for employee health care, retiree or welfare benefits.
  • Deductions for state, local or federal taxes.
  • Deductions for contributions to a separate segregated fund pursuant to 2 United States Code section 441b(b) or section 16-916.
  • Any deduction otherwise required by law.

  Moreover, the requirements of this rule do not apply to any public safety employee, including a peace officer, firefighter, corrections officer, probation officer or surveillance officer, who is employed by the state of Arizona or one of its political subdivision. AZ Statute 23-361.02(H)

  If an employee has authorized a political purposes deduction and the employee resigns membership in the association or organization for which the deduction was authorized, the employee must provide the employer written notice before the employer is required to stop the deduction. The employer has one pay period after receiving the written notice from the employee to stop the deduction. AZ Statute 23-361.02(F)

  If a deduction is made from an employee’s paycheck for multiple purposes, the employer shall obtain a statement from each entity to which the deductions are paid that indicates the payment is not used for political purposes or a statement that indicates the maximum percentage of the payment that is used for political purposes. The employer shall not deduct any payment beyond that specified for nonpolitical purposes without the annual written or electronic permission of the employee. AZ Statute 23-361.02(B)

  An employer who knowingly makes political purposes deduction from an employee’s wages without proper approval or an entity that provides an inaccurate statement regarding political purposes deductions is subject to a civil penalty of at least $10,000 for each violation. The Arizona Attorney General will impose and collect these civil penalties and shall deposit them, pursuant to sections AZ Statute 35-146 and 35-147, in the state general fund. AZ Statute 23-361.02(D)

  Arizona’s law regarding deductions for political purposes does not preempt any federal law. AZ Statute 23-361.02(G)

  Uniforms, Tools, and Other Equipment Necessary for Employment

  Arizona has no laws that prohibit an employer from requiring an employee to pay for a uniform, tools, or other items necessary for employment for the employer. However, an employee must consent in writing to any deduction from wages to pay for the uniform.

  Pre-hire Medical, Physical, or Drug Tests

  Arizona does not have any laws prohibiting an employer from charging a potential hire from paying for pre-hire medical, physical, or drug tests.

  Notice of Wage Reduction

  Arizona does not have any laws addressing when or how an employer may reduce an employee’s wages or whether an employer must provide employees notice prior to instituting a wage reduction. However, a wage reduction can only be applied to hours worked after the change and cannot be applied to hours already worked.

  Statement of Wages (Pay Stub)

  An employer must provide employee’s whose wages are directly deposited a statement of earnings and withholding for each deposit. AZ Statute 23-351

  Record Keeping Requirements

  Employers must retain payroll records showing the hours worked for each day worked, and the wages paid to all employees for a period of four (4) years. Failure to do so shall raise a rebuttable presumption that the employer did not pay the required minimum wage rate. AZ Statute 23-364

  Federal law requires every employer covered by the Fair Labor Standards Act (FLSA) to keep certain records for each covered, nonexempt worker, for at least 3 years. For more information, visit FLSA.

  Employers must keep the following records:

  • All time and earning cards or sheets on which are entered:
    • the daily starting and stopping time of individual employees, or of separate work forces, or
      the amounts of work accomplished by individual employees on a daily, weekly, or pay period basis (for example, units produced) when those amounts determine in whole or in part: (1) those employees’ pay period wages; and (2) those employees’ earned paid sick time or equivalent paid time off;

    Non-Exempt Employees

    Employers must include the following information in the records of each employee who is subject to Arizona’s minimum wage requirements (non-exempt employees):

    • Full name, and on the same record, the employee’s identifying symbol or number if it is used in place of the employee’s name on any time, work, or payroll record;
    • Home address, including zip code;
    • Date of birth, if under 19;
    • Occupation;
    • Time of day and day of week on which the employee’s workweek begins.
      • If the employee is part of a workforce or employed in or by an establishment all of whose workers have a workweek beginning at the same time on the same day, then a single notation of the time of the day and beginning day of the workweek for the whole workforce or establishment is permitted;
      • The employee’s earned paid sick time balance is the sum of earned paid sick time or equivalent paid time off that is: (1) carried over to the current year; (2) accrued to date in the current year; and (3) provided to date in the current year as required by law.

      Exempt Employees

      Employers must include the following information in the records for each employee who is compensated on a salary basis at a rate that exceeds the state minimum wage and who is exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA) as an exempt bona fide executive, administrative, or professional employee, including an employee employed in the capacity of academic administrative personnel or teachers in elementary or secondary schools or in outside sales:

      • Full name, and on the same record, the employee’s identifying symbol or number if it is used in place of the employee’s name on any time, work, or payroll record;
      • Home address, including zip code;
      • Date of birth, if under 19;
      • Occupation;
      • Time of day and day of week on which the employee’s workweek begins.
        • If the employee is part of a workforce or employed in or by an establishment all of whose workers have a workweek beginning at the same time on the same day, then a single notation of the time of the day and beginning day of the workweek for the whole workforce or establishment is permitted;
        • The employee’s earned paid sick time balance is the sum of earned paid sick time or equivalent paid time off that is: (1) carried over to the current year; (2) accrued to date in the current year; and (3) provided to date in the current year as required by law.

        Employees Working Fixed Schedules

        If employees work on work on fixed schedules, an employer may maintain records showing, instead of the hours worked each day and each workweek as discussed above, the schedule of daily and weekly hours the employee normally works, provided:

        • In weeks in which an employee adheres to this schedule, the employer indicates by check mark, statement, or other method, that the employee actually worked the hours; and
        • In weeks in which more or fewer than the scheduled hours are worked, the employer records the number of hours actually worked each day and each week.

        Tipped Employees

        Employers with employees who customarily and regularly receives tips must include the following additional information in the records of each employee:

        • A symbol, letter, or other notation placed on the pay records identifying each employee whose wage is deter-mined in part by tips;
        • Amount of tips the employee reports to the employer;
        • The hourly wage of each tipped employee after taking into consideration the employee’s tips;
        • Hours worked each workday in any occupation in which the employee does not receive tips, and total daily or week straight-time payment made by the employer for the hours;
        • Hours worked each workday in occupations in which the employee receives tips and total daily or weekly straight-time wages for the hours; and
        • The amount per hour that the employer takes as a tip credit.

        Recording Retroactive Payments

        An employer who makes retroactive payment of wages, voluntarily or involuntarily, must record on the pay records, the amount of the payment to each employee, the period covered by the payment, and the date of payment. AZ Admin. Code 20-5-1210(F)

        Notice Requirements

        Arizona does not have any laws requiring employers to provide employees, whether at hire or at any other time, of notice of wage rates, dates of pay, employment policies, fringe benefits, or other terms and conditions of employment.