Employer of Record for Arizona

Guide to Hiring Employees in Arizona

Your guide to hiring employees in Arizona, covering employment and labor laws, payroll, benefits, onboarding and taxes. You can also manage and pay your contractors in Arizona through Playroll.

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Capital City

Phoenix

Timezone

MST

(

UTC -7

)

Paid Leave

No legal requirement

Income Tax

2.5%

Employer Tax

14.3% - 30.23%

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How to Hire Employees In Arizona

Hiring in Arizona for the first time can be challenging, especially with the state's complex employment laws. Whether you're hiring independent contractors, setting up a legal entity, partnering with a PEO, or using an Employer of Record (EOR), it's essential to understand the local employment landscape. Playroll's comprehensive guide is here to help, whether you're onboarding local talent or relocating team members.

Here are four primary ways companies can hire employees in Arizona:

  • Establishing a local entity: Creating a legal entity in Arizona allows for direct hiring, but it can be costly and time-consuming. However, it gives you full control over employment and reduces risk exposure.
  • Partnering with an Employer of Record (EOR): An EOR, like Playroll, takes on the legal responsibilities of employment, acting as the employer on your behalf. This option streamlines hiring, payroll, and compliance with Arizona’s labor laws, helping you hire in Arizona without navigating the complex legal landscape yourself.
  • Working with a Professional Employer Organization (PEO): A PEO, such as Playroll, co-employs your team, managing essential HR functions like payroll, benefits, and compliance. Partnering with a PEO ensures you meet Arizona’s labor regulations while offering competitive employee benefits.
  • Hiring independent contractors: Hiring independent contractors can be more cost-effective, but Arizona has strict contractor classification rules. Proper classification is essential to avoid penalties for misclassification when hiring in Arizona.

Complying with Arizona specific employment regulations and federal laws is critical to avoiding legal risks and costly fines. Our guide focuses on hiring in Arizona, employment compliance, and how Playroll’s services can support your business as you navigate the complexities of hiring in the state.

Good To Know

Arizona's job market, particularly in tech and finance, has been rapidly growing, with Phoenix ranked among the top U.S. cities for tech job growth.

Arizona's climate supports year-round outdoor activities, with popular options like hiking, golfing, and kayaking easily accessible around the Phoenix and Scottsdale areas.

Arizona’s cost of living is generally lower than in neighbouring states like California, making it attractive for companies and remote workers seeking affordability combined with a high quality of life.

Key Things to Know About Hiring in Arizona

Do I need an EIN or Payroll Tax Number to Employ in Arizona?

  • Yes, employers in Arizona must have an EIN, issued by the IRS, to hire employees. This number is required for reporting taxes and other payroll-related documents.
  • Employers must also register with the Arizona Department of Revenue and the Arizona Department of Economic Security for withholding and unemployment taxes. Registration can be completed online through the state's tax portal.

Working Hours in Arizona 

  • The standard working hours for employees in Arizona are 8 hours per day, or 40 hours per week.
  • Arizona follows federal overtime laws, requiring overtime pay for hours worked beyond 40 in a week at a rate of 1.5 times the employee's regular pay.
  • There are no specific state laws mandating meal or rest breaks, so federal guidelines apply.

What is considered full-time employment in Arizona

Full-time employment is generally defined as working at least 30 to 40 hours per week. This is similar to the federal definition used under the Affordable Care Act, which considers 30 hours per week as full-time for certain benefit purposes.

Probation Period in Arizona

There is no legal requirement for private sector employers to implement probationary periods for new employees. However, for certain public sector positions, probationary periods are mandated. For example, the Arizona Administrative Code specifies that law enforcement personnel must serve a 12-month initial probationary period.

Arizona Employment Laws for Hiring

Minimum wage in Arizona

On January 1st of every calendar year, the minimum wage in Arizona rises due to the increased cost of living. As of 2024, Arizona's minimum wage is $14.35 per hour. Arizona's Under 20 Minimum Wage (for employees under 20 years old) is $4.25 per hour for the first 90 days of employment. Arizona's minimum hourly wage for full-time students is $12.20, which is 85% of the regular minimum wage. In addition, the city of Flagstaff has a higher minimum wage than the state minimum, and it is $17.40 per hour. When it comes to the minimum wage for tipped employees in Flagstaff, it amounts to $15.90 per hour.

Arizona Anti-Discrimination Laws

Arizona follows strict regulations prohibiting discrimination and wrongful employment termination on multiple grounds.

The Equal Employment Opportunity Commission prohibits discrimination based on:

  • Biological sex,
  • Race and national origin,
  • Age (applies to individuals between 40 and 70 years of age),
  • Pregnancy, child, or spousal support withholding,
  • Sexual orientation,
  • Gender and gender identity,
  • Religion,
  • AIDS/HIV status, and
  • Disability (mental, physical), etc.

Giving bonuses, merits, or deducting wages based on these criteria is also punishable by law.

Onboarding New Hires in Arizona

We can help you get your new employee started in Arizona fast, with a minimum onboarding time from just 1-2 working days. Note that the timeline is dependent upon registration with the local authorities, and begins after the employee has submitted all the required information on the Playroll platform.

For non-citizens of the US, a work eligibility assessment may be required, and can add three extra days to the onboarding time. If a follow-up is needed, there may be additional delays.

Please note that payroll cut-off dates can impact the actual first day of employment. Playroll’s payroll cut-off date is the 10th of the month, unless otherwise specified.

Payroll Services For Arizona

Arizona law mandates that employers pay employees at least twice a month. This requirement ensures employees are paid no less frequently than semimonthly.

  • Employers must provide wages at least twice monthly, with no more than 16 days between pay periods.
  • While twice-monthly is the minimum, employers may choose more frequent cycles, such as biweekly (every two weeks) or weekly.

Looking to grow your team in Arizona?

Stay Compliant: Navigate Arizona’s complex labor laws with ease.

Affordable Solution: Reduce costs with a budget-friendly EOR option.

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Overview of Employment Taxes in Arizona

Employers and employees are both subject to state-specific and federal employment taxes. 

Employer Tax Contributions

                                                                                                                                                   
Employment Tax TypeArizona State Requirement
Social Security TaxAs per federal legislation
Medicare TaxAs per federal legislation
Federal Unemployment Tax (FUTA)As per federal legislation
State Unemployment TaxRanges from 0.05% to 14.03% on the first 8,000 USD of wages (approx. 2.0% for new employers)
Workers Compensation InsuranceRequired, rates vary by industry and job classification
Income TaxFlat rate of 2.5% on all income

Employee Payroll Tax Contributions

                                                                                                           
Employee Payroll Tax ContributionTax Rate
Federal Income TaxBased on federal tax brackets
Social Security Tax (required for most employees)6.2% on wages, up to the federal wage cap
Medicare Tax (additional 0.9% for wages above 200,000 USD)1.4% on all wages
Arizona State Income Tax2.5% flat rate on taxable income

GOOD TO KNOW: Arizona does not impose additional local income taxes or require additional contributions from employees for state disability insurance or other similar programs. Federal payroll tax contributions, including Social Security and Medicare, apply as they do across the United States.

Tax Due Dates in Arizona

The tax deadline for filing Arizona state income tax returns is typically April 15, aligning with the federal deadline, though extensions to October 15 are available if requested by the original deadline.

Pension in Arizona 

Arizona does not mandate that private employers provide pension or retirement plans to their employees.

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The tax-related information provided in this guide is intended for general guidance and informational purposes only. Reach out to our dedicated team for insights on remote hiring in Arizona tailored to your needs.

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Benefit Requirements for Employers in Arizona

Employers must navigate both federal and state regulations to determine their obligations regarding employee benefits.

Are employers required to provide health insurance in Arizona?

  • Employers with fewer than 50 full-time employees are not obligated to provide health insurance.
  • Employers with 50 or more full-time employees (or the equivalent in part-time employees) are required to offer health insurance as per federal regulations. 

Do part-time employees get benefits in Arizona?

There is no federal or state law mandating that employers provide benefits to part-time employees.

Are employers required to offer 401k in Arizona?

There is no federal or Arizona state law that requires employers to offer 401(k) or other retirement plans to their employees.

It’s Easy To Manage Benefits For Employees In Arizona With Playroll

Paid and Unpaid Leave Policies in Arizona

Is vacation leave mandatory in Arizona?

It is not mandated by federal law, and Arizona does not require employers to provide paid or unpaid vacation leave. Employers have the discretion to offer vacation leave and may set their own policies regarding accrual, usage, and payout upon termination.

What are Mandatory Leave Entitlements in Arizona:

                                                                                                                                                                                                                                                                                 
Type of LeaveTime PeriodMandatoryPay StatusEligibility Criteria
Annual LeaveVariesNoBased on PolicyBased on employer policy.
Maternity LeaveAs stipulated by federal FMLA legislationYesPaidIn accordance with federal FMLA eligibility
Sick Leave30 daysYesPaidIn accordance with federal FMLA eligibility
Military LeaveDuration of ServiceYesUnpaid with re-employment rightsAll employees who serve in the military
Jury LeaveLength of Jury dutyYesUnpaidAll employees, upon presenting a jury summons to the employer.
Parental LeaveAs stipulated by federal FMLA legislationNoUnpaidIn accordance with federal FMLA eligibility

Paid Time Off in Arizona

Not mandated by law.

Maternity Leave In Arizona

Maternity, paternity, and parental leave are not state-mandated in Arizona but are covered under the federal Family and Medical Leave Act (FMLA) for eligible employees. See more information about leave entitlements in the US in our federal guide

Paternity Leave In Arizona

Maternity, paternity, and parental leave are not state-mandated in Arizona but are covered under the federal Family and Medical Leave Act (FMLA) for eligible employees. See more information about leave entitlements in the US in our federal guide

Sick Leave In Arizona

Paid sick leave is mandated. Employees accrue 1 hour of leave for every 30 hours worked, with annual caps depending on employer size. Sick leave can be used for personal or family illness, domestic violence, and public health emergencies.

Military Leave in Arizona 

Federal law applies. 

Jury Duty in Arizona 

Employers must allow time off for jury duty, though they are not required to pay for this leave. Employees cannot be penalised or terminated for serving on a jury and should notify employers upon receiving a summons.

Parental Leave In Arizona

Parental leave is not mandated by law. Eligible employees can take unpaid parental leave under FMLA for bonding with a new child by birth, adoption, or foster care. For more details on the exact entitlement check out our federal guide. 

Bereavement Leave in Arizona 

Not mandated by law, but is offered at employer discretion.

Voting Leave in Arizona 

Arizona requires up to three hours of paid time off for voting if an employee’s schedule does not provide sufficient time while polls are open.

Employment Termination Protocols in Arizona

Termination Process in Arizona

In Arizona, private sector employment follows the "At-Will" employment doctrine. This means that an employee can be terminated, or can quit, at any time without cause or notice, unless the termination violates specific laws (e.g., discrimination, retaliation, or contract terms).

Notice Period in Arizona

There is no legally mandated notice period for private sector employees in Arizona. Notice requirements may exist if specified in a company policy or an employment contract.

Severance in Arizona

Severance is not mandated by State law.

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Employer of Record for Arizona

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FAQs About Hiring In Arizona

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