Navigating Arizona payroll can be complex. This guide provides key information on Arizona’s payroll laws and practices, including tax withholding, unemployment insurance, wage and hour regulations, and child support withholding.
**Arizona State Income Tax Withholding**
The Arizona Department of Revenue oversees state income tax collection and reporting. They can be contacted at: Department of Revenue, 1600 W. Monroe St., P.O. Box 29009, Phoenix, AZ 85038-9009, 602-255-2060 or 800-843-7196, www.revenue.state.az.us/#WithholdingTax.
Arizona mandates the use of Arizona form A-4, “Employee’s Arizona Withholding Percentage Election,” instead of the federal W-4 form for state income tax withholding.
Unlike some states, Arizona excludes salary reductions under Section 125 cafeteria plans and 401(k)s from income tax and unemployment calculations.
Arizona payroll law does not have specific supplemental wage tax rates.
Arizona allows employers to file W-2s via magnetic media.
**Arizona State Unemployment Insurance**
The Arizona Department of Economic Security, Unemployment Tax Division (P.O. Box 6028, SAT Code 911B, Phoenix, AZ 85005, 602-248-9354, www.de.state.az.us/links/esa/index.html) manages unemployment insurance.
The taxable wage base for unemployment is $7,000 per employee per year. Unemployment tax is calculated only on the first $7,000 of an employee’s wages.
Magnetic media reporting for quarterly wage reporting is optional.
Employers must retain unemployment records for at least four years, including employee names, social security numbers, hire/rehire/termination dates, wages, pay periods, pay dates, and termination circumstances.
**Arizona Wage and Hour Laws**
The Labor Department (P.O. Box 19070, Phoenix, AZ 85005-9070, 602-542-4515, www.ica.state.az.us/labor/labortop.htm) enforces state wage and hour laws.
Arizona has no general minimum wage provision.
There is no general provision for overtime pay for employers not covered by the FLSA.
Arizona requires employers to report new hires and rehires within 20 days. Required information includes employee name, address, social security number, employer name, address, and Federal Employer Identification Number (EIN). Reports can be submitted via W4 or equivalent by mail, fax, or electronically. There is no penalty for late reporting. The new hire reporting agency can be reached at 888-282-2064 / 602-340-0555 or www.az-newhire.com.
Compulsory direct deposit is not allowed in Arizona.
Pay stubs must include earnings and deductions information, even if employees are paid via direct deposit.
Pay frequency is semi-monthly (within 16 days of each other). FLSA-exempt employees of out-of-state employers can be paid monthly.
Final pay for involuntarily terminated employees must be paid within 3 working days. Voluntarily terminated employees must be paid by the next regular payday or by mail if requested. There is a 5 day lag time after the pay period (10 days if payroll system is out of state); 16 days for exception or overtime pay.
Wages of deceased employees (up to $5,000) must be paid to the surviving spouse after an affidavit is provided.
Unclaimed wages must be turned over to the state after one year, and employers must keep records of abandoned wages for five years.
Arizona law does not address tip credits against the state minimum wage, nor does it mandate rest or meal periods.
There are no specific Arizona laws concerning record retention of wage and hour records, so following FLSA guidelines is advisable.
**Arizona Child Support Withholding**
The Division of Child Support Enforcement (3443 N. Central Ave., 4th Fl., Phoenix, AZ 85012, 602-252-4045, www.de.state.az.us/links/dsce/index.html) enforces child support orders and laws.
Key provisions include:
* Start withholding: 14 days after receiving the order.
* Send payment: Within 2 days of payday.
* Send termination notice: Within 10 days of termination.
* Maximum administrative fee: Greater of $4 per month or $1 per pay period.
* Withholding limits: 50% of disposable earnings.
**Disclaimer:** This information is for general guidance only and is not legal advice. Laws are subject to change. Consult with legal and payroll professionals for up-to-date guidance.