It is typical for employees in various industries to exceed their regular working hours, going beyond the standard workday or 40-hour workweek.
Employers are required by labor laws to appropriately compensate these employees for the additional time worked. It is essential to understand the eligibility criteria, consequences of non-compliance, and the correct rates of overtime compensation.
According to Arizona Labor Laws, if an employee works over 40 hours per week, they have the right to receive overtime pay at a rate of one and a half times their regular rate of pay. This guide aims to address inquiries and provide relevant court cases specific to Arizona, offering guidance on ensuring the fair implementation and payment of overtime.
This article covers:
- Arizona Overtime Rates
- Full-time and Part-time Employees in Arizona
- Compensation for Waiting and On-Call Time in Arizona
- Overtime for Salaried Employees in Arizona
- Overtime Pay for Tipped Employees in Arizona
- Refusing to Work Overtime in Arizona
- Overtime Exceptions and Exemptions in Arizona
- Misclassifying Employees in Arizona
- Legal Cases Relating to Overtime Compensation in Arizona
Arizona overtime is regulated by the Fair Labor Standards Act (FLSA). According to FLSA, any work done over 40 hours per week is considered overtime.
Unlike some states that also have daily overtime regulations, Arizona does not specify daily overtime.
Hourly employees are entitled to 1.5 times their regular hourly wage for overtime work.
As a result, the overtime minimum wage in Arizona stands at $21.53 per hour, which is one and a half times higher than its regular minimum wage of $14.35 per hour.
It is important to note that Arizona follows both federal and state regulations, with state law taking precedence where there are discrepancies.
Arizona defines a workweek as any consecutive 7 days of work.
Part-time employees, as defined by state law, work no more than 30 hours in a workweek or less than 130 hours in a month.
Typically, full-time employees in Arizona work 40 hours in a workweek.
However, the Affordable Care Act (ACA) considers full-time employment to be any work schedule exceeding 30 hours a week.
According to labor regulations in Arizona, employers are required to provide compensation to employees for the time they spend waiting or on-call while actively performing their duties.
However, travel time, meetings, training, and lecture time are not obligatory to be reimbursed.
In cases where an employee is dismissed before the end of a workday, they will only receive payment for the hours they actually worked.
Although not all employees in Arizona are eligible for overtime pay, there is a common misconception that salaried employees are always exempt from receiving overtime compensation.
However, it is important to consider several factors and distinctions outlined in federal laws before definitively concluding that a salaried employee is ineligible for overtime.
Although Arizona employers have the option to pay tipped employees an hourly wage lower than the minimum wage for their initial 40 hours (up to $3 lower per hour than the state minimum wage of $11.35 in tipping industries), this lower wage is not considered when calculating overtime pay.
Overtime compensation must be calculated based on the actual minimum wage, rather than the reduced amount typically paid to tipped employees.
In Arizona, there are no specific overtime laws that prohibit employers from terminating employees for declining to work overtime hours.
This applies to most employees who are classified under the principles of at-will employment, which allow either the employer or the employee to terminate the employment relationship without notice or cause, and it generally applies to the majority of workers in Arizona, except for contracted employees.
It is essential to consider the terms outlined in a contract, as they dictate the rights and limitations for employers regarding contracted employees.
The FLSA states that salaried employees earning over $684 per week ($35,568 annually) are exempt from overtime pay. This includes employees in certain white-collar positions encompassing executive, administrative, or professional roles. Further, outside sales employees, agricultural workers, drivers, and workers dealing with machinery parts and mechanics are considered exempt from overtime pay in Arizona.
According to the Fair Labor Standards Act (FLSA), individuals are classified as employees if they are economically dependent on the contractor for their income.
As such, if the worker is working a significant amount of hours, they are likely to be classified as an employee and entitled to overtime pay, as they would be dependent.
Incorrectly categorizing a worker as an independent contractor to exempt them from overtime can lead to consequences, such as inadequate payment of taxes to the IRS.
Below, we present law cases relating to fair overtime compensation for employees in Arizona:
1. Arizona Correction Officers Claim Pre-shift Screenings as Overtime
In the case of Roberts v. Arizona, a group of corrections officers filed a lawsuit against the state for not compensating them for the time they spent in mandatory security screenings before starting their duties.
They claimed that these screenings added around thirty minutes of unpaid time to their shifts.
The trial court initially ruled in favor of the state, stating that the screenings were not eligible for compensation. However, the Supreme Court reversed this decision, stating that the question of whether the officers were entitled to overtime should be determined by the law.
Key lessons from this case:
- Time spent in mandatory activities may be compensable. Employers should carefully evaluate whether such activities are integral and indispensable to the employees’ primary job duties and determine if they should be included in the calculation of hours worked for overtime purposes.
- Court decisions can overturn lower court rulings. This underscores the significance of pursuing legal avenues and seeking redress when employees believe their rights to fair compensation have been violated.
- The case emphasizes the importance of carefully analyzing the language and intent of relevant laws and regulations in determining the rights of employees and the obligations of employers.
2. Oil Rig Supervisor Entitled to Overtime Pay Due to Daily Rate Instead of Salary
In the case of Helix Energy Solutions Group, Inc. v. Hewitt, Michael Hewitt, a well-paid oil rig supervisor, filed a lawsuit against his employer, Helix Energy Solutions Group, arguing that he should be entitled to overtime pay for his long work weeks.
Hewitt worked an average of 84 hours per week for 7 days, and he claimed that because he was paid on a daily basis, he should receive time and a half for hours worked beyond 40 hours per week under the Fair Labor Standards Act.
Helix Energy, on the other hand, argued that Hewitt, who earned $200,000 annually, was exempt from the overtime requirement as a “bonafide executive.” However, the court, in a 6-3 decision, determined that the overtime pay exemption for highly paid workers did not apply to Hewitt because he was paid a daily rate of $963 instead of a salary.
The court, in this decision, recognized that Helix’s position would have negative implications for lower-income workers who are protected by the Fair Labor Standards Act. It would essentially deprive daily workers earning less than $100,000 of overtime pay.
Key lessons from this case:
- The case highlights the importance of correctly classifying employees for overtime purposes.
- Employers must carefully evaluate whether employees meet the criteria for exemption from overtime pay and ensure compliance with relevant laws and regulations.
- The court recognizes the potential negative consequences that a broad application of the overtime exemption could have on a certain group.
3. Valley Wide Plastering Construction to Pay $2.6M for Unpaid Overtime
In the Sec’y of Labor v. Valley Wide Plastering Constr. case, a federal judge in Arizona has recently issued a judgment against Valley Wide Plastering Construction Inc., ordering the company to pay $2.6 million in unpaid overtime wages to its workers.
According to court records, the contractor failed to properly compensate employees for overtime work and also failed to maintain accurate timekeeping records between 2015 and 2022.
The court records state that employees were consistently denied their rightful overtime wages due to the company’s manipulation of time records and inadequate documentation of hours worked.
The U.S. Labor Department has expressed its intention to pursue further legal actions and impose penalties if Valley Wide Plastering fails to fulfill its obligation of paying overtime wages.
Furthermore, the Labor Department is actively seeking current and former workers of the contractor to gather more evidence regarding the alleged withholding of overtime wages and falsification of time records.
Key lessons from this case:
- The case highlights the importance of employers accurately calculating and compensating employees for overtime work.
- Employers should maintain thorough and reliable records of hours worked by employees to ensure accurate payment and comply with labor laws.
- The involvement of the U.S. Labor Department in pursuing the case emphasizes the agency’s commitment to protecting workers’ rights and ensuring fair compensation practices.
Learn more about Arizona Labor Laws through our detailed guide.
Important Cautionary Note
When making this guide we have tried to make it accurate but we do not give any guarantee that the information provided is correct or up-to-date. We therefore strongly advise you seek advice from qualified professionals before acting on any information provided in this guide. We do not accept any liability for any damages or risks incurred for use of this guide.