Wage Payment Law Summaries
Arizona, Wage Payment Law Summaries
Arizona's wage payment law is codified in the Arizona Revised Statutes at Title 23, Chapter 2, Article 7. The full text of the law is available at Wages-Hours ¶3-46,001 .
DEFINITIONS
“Employee” means any person who performs services for an employer under a contract of employment either made in this state or to be performed wholly or partly within this state (Sec. 23-350).
“Employer” means any individual, partnership, association, joint stock company, trust, corporation, the administrator or executor of the estate of a deceased individual or the receiver, trustee or successor of any of such persons employing any person. The term also includes this state and any county, municipality, school district or other political subdivision of this state (Sec. 23-350).
“Wages” means nondiscretionary compensation due an employee in return for labor or services rendered by an employee for which the employee has a reasonable expectation to be paid whether determined by a time, task, piece, commission or other method of calculation. Wages include sick pay, vacation pay, severance pay, commissions, bonuses and other amounts promised when the employer has a policy or a practice of making such payments (Sec. 23-350).
COVERAGE
Both private and public employers are subject to Arizona's wage payment law (Sec. 23-350).
EXCEPTIONS
Each employer must, on each of the regular paydays, pay to its employees or, with the written consent of the employee, by deposit on the payday to the employee's credit at a financial institution of the employee's choice, all wages due the employees up to such date, except for the following (Sec. 23-351, as amended by Ch. 321 (H. 2350), L. 1999, effective August 6, 1999):
in the case of employees remaining in the service of any such employer, wages for not more than five days of labor may be withheld.
in the case of employees of school districts or of the Arizona state school for the deaf and the blind, the annual salary may be prorated 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's salary is prorated, all such payments still due at the close of the school attendance year or fiscal year may at the option of the employee be paid in either a lump sum or paid within a period of two months after the close of the fiscal year.
WHAT THE EMPLOYER MUST DO
Each employer must, on each of the regular paydays, pay to its employees all wages due up to such date, except for the following (Sec. 23-351, as amended by Ch. 321 (H. 2350), L. 1999, effective August 6, 1999):
In the case of employees remaining in the service of any such employer, all wages other than overtime or exception pay not to exceed five days of labor may be withheld. An employer may satisfy these requirements by any of the following (a) personally delivering the wages to the employee no later than five days after the end of the most recent pay period; (b) depositing the wages in the U.S. mail no later than five days after the end of the most recent pay period for delivery to an address specified by the employee; or (c) effective August 6, 1999, personally delivering the wages to the employee no later than 10 days after the end of the most recent pay period for an employer whose payroll system is centralized outside the state of Arizona. Overtime or exception pay must be paid no later than 16 days after the end of the most recent pay period.
In the case of employees of school districts or of the Arizona state school for the deaf and the blind, the annual salary may be prorated 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's salary is prorated, all such payments still due at the close of the school attendance year or fiscal year may at the option of the employee be paid in either a lump sum or paid within a period of two months after the close of the fiscal year.
Form of payment.- Every employer, including the state and its political subdivisions, must pay wages or compensation due an employee 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, which can be immediately redeemed in cash at a bank or other financial institution, payable on demand or by deposit in a financial institution of employee's choice and dated not later than the day upon which the check, draft, money order or warrant is given, and not otherwise (Sec. 23-351, as amended by Ch. 321 (H. 2350), L. 1999, effective August 6, 1999; and Sec. 23-353).
Cash payments.- An employer that has two or more employees and pays hourly wages or salary by cash to any employee shall comply with all of the following (Sec. 23-361.01(A), as added by H. 2745, L. 2008, enacted and effective May 1, 2008):
The income tax withholding laws prescribed in Title 43, Ch. 4.
The employer reporting laws prescribed in Sec. 23-722.01 (see ¶3-1600 ).
The employment security laws prescribed in Chapter 4 of Title 23 (see ¶3-1700 ).
The workers' compensation laws prescribed in Ch. 6 of Title 23 (see ¶3-4300 ).
For a violation of Sec. 23-361.01(A) just above, the attorney general may bring an action in superior court against an employer. On a finding of a violation, the court shall order the employer to pay a civil penalty that is equal to treble the amount of all withholdings, payments, contributions or premiums that the employer failed to remit as prescribed by Sec. 23-361.01(A) or $5,000 for each employee for whom a violation was committed, whichever is greater (Sec. 23-361.01(B), as added by H. 2745, L. 2008, enacted and effective May 1, 2008). Monies collected pursuant to Sec. 23-361.01(B) shall be equally appropriated to the Department of Education and the Department of Health Services for the purposes of offsetting increased costs to the state by unauthorized aliens (Sec. 23-361.01(C), as added by H. 2745, L. 2008, enacted and effective May 1, 2008).
Frequency of payment.- Each employer in Arizona shall designate two or more days in each month, not more than 16 days apart, as fixed paydays for payment of wages to its employees (Sec. 23-351, as amended by Ch. 321 (H. 2350), L. 1999, effective August 6, 1999).
Notwithstanding the above provision, each employer in Arizona whose principal place of business is located outside the state of Arizona and whose payroll system is centralized outside the state of Arizona, may designate one or more days in each month as fixed paydays for payment of wages to the following employees if their salaries are not subject to a collective bargaining agreement (Sec. 23-351, as amended by Ch. 321 (H. 2350), L. 1999, effective August 6, 1999):
professional, administrative or executive employees or employees employed in the capacity of an outside salesperson;
employees employed in a supervisory capacity.
Payment upon discharge.- When an employee is discharged from the service of an employer, he or she must be paid wages due him or her within three working days or the end of the next regular pay period, whichever is sooner (Sec. 23-353).
If an employee is discharged from the service of a school district, the school district must pay the wages due to the employee within 10 calendar days from the date of discharge (Sec. 15-502).
Payment when employee quits.- When an employee quits the service of an employer, he or she must be paid in the usual manner all wages due him or her no later than the regular payday for the pay period during which the termination occurred. If requested by the employee, such wages must be paid by mail (Sec. 23-353).
Direct deposit.- When an employee's wages are paid by deposit in a financial institution, he or she must be given a statement of his or her earnings and withholdings. Any wage deposit plan adopted by an employer must entitle the employee to one withdrawal for each deposit, free of any service charge to the employee. No person may be denied employment nor discharged for refusal to consent to payment of wage by deposit in a financial institution (Sec. 23-351, as amended by Ch. 321 (H. 2350), L. 1999, effective August 6, 1999).
Deductions from wages.- No employer may withhold or divert any portion of an employee's wages unless one of the following applies (Sec. 23-352):
The employer is required or empowered to do so by state or federal law.
The employer has prior written authorization from the employee.
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.
Day labor.- A day labor service agency must compensate day laborers for work performed by providing or making available commonly accepted negotiable instruments that are payable in cash, on demand, at a financial institution (Sec. 23-553, as added by S. 1494, L. 2001, effective August 9, 2001).
At the time of payment of wages, a day labor service agency must provide each day laborer with an itemized statement showing in detail each deduction made from the wages (Sec. 23-553, as added by S. 1494, L. 2001, effective August 9, 2001).
In no event may any deductions made by a day labor agency, other than those required by federal or state law, bring the day laborer's pay below federal minimum wage for the hours worked (Sec. 23-553, as added by S. 1494, L. 2001, effective August 9, 2001).
Sales representatives.- If an agreement of services between a sales representative and the principal is terminated for any reason, both of the following apply (Sec. 44-1798.02, as amended by Ch. 185 (S. 1402), L. 2006):
All the commissions due through the time of termination shall be paid to the sales rep within a period of not to exceed 30 days after termination.
All the commissions that become due after the effective date of termination shall be paid to the sales rep within 14 days after they become due.
The principal shall pay the sales rep all commissions due while the business relationship is in effect in accordance with the agreement between the parties. A principal who fails to comply with the provisions outlined just above is liable to the sales rep for damages in the amount of three times the sum of the unpaid commissions owed to the sales rep (Sec. 44-1798.02, as amended by Ch. 185 (S. 1402), L. 2006).
Commissions shall be paid at the usual place of payment unless the sales rep requests that the commissions be sent by registered mail. If, in accordance with a request by the sales rep, the sales rep's commissions are sent by mail, the commissions are deemed to have been paid as of the date of the registered postmark on the envelope (Sec. 44-1798.02, as amended by Ch. 185 (S. 1402), L. 2006).
Unless payment is made pursuant to a binding and final written settlement agreement and release, the acceptance by a sales representative of a commission payment from the principal does not constitute a release as to the balance of any commissions claimed due. A full release of all commission claims that is required by a principal as a condition to a partial commission payment is null and void (Sec. 44-1798.02, as amended by Ch. 185 (S. 1402), L. 2006).
DEADLINES
Employers have five days after the end of a pay period to personally deliver or mail current employees' regular wages, and overtime or exception pay must be paid no later than 16 days after the end of the most recent pay period. In the case of school district employees who choose to have their salary prorated, all payments still due at the close of the school attendance year or fiscal year must be paid within two months after the close of the fiscal year (Sec. 23-351, as amended by Ch. 321 (H. 2350), L. 1999, effective August 6, 1999).
An employer whose payroll system is centralized outside of Arizona must personally deliver the wages to the employee no later than 10 days after the end of the most recent pay period (Sec. 23-351, as amended by Ch. 321 (H. 2350), L. 1999, effective August 6, 1999).
Payment upon discharge.- When an employee is discharged from the service of an employer, he or she must be paid wages due him or her within three working days or the end of the next regular pay period, whichever is sooner (Sec. 23-353).
If an employee is discharged from the service of a school district, the school district must pay the wages due to the employee within 10 calendar days from the date of discharge (Sec. 15-502).
Payment when employee quits.- When an employee quits the service of an employer, he or she must be paid in the usual manner all wages due no later than the regular payday for the pay period during which the termination occurred.
ENFORCEMENT
The state labor department is responsible for enforcement of Arizona's wage payment law. If it is determined that a claim for unpaid wages is valid, the department will direct that the unpaid wages be paid by the party responsible for their payment (Sec. 23-357). A party aggrieved by such a determination may seek review, and if the department finds that it cannot resolve a dispute, the employee may attempt to recover wages through a civil action (Sec. 23-358).
Failure to pay wages.- If an employer fails to pay wages due any employee according to Arizona's wage payment law, such employee may recover in a civil action against an employer or former employer an amount which is three times the amount of the unpaid wages (Sec. 23-355). Alternately, an employee may file a written claim with the state labor department for unpaid wages against an employer if the amount of such wages does not exceed $2,500 and if such claim is filed within one year of the accrual of such claim (Sec. 23-356).
WHO TO CONTACT
The state labor department is responsible for enforcement of Arizona's wage payment law (Sec. 23-357).
PENALTIES
See also WHAT THE EMPLOYER MUST DO above.
Any employer who violates one or more of the provisions of Arizona's wage payment law relating to frequency of payment, form of payment, direct deposit, or payment upon discharge is guilty of a petty offense (Sec. 23-351, as amended by Ch. 321 (H. 2350), L. 1999; and Sec. 23-353).
An employer who has been ordered by the state labor department or a court to pay wages due an employee and who fails to do so within 10 days after the order becomes final is liable to pay the employee an amount that is equal to three times the amount of the unpaid wages and that is subject to interest at the legal rate (Sec. 23-360).
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