What is Overtime in Arizona?
Employees covered by the FLSA and working overtime must be compensated at the rate of "not less than one and one-half times the regular rate at which he is employed." 29 U.S.C. § 207(a)(1). In Arizona, overtime is considered hours worked beyond eight per day or 40 per week. (See Fair Labor Standards Act). The federal statute governs the method of computing overtime pay. (29 C.F.R. § 778.107). Arizona law however, is more favorable to employees and requires payment for time worked in excess of eight hours in a day . Arizona law also outlines and provides for employees to receive overtime pay if he/she worked on the employer’s recognized holidays. Employers in Arizona do not have to pay for the spread of hours as long as they are paying overtime for wages for each hour over forty in a week. (A.R.S. § 23-232(B). Employers in Arizona are permitted to average the required workweeks of their employees when calculating overtime pay and lunch breaks are not counted as uncompensated time.
Overtime Laws: Federal vs. State
A necessary part of our Arizona overtime pay laws analysis is to clarify what kind of differences exist between the federal and state laws, and why they matter to employers and employees. Generally, federal law simply requires payment of overtime at 1.5 times the regular rate for time worked over 40 hours in a week. Arizona law is a little more complex and variances in state and federal requirements make working through potential overtime issues fairly complex. The following table outlines some of the key points of difference between the federal Fair Labor Standards Act and the relevant Arizona state laws.
The most common difference in state and federal overtime law is that Arizona has its own minimum salary requirement for exempt employees of $455 per week, which is $12 per hour. In contrast, the federal minimum is only $684 per week (which works out to $17.10 per hour). This means that if an employee earns less than $684 per week, they are nonexempt under federal law if all other tests for exemption are met, but are exempt under Arizona law for the duties they perform. Employers should keep these differences in mind to identify whether their employees should be classified as nonexempt or exempt under the Arizona overtime pay law.
To be sure you aren’t misclassifying your employees, get in touch with an experienced employment lawyer in Arizona.
Arizona Overtime Exemptions
Arizona law exempts certain types of employees from being entitled to overtime pay. The most common job categories or classifications that show up in Arizona exemption cases are:
"Bonafide Executive, Administrative, or Professional" Employees
If you work in an "Executive", "Administrative", or "Professional" capacity you are exempt from overtime requirements if you:
All of the following jobs would likely be considered executive, administrative, or professional employees exempt from overtime pay requirements:
An attorney
A computer programmer
An accountant
A vice president
An office manager
A marketing director
A manufacturing supervisor
An executive chef
A supervisor of a convenience store
The supervisor of other employees in a retail establishment
These are just a few examples of executive, administrative, and professional employees that are considered exempt from overtime.
"Computer Employees"
Even if you don’t consider yourself a professional, administrative, or executive, if you work as a computer employee you are likely exempt from overtime pay requirements. For example jobs include:
A computer programmer
A computer systems analyst
A computer systems administrator
There are some caveats to exercising the overtime exemptions for exempt occupations, however. As an example, the computer employee exemption only applies if the employee’s primary duty is to:
Apply systems analysis techniques and procedures.
Design, test and develop computer systems and programs.
Actually recommend the purchase of computer systems.
If your true job duties are not software development and your classification falls under an "exemption", your employer will be held liable for all overtime wages you are entitled to but did not receive. Cases against employers frequently find that a deception or misclassification of an employee’s job duties occurred. As always, the help of an employment lawyer is the best way to determine whether you are being misclassified and as such entitled to overtime pay.
How to File a Claim for Overtime Violations
If you feel that your assistive compensation has been violated by not receiving the proper overtime pay, then there are many ways for you to address your claim. First, you can file a written complaint with the U.S. Department of Labor’s Wage and Hour Division and/or Arizona’s Industrial Commission. Both of these agencies will conduct their own independent investigation of the alleged unpaid overtime claim and will provide you with instructions on how to wage your claim. As an alternative option, if the amount of unpaid compensation due to you does not exceed $5,000, you may choose to utilize the state’s small claims court to recover any unpaid compensation if you so choose . To file for an Arizona small claims action, you must fill out the proper forms and provide copies of any relevant supporting evidence, and pay the filing fee. It is also important to note that if an employee instead chooses to file a claim with Arizona’s Industrial Commission, in order to avoid relitigating issues with the small claims court, all claims that have already been the subject of a prior order issued by the Industrial Commission will be barred from being heard by the small claims court and vice versa.
Recent Developments and Updates in Arizona Overtime Laws
Until recently, Arizona law did not explicitly lay out how overtime pay should be calculated. The law’s silence on the issue opened the door for many possible wrongs and ambiguities. For example, the state’s lack of a clearly required basis for calculation of overtime gave employers the option to create a standard not fully in compliance with the law, even if it resulted in employees receiving less than they expected. Additionally, because specific rounding guidelines for timecards were not outlined in the law – nor were the voluntary or mandatory nature of those guidelines addressed – both employers and employees were left in doubt about the validity of pay periods with rounded amounts.
The necessity of establishing clear requirements for overtime pay was just one of many reasons why Arizona recently joined the majority of states in implementing a written set of rules concerning this subject. In the spring of 2017, the Arizona Department of Labor & Standards (ADLS) released a new set of guidelines laying out at least five requirements that are now in place:
• Employers must follow the federal overtime regulations regarding the calculation of time and a half, i.e. all hours worked in excess of 40 in a single workweek must be calculated at 1.5 times the employee’s regular pay rate.
• Employers must use a set pay period and a fixed, regular payday for calculating overtime.
• Employees must receive overtime pay during the following regular pay period.
• If an employee agrees to a voluntary rounding policy, that policy must be especially favorable to the employee.
• Timecards with rounded hours must follow the applicable federal guidelines, meaning any rounding must adhere to intervals of 5, 7.5, 10, 15 or 60 minutes. Additionally, rounding policies may not result in a net deduction of hours.
Moreover, the courts have stepped in to articulate how overtime should be calculated. In the case of McRoberts v. State of Arizona, an employer was found liable for unpaid overtime under the Fair Labor Standards Act (FLSA) based on the frequency and nature of employee activities while attending work events. In Wyland v. Arizona, the court ruled that exempt employees who work in a different location from their designated worksite could claim overtime for travel between separate job sites.
Of course, these changes don’t mean that the ADLS will mandate the same standards across the board when it comes to overtime calculation. As it stands, the primary changes summarized above are more clarifications than sweeping changes. Future updates are likely to be similarly minor.
Common Myths and Misconceptions
Common Misunderstandings and Myths About Arizona Overtime Laws
When it comes to overtime, there are murmurs of all kinds. Myriad assumptions, leaps of logic and downright misinformation lurk in the shadows, just waiting to ensnare the naive, the unsuspecting and the unwary. There is simply no substitute for reliable information about a subject so important.
In this post, we’ll address some of the most common and problematic misunderstandings and myths that many employees have about their rights to overtime compensation, so they can proceed on the best path to protect themselves if they need to.
Myth: Overtime is paid at one and a half times the employee’s hourly rate.
Overtime is actually paid at one and one half times one and a half (1.5 x) the employee’s regular rate of pay. It is not calculated based on an employee’s hourly rate, which is often expressed with a dollar sign and the letters "/hr," as in "10.00/hr." Instead, it is calculated based on the amount of money the employer pays the employee per hour that the employee actually works.
Myth: Salary employees are always exempt from overtime.
For salaried employees, an employer must calculate daily and weekly hours to determine whether the employee is exempt from overtime or owes the employee overtime compensation. It is also important to note that just because an employee is paid on a salary basis does not mean that he or she is exempt from overtime. For example:
Myth: All employees in the same job classification are entitled to receive the same overtime pay rate.
Overtime pay rates vary among employees, depending on the employee’s "regular rate" of pay and hours worked. For example, consider the following:
Myth: Employees are automatically entitled to 1 and 1/2 times the employee’s regular rate after 40 hours on a weekly basis.
In Arizona, the relevant overtime law is found under federal law , not state law. The Fair Labor Standards Act ("FLSA") only mandates overtime after 40 hours in a week. Arizona law does not require overtime pay, unless the parties agree in writing to do so. This means that employees in Arizona are only entitled to overtime (at all) if their employer, in its discretion, decides to pay them overtime. If an employer does not pay overtime, it is not mandatory, even in circumstances where it is common or expected.
Myth: An employer must comply with its own rules.
Sometimes, employers get the best of both worlds: They want their employees to work on weekends, nights and holidays, and they also want to make sure they don’t have to pay overtime. Sometimes, employees and their supervisors agree to work out of class to make some extra money, but the employer fails to comply with its own policies and procedures while making extra money for both the employee and the employer. In these effectively unauthorized situations, employees are still entitled to be compensated correctly according to the law, even if their employer is not complying with its own rules on overtime pay.
Myth: Employees can regularly work over 40 hours a week.
The FLSA allows employers and employees to contract around the statutory requirements on overtime in many different ways. For example, employees may agree to work more than 40 hours a week in exchange for a higher hourly wage or a weekly salary. These types of contracts might even be endorsed or recommended by the employer to entice the employee to work. However, when an employer breaks its promises not to work an employee for more than 40 hours a week, that’s generally a violation of Arizona and federal law to pay the employee overtime. If the employer has failed to compensate you properly, an experienced Arizona overtime attorney can advise you on your options for pursuing fair pay.
