Arizona Law Amends Definitions Regarding Employee Compensation and Benefits

Law Effective August 6, 2016

A new law in Arizona amends the state wage and hour law with respect to the definitions of “minimum wage” and “wages.”

Minimum Wage
The new law defines “minimum wage” as the nondiscretionary minimum compensation due to an employee by reason of employment, including the employee’s commissions—but excluding tips or gratuities.

Note: In cases where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages. Be sure to also comply with any city or other local wage requirements (which may be higher than the state or federal minimum wage) that may apply to your business.

The law removes the following items from the definition of “wages“:

  • 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.

The law is effective August 6, 2016. Click here to read the text of the law.