Nobody ever said running a business was easy. As an employer, you have many things to handle, and compliance is just one of them.
In addition to federal regulations, each state has its own share of employment-related laws that business owners need to be aware of. Here, we’re highlighting some of these key state-specific requirements, and offering guidance to help you keep up.
Bear in mind that this list is not comprehensive, and there may be local or industry-specific employment requirements that your business needs to comply with. It’s best to consult with counsel to ensure compliance with all applicable laws, as Justworks does not provide legal advice.
Payroll Tax Accounts
Because Justworks reports state unemployment taxes on behalf of customers who utilize Justworks’ PEO services, employers will need to close their Arizona unemployment and withholding accounts prior to joining the Justworks platform. Linked here are the steps you’ll need to take: Arizona - State Unemployment Insurance.
Recruiting & Hiring Practices
Arizona employers should familiarize themselves with specific compliance issues when hiring employees.
Mineral*: Arizona Applicant and Employee Screening
E-Verify
The Legal Arizona Workers Act requires that all employers in Arizona enroll and participate in E-Verify which allows participating employers to electronically verify the employment eligibility of their employees. E-Verify compares information from Form I-9 to government records to confirm that an employee is authorized to work in the US.
Arizona Attorney General (AG): Legal Arizona Workers Act
Mineral*: Arizona Employment Verification and New Hire Reporting
Independent Contractors
When deciding whether to classify workers as employees or independent contractors, there are a few things your business should consider, including the different tests that apply under different federal and state employment laws, and the potential penalties and other liabilities for misclassifying employees as independent contractors.
You can read our general Help Center article on contractors, and view information on how to determine if someone is a contractor or employee in Arizona in the relevant section at the link below.
Mineral: Arizona Independent Contractors*
Pay Requirements
Minimum Wage & Overtime
Arizona rules on overtime and minimum wage can be found at the link below.
Industrial Commission of Arizona (ICA): Labor Department - Minimum Wage
ICA: FAQ About Minimum Wage and Earned Paid Sick Time
The localities in Arizona, listed below, have a higher minimum wage than at the state level. Where both laws apply to an employee based on worksite, the law that favors the employee should be followed. Minimum wages in these localities are always changing, and this list is always growing. The very best way to ensure compliance with all applicable laws is to consult with legal counsel.
Leave
Sick and Safe Leave
Under Arizona’s paid sick and safe leave law, all employees in Arizona are eligible to accrue at least one hour of paid sick and safe leave for every 30 hours worked for each calendar year (or other 12-month period). More on these requirements can be found below.
Voting Leave
Employees are eligible for up to three hours of paid leave to vote if the polls are not open at least three consecutive hours before or three consecutive hours after the employee’s shift. Employers may not deduct wages or penalize employees for taking time off to vote. Employees must apply for voting leave before election day and employers can decide when an employee takes their voting leave.
Mineral*: Arizona Voting Leave
Victim Leave
Employers with 50 or more employees are obligated to grant unpaid leave to any employee who becomes a victim of a crime or juvenile offense. Employers may require that the employee use accrued paid vacation, personal leave, or sick leave during this unpaid leave period. Employers may not discriminate against an employee who takes victim leave. Employers can however, limit the amount of victim leave taken if there is undue hardship on the business.
Mineral*: Arizona Victim Leave
Harassment & Discrimination
In addition to protections under federal law, Arizona law prohibits employment discrimination based on membership in any protected class by employers covered under Arizona's anti-discrimination laws.
Arizona AG: Arizona Employment Discrimination Law
Separation
If you'd like to know how to separate an employee in Justworks, please visit our Help Center resource on Terminating Employees.
In Arizona, the final paycheck for separating employees should be issued no later than seven working days from the final date worked, or on the next scheduled payday, whichever occurs first.
Employees working in Arizona who resign must be paid on the next scheduled payday.
Accrued, unused vacation time does not need to be paid to Arizona employees upon termination. Employers should clearly set forth in writing any policy with respect to unused vacation.
Additionally, unemployment insurance information (Form UIB-1241A, Take Care of Unemployment Business by Telephone or Internet,) must be provided to all separating employees, regardless of the reason for leaving.
Arizona State Legislature: Payment of wages of discharged employee; violation; classification
Mineral*: Arizona Separation
Business Closings and Layoffs
The Federal WARN Act imposes certain notice requirements and other obligations on covered businesses before conducting large-scale business closures, layoffs, or relocations. For more information, visit the link below.
U.S. Department of Labor: Worker Adjustment and Retraining Notification (WARN) Act Advisor
Arizona: Department of Economic Security
Notes
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Disclaimer
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.