Important laws for new businesses in Arizona to understand

Business News | 19 Oct, 2020 |

If you are planning to start a new business in Arizona, the chances are that you have a million plates to keep spinning right now.

Here’s the thing to remember: it is definitely worth working through these tough times as you will get your reward further down the line!

One of the key aspects of Arizonan law that you will need to be aware of are those statutes relating to employee rights because, without a firm grasp of the various rules and regulations, you may find yourself getting into trouble should an unforeseen situation develop.

In this guide, we have published some of the key things that you need to know about employment law in Arizona.

Minimum wage

At the time of writing (October 2020), the minimum wage for workers in Arizona is $12 per hour, which is higher than the federal minimum wage of $7.25 per hour.

When planning to recruit new employees, be aware that you will have to pay them more than you would in other states that have stuck to the federal baseline.

Immigration and union membership

As part of the Arizonan constitution, the state has a ‘right to work’ policy. What this basically means is that no individual employee can be forced to join a union – consequently, Arizona is one of the lowest unionized states in the U.S.

As is the case in most states, you cannot employ unauthorized immigrants in your workforce – this is a criminal offence for which you, rather than the employee, are liable.

The federal ‘E-Verify’ system can be used to identify the status of immigrants and their eligibility to work in your organization.

Guns, drugs and intolerable working conditions

As you could probably guess already, you must provide your employees with an appropriate working environment – ‘intolerable working conditions’ can be classed as a violation of state law if the situation is not remedied in an appropriate time frame.

What you may not know is that your employees can bring weapons to your workplace – albeit they must be locked in their vehicle and stored out of sight.

Then there’s medical marijuana – if your employee has the appropriate documentation as proof, they are allowed to smoke in the designated areas. This is confirmed by Arizonan statutory law.

Workers’ compensation insurance

It’s worth dedicating a section of this article to workers’ compensation law, because the comprehensive nature of the statutes in this area means that you must be compliant from the get-go.

If an employee of yours suffers an injury or illness as a consequence of working in your organization, it does not matter how that ailment was caused – assuming that it wasn’t intentional on the part of the individual concerned – you will be responsible for the payment of their compensation.

This can have an incredibly debilitating impact on your business – for the sake of context, 90,000 compensation claims are filed in Arizona every year. If one of your employees gets hurt, you can expect a lawsuit to be filed against you.

Therefore, it makes good sense to have workers’ compensation insurance in place. Some business owners wrongly believe that this is an unnecessary expense, but compared to the financial outlay of a compensation claim, it is clearly a smart decision to protect yourself.

What’s more, having adequate workers’ compensation insurance in place is also a legal requirement, with workers’ comp in your state of Arizona being mandatory.

What does workers’ compensation insurance cover?

When one of your employees is hurt or is taken ill in your workplace, think about the cost to them.

There are the medical bills, for one thing, but also the lost earnings to cover any time that they have off.

Your workers’ compensation insurance policy will account for both of these factors, and can make a huge difference financially to new businesses in Arizona that are just getting off the ground.

What is the penalty for not having workers’ compensation insurance?

If you have more than one employee in your organization, you could be fined up to $1,000 if you don’t have adequate workers’ compensation insurance in place – not to mention the medical bills you will need to pay for.

You could be fined for subsequent breaches of the law – up to $5,000 the second time you are caught without an appropriate policy and $10,000 for a third breach.

In some cases, the ICA can even force you to temporarily close your business down until you have adequate protection in place.

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