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NOTICE OF FINAL RULEMAKING TITLE 20. COMMERCE, FINANCIAL INSTITUTIONS, AND INSURANCE CHAPTER 5. INDUSTRIAL COMMISSION OF ARIZONA PREAMBLE 1. Sections Affected Article 12 R20-5-1201 R20-5-1202 R20-5-1203 R20-5-1204 R20-5-1205 R20-5-1206 R20-5-1207 R20-5-1208 R20-5-1209 R20-5-1210 R20-5-1211 R20-5-1212 R20-5-1213 R20-5-1214 R20-5-1215 R20-5-1216 R20-5-1217 R20-5-1218 R20-5-1219 R20-5-1220 2. Rulemaking Action New Article New Section New Section New Section New Section New Section New Section New Section New Section New Section New Section New Section New Section New Section New Section New Section New Section New Section New Section New Section New Section

The statutory authority for the rulemaking, including both the authorizing statute (general) and the statutes the rules are implementing (specific): Authorizing Statute: 23-364(A), as added by 2006 Proposition 202, 2. Implementing Statute(s): 23-362, 23-363, 23-364(B) through (D), (F), and (G), as added by 2006 Proposition 202, 2.

3.

The effective date of the rules: The Commission requests that the rules become effective upon the expiration of the Emergency Rules currently in effect (January 12, 2008).

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4.

A list of all previous notices appearing in the Register addressing the final rule: Notice of Rulemaking Docket Opening 13 A.A.R. 873 (March 16, 2007) Notice of Rulemaking Docket Opening 13 A.A.R. 2173 (June 22, 2007) Notice of Emergency Rulemaking, effective January 25, 2007, 13 A.A.R. 473 (February 16, 2007) Notice of Proposed Rulemaking, 13 A.A.R. 2142 (June 22, 2007) Notice of Renewal of Emergency Rulemaking, effective July 16, 2007, 13, A.A.R. 2785 (August 10, 2007)

5.

The name and address of agency personnel with whom persons may communicate regarding the rulemaking: Name: Address: Nancy O. Johnson 800 West Washington Street, Suite 303 Phoenix Arizona 85007 Telephone Number: Fax Number: E-mail: (602) 542-5948 (602) 542-6783 [email protected]

6.

An explanation of the rule, including the agency's reasons for initiating the rule:

On November 7, 2006, the Arizona voters approved Proposition 202, referred to as the "Raise the Arizona Minimum Wage for Working Arizonans Act," ("Act"). On December 4, 2006, the Arizona Secretary of State certified the election results by signing the Official Canvas of the general election. Under A.R.S. 23-364(A), which became effective January 1, 2007, the Industrial Commission of Arizona ("Commission") is given the authority to enforce and implement the Act. Emergency rules promulgated in response to direction in A.R.S. 23-364(A) became effective on January 25, 2007. Those rules were renewed by Notice of Renewal of Emergency Rulemaking, 13 A.A.R. 2785, effective July 16, 2007. These rules will replace the emergency rules currently in effect and will: a. Define relevant terms and identify non-exclusive factors for determining an employment relationship;
b. Provide criteria for the calculation of minimum wage, including the treatment of commissions and tips; c. Implement the posting and recording keeping requirements of the Act by specifying where notices shall be posted and how, and what, records are required to be kept for different classes of employees (e.g. employees receiving tips, employees working on a

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fixed schedule, and salaried employees who are exempt under 29 CFR 541); d. Establish requirements for the filing of administrative complaints, including applicable deadlines for minimum wage complaints and complaints of retaliation; e. Address hearing procedures under the Act, including the right to request a hearing before a Commission Administrative Law Judge, the conduct of the hearing and the right to request review or rehearing; f. Address procedures for the collection of money, the assessment of civil penalties (including the assessment of penalties for engaging in conduct that hinders an investigation under the Act), and the informal resolution of disputes; and g. Provide a mechanism for a small employer (or class of small employers) to request relief from certain record keeping requirements. 7. A reference to any study relevant to the rule that the agency reviewed and either relied on in its evaluation of or justification for the rule or did not rely on in its evaluation of or justification for the rule, where the public may obtain or review each study, all data underlying each study, and any analysis of each study and other supporting material: None 8. A showing of good cause why the rule is necessary to promote statewide interest if the rules will diminish a previous grant of authority of a political subdivision of this state: Not applicable 9. The summary of the economic, small business, and consumer impact statement: Annual costs/revenues changes are designated as minimal when less than $1,000, moderate when between $1,000 and $10,000, and substantial when $10,000 or greater in additional costs or revenues. The ICA will bear moderate to substantial costs for promulgating and enforcing the rules. Costs for promulgating the rules include staff time to write, review, and direct the rules through the rulemaking process. The cost for enforcing the rules is difficult to ascertain at this time, but will include staff time to investigate complaints and to litigate challenges to decisions. These rules were promulgated in response to direction in A.R.S. 23-364(A). The cost to the public, including Arizona employers and employees, are based on directives in statute, and may be substantial. The rules merely provide the process to implement those directives. Directives in this new statute that may have a substantial cost to employers are: a. b. c. The increase in minimum wage, The fact that the minimum wage applies to all employees under the Act, Credit for board, lodging and other items are no longer allowed, and

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d.

The assessment of civil penalties for violation of the Act.

The cost to Arizona employers for notifying their employees of their intent to exercise a tip credit under R20-5-1207(C) may have a minimal effect per employee. 10. A description of the changes between the proposed rules, including supplemental notices, and final rules (if applicable): 1. R20-5-1210(E)(6): Typographical error. The citation to R20-5-1208 was changed to the correct citation of R20-5-1207(C). 2. 11. Minor technical and grammatical changes were made at the suggestion of GRRC staff.

A summary of the comments made regarding the rule and the agency response to them: The Commission received 22 written comments and one speaker addressed the Commission at the oral proceeding regarding this rulemaking. Many of the comments addressed the issues in Comments 1 and 2 below. The issues raised and the Commission's responses are as follows: Comment 1: The lodging credit, that is allowed under the Federal Labor Standards Act (FLSA) and that is included in the Commission's emergency rules, should not be removed from the proposed rules. Employers should be allowed to continue using the lodging credit in calculating the minimum wage of an employee. Commission's response: Emergency rule R20-5-1207 currently allows credits toward the minimum wage for board and lodging, as well as other items such as uniforms and tools if it is agreed to in a collective bargaining agreement. However, additional research was done after the emergency rules were in place, reviewing statutes in all states that have minimum wage laws. Based on that research, the Commission believes that all credits (other than the "tip" credit) should be removed from the rules. Unlike any other state's statutes, our minimum wage statute defines "wage" to include only "monetary compensation." (Emphasis added.) Many state statutes provide for board and lodging credits as part of their definition of "wage", and some states have specific statutes that address board and lodging credits. Therefore, the Commission believes that it does not have statutory authority to consider allowing the value of lodging (and other items) when computing an individual's entitlement to receive minimum wages under the Minimum Wage Act, and the language regarding these credits that is in the emergency rules is not in the proposed rules. Although the Commission encouraged interested parties to provide the Commission with legal authority for allowing board and lodging credits, none of the comments provided the Commission with authority supporting a different conclusion. Comment 2: In order to clarify that employees who reside on the employer's premises are not entitled to wages 24 hours a day, seven days a week, add the following language to the definition of "hours worked" in R20-5-1201(6):

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An employee who resides on the employer's premises is not engaged in "hours worked" all the time the employee is on the employer's premises. The Commission shall accept any reasonable agreement between the employer and employee about hours worked for purposes of this Article, provided that, if the employee is required to be on duty for 24 hours, then the employee must have at least five hours of uninterrupted sleep. Commission's response: The Commission believes that the definition of "hours worked" in the proposed rulemaking is clear that an employee is only paid for hours actually on duty, and not just for time on the employer's premises. However, the emergency rules did have language specifying that the Commission would be guided by 29 CFR 785 when determining whether an employee is considered to be working for the purpose of the Minimum Wage Act. That language is not included in the proposed rules because the language is not regulatory. For the benefit of the regulated community, the Commission has agreed to issue a Substantive Policy Statement that is consistent with the current emergency rules regarding the reliance on 29 CFR 785, and will provide the regulated community with guidance in a variety of situations that may arise in this area. The language suggested above does not address all of the situations that may arise, and would, in some instances, actually be contrary to the principles set forth in 29 CFR 785. Additionally, a representative of the regulated community that supported the additional language identified above, withdrew the request for the language on their behalf, in reliance on the Commission's agreement to issue the Substantive Policy Statement. Comment 3: Employers should not have to pay minimum wage to disabled workers. Commission's response: On March 29, 2007 the Commission approved a Substantive Policy Statement that provides the Commission's interpretation of the term "employee" under the Act as it applies to work activities performed by individuals with disabilities. It distinguishes work activities performed for the primary benefit of the employer from work activities performed for the primary or personal benefit of the individual, concluding that an individual is not an "employee" under the Act if the individual performs work activities as a component of a vocational training program or for a therapeutic purpose under a service recipient program. The Substantive Policy Statement also includes a legal analysis supporting the Commission's interpretation. The Substantive Policy Statement is published at 13 A.A.R. 1566. Comment 4: Employers should not have to pay the minimum wage to trainees. Commission's response: The Minimum Wage Act precludes any wage below minimum wage for employees covered by the Minimum Wage Act, and that includes employees who are in a training or apprentice program.

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Comment 5: Fines for employers who retaliate against an employee should be capped, and not allowed to continue until judgment is final. Commission's response: A.R.S. 23-364(G) states, "Any employer who retaliates against an employee or other person in violation of this article shall be required to pay the employee an amount set by the commission or a court sufficient to compensate the employee and deter future violations, but not less than one hundred fifty dollars for each day that the violation continued or until legal judgment is final." The employer can end the fine assessment period by ceasing the retaliatory conduct against the employee. By statute, that is the only way to end the fine assessment period other than by final legal judgment. Comment 6: Allow the employer to settle the wage complaint without paying the penalty of twice the underpaid wages. Commission's response: The rules allow the Commission to mediate a wage dispute, which means the parties, recognizing there is a legitimate dispute, may negotiate the amounts to be paid. Comment 7: Expressed concern that private information of other employees not a part of the investigation would become public, based on the Public Information Act. Commission's response: Records obtained during the investigation of a minimum wage

complaint will be treated the same as other records obtained by the Commission, and private, confidential information will be treated as provided by law. Comment 8: An employee's identity should not be kept confidential after an administrative complaint is filed. Commission's response: A.R.S. 23-364(C) states, in part, "The name of any employee

identified in a complaint to the commission shall be kept confidential as long as possible. Where the commission determines that an employee's name must be disclosed in order to investigate a complaint further, it may so do only with the employee's consent." The statute requires that an employee's name be kept confidential during the investigation of the claim, and this suggestion would require a change in the statute. Comment 9: No time is given to respond to the Commission's request for payroll records. Commission's response: R20-5-1209 (A) gives the employer 72 hours to gather documents requested by the Commission. Comment 10: Keeping records for 4 years is inconsistent with federal requirements of 3 years. Commission's response: The record keeping requirement is set forth in the statute. To the extent that the statute requires an employer to keep records longer than some federal requirements, it cannot be addressed through the rules. Comment 11: With regard to reimbursement and rehiring an employee for employer violation

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what if the employer is out of business? Commission's response: If the employer is out of business, then the employee will not be able to be rehired. How back wages would be paid depends on the legal status and solvency of the business. There are no rule changes needed for this comment. Comment 12: Administrative Law Judge as arbiter is a conflict of interest. Commission's response: The Administrative Law Judge Division of the Industrial Commission is authorized to resolve disputes arising under the jurisdiction of the Commission. The mere fact that the ALJ Division is a part of the same agency that is charged with investigation and enforcement of minimum wage complaints does not, in and of itself, give rise to a conflict of interest. An actual conflict must be shown before the courts will find a conflict of interest. Comment 13: The Commission does not have authority to exclude volunteer from the definition of "employee." Commission's response: A.R.S. 23-364(A) authorizes the Commission to enforce and

implement the Article. As the statute, by its express terms, only applies to employees, the Commission can identify, by rule, those individuals who do not fall into the class of "employees." No rule changes are needed for this comment. 12. Any other matters prescribed by statute that are applicable to the specific agency or to any specific rule or class of rules: None 13. Incorporations by reference and their location in the rules: None 14. Was this rule previously made as an emergency rule? Yes. Notice of Emergency Rulemaking, effective January 25, 2007, 13 A.A.R. 473 (February 16, 2007) Notice of Renewal of Emergency Rulemaking, effective July 16, 2007, 13 A.A.R. 2785 (August 10, 2007) 15. The full text of the rules follows:

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TITLE 20. COMMERCE, BANKING, AND INSURANCE CHAPTER 5. THE INDUSTRIAL COMMISSION OF ARIZONA ARTICLE 12. ARIZONA MINIMUM WAGE ACT PRACTICE AND PROCEDURE

R20-5-1201. R20-5-1202. R20-5-1203. R20-5-1204. R20-5-1205. R20-5-1206. R20-5-1207. R20-5-1208. R20-5-1209. R20-5-1210. R20-5-1211. R20-5-1212. R20-5-1213. R20-5-1214.

Notice of Rules Definitions Duty to Provide Current Address Forms Prescribed by the Department Determination of Employment Relationship Payment of Minimum Wage; Commissions; Tips Tip Credit Toward Minimum Wage Posting Requirements Records Availability General Recordkeeping Requirements Administrative Complaints Conduct that Hinders Investigation Findings and Order Issued by the Department Review of Department Findings and Order; Hearings; Issuance of Decision Upon Hearing

R20-5-1215. R20-5-1216. R20-5-1217. R20-5-1218. R20-5-1219. R20-5-1220.

Request for Rehearing or Review of Decision Upon Hearing Judicial Review of Decision Upon Hearing or Decision Upon Review Assessment of Civil Penalties Under A.R.S. 23-364(F) Collection of Wages or Penalty Payments Owed Resolution of Disputes Small Employer Request for Exception to Recordkeeping Requirements

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Article 12. Arizona Minimum Wage Act Practice and Procedure R20-5-1201. A. Notice of Rules

This Article applies to all actions and proceedings before the Commission arising under the Raise the Arizona Minimum Wage for Working Arizonans Act, as added by 2006 Proposition 202, 2.

B.

The Commission shall provide a copy of this Article upon request to any person free of charge. Definitions

R20-5-1202.

In this Article, the definitions of A.R.S. 23-362 (version two) apply. In addition, unless the context otherwise requires: 1. "Act" means the Raise the Arizona Minimum Wage for Working Arizonans Act, as added by 2006 Proposition 202, 2. 2. "Affected employee" means an employee or employees on whose behalf a complaint may be filed alleging a violation under the Act. 3. "Authorized representative" means a person prescribed by law to act on behalf of a party who files with the Department a written instrument advising of the person's authority to act on behalf of the party. 4. "Casual Basis," when applied to babysitting services, means employment which is irregular or intermittent. 5. "Commission" means monetary compensation based on: a. b. c. d. 6. 7. A percentage of total sales, A percentage of sales in excess of a specified amount, A fixed allowance per unit, or Some other formula the employer and employee agrees as a measure of accomplishment.

"Complainant" means a person or organization filing an administrative complaint under the Act. "Department" means the Labor Department of the Industrial Commission of Arizona or other authorized division of the Industrial Commission as designated by the Industrial Commission.

8.

"Filing" means receipt of a report, document, instrument, videotape, audiotape, or other written matter at an office of the Department.

9.

"Hours worked" means all hours for which an employee covered under the Act is employed and required to give to the employer, including all time during which an employee is on duty or at a prescribed work place and all time the employee is suffered or permitted to work.

10. 11.

"Minimum wage" means the lowest rate of monetary compensation required under the Act. "Monetary compensation" means cash or its equivalent due to an employee by reason of employment.

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12.

"On duty" means time spent working or waiting that the employer controls and that the employee is not permitted to use for the employee's own purpose.

13.

"Tip" means a sum a customer presents as a gift in recognition of some service performed, and includes gratuities. The sum may be in the form of cash, amounts paid by bank check or other negotiable instrument payable at par, or amounts the employer transfers to the employee under directions from a credit customer who designates an amount to be added to a bill as a tip. Gifts in forms other than cash or its equivalent as described in this definition, including theater tickets, passes, or merchandise, are not tips.

14.

"Violation" means a transgression of any statute or rule, or any part of a statute or rule, including both acts and omissions.

15.

"Willfully" means acting with actual knowledge of the requirements of the Act or this Article, or acting with reckless disregard of the requirements of the Act or this Article.

16. 17.

"Workday" means any fixed period of 24 consecutive hours. "Workweek" means any fixed and regularly recurring period of 7 consecutive workdays. Duty to Provide Current Address

R20-5-1203. A.

A complainant shall provide and keep the Labor Department advised of the complainant's current mailing address and telephone number.

B.

An employer under investigation by the Department shall provide and keep the Labor Department advised of the employer's current mailing address and telephone number.

R20-5-1204.

Forms Prescribed by the Department

Forms prescribed by the Department, including the poster required under R20-5-1208, shall not be changed, amended, or otherwise altered without the prior written approval of the Department. R20-5-1205. A. Determination of Employment Relationship

Determination of an employment relationship under the Act, which includes whether an individual is an independent contractor, shall be based upon the economic realities of the relationship. Consideration of whether an individual is economically dependent on the employer for which the individual performs work shall be determined by factors showing dependence, which non-exclusive factors shall include: 1. 2. The degree of control the alleged employer exercises over the individual; The individual's opportunity for profit or loss and the individual's investment in the business; 3. 4. The degree of skill required to perform the work; The permanence of the working relationship; and

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5.

The extent to which the work performed is an integral part of the alleged employer's business.

B.

An individual that works for another person without any express or implied compensation agreement is not an employee under the Act. This may include an individual that volunteers to work for civic, charitable, or humanitarian reasons that are offered freely and without direct or implied pressure or coercion from an employer, provided that the volunteer is not otherwise employed by the employer to perform the same type of services as those which the individual proposes to volunteer.

C.

An individual that works for another individual as a babysitter on a casual basis and whose vocation is not babysitting, is not an employee under the Act even if the individual performs other household work not related to caring for the children, provided the household work does not exceed 20% of the total hours worked on the particular babysitting assignment.

R20-5-1206. A.

Payment of Minimum Wage; Commissions; Tips

Subject to the requirements of the Act and this Article, no less than the minimum wage shall be paid for all hours worked, regardless of the frequency of payment and regardless of whether the wage is paid on an hourly, salaried, commissioned, piece rate, or any other basis.

B.

If the combined wages of an employee are less than the applicable minimum wage for a work week, the employer shall pay monetary compensation already earned, and no less than the difference between the amounts earned and the minimum wage as required under the Act.

C.

The workweek is the basis for determining an employee's hourly wage. Upon hire, an employer shall advise the employee of the employee's designated workweek. Once established, an

employer shall not change or manipulate an employee's workweek to evade the requirements of the Act. D. In computing the minimum wage, an employer shall consider only monetary compensation and shall count tips and commissions in the workweek in which the tip or commission is earned. E. An employer is allowed to: 1. 2. Require or permit employees to pool, share, or split tips, and Require an employee to report tips to the employer in order to meet reporting requirements of this Article and federal law. R20-5-1207. A. Tip Credit Toward Minimum Wage

In this section, unless the context otherwise requires, "customarily and regularly" means receiving tips on a consistent and recurrent basis, the frequency of which may be greater than occasional, but less than constant, and includes the occupations of waiter, waitress, bellhop, busboy, car wash attendant, hairdresser, barber, valet, and service bartender.

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B.

For purposes of calculating the permissible credit for tips under A.R.S. 23-363(C), the following applies: 1. Tips are customarily and regularly received in the occupation in which the employee is engaged; 2. Except as provided in R20-5-1206(E), the employee actually receives the tip free of employer control as to how the employee uses the tip and the tip becomes the employee's property; 3. Employees who customarily and regularly receive tips may pool, share, or split tips between them, and the amount each employee actually retains is considered the tip of the employee who retains it; 4. Employer-required sharing of tips with employees who do not customarily and regularly receive tips in the occupation in which the employee is engaged, including management or food preparers, are not credited toward that employee's minimum wage; and 5. A compulsory charge for service imposed on a customer by an employer's establishment are not credited toward an employee's minimum wage unless the employer actually distributes the charge to the employee in the pay period in which the charge is earned.

C.

Upon hiring or assigning an individual to a position that customarily and regularly receives tips, an employer intending to exercise a tip credit shall provide written notice to the employee prior to exercising the tip credit. Thereafter, the employer shall notify the employee in writing each pay period of the amount per hour that the employer takes as a tip credit.

R20-5-1208.

Posting Requirements

Every employer subject to the Act shall place a poster prescribed by the Department informing employees of their rights under the Act in a conspicuous place in every establishment where employees are employed and where notices to employees are customarily placed. The employer shall ensure that the notice is not removed, altered, defaced, or covered by other material. R20-5-1209. A. Records Availability

Each employer shall keep the records required under the Act and this Article safe and accessible at the place or places of employment, or at one or more established central recordkeeping offices where the records are customarily maintained. When the employer maintains the records at a central recordkeeping office other than in the place or places of employment, the employer shall make the records available to the Department within 72 hours following notice from the Department.

B.

Employers who use microfilm or another method for recordkeeping purposes shall make available to the Department any equipment that is necessary to facilitate inspection and copying

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of the records. C. Each employer required to maintain records under the Act shall make enlargement, recomputation, or transcription of the records and shall submit to the Department the records or reports in a readable format upon the Department's written request. R20-5-1210. A. General Recordkeeping Requirements

Payroll records required to be kept under the Act include: 1. All time and earning cards or sheets on which are entered the daily starting and stopping time of individual employees, or of separate work forces, or the amounts of work accomplished by individual employees on a daily, weekly, or pay period basis (for example, units produced) when those amounts determine in whole or in part the pay period wages of those employees; 2. From their last effective date, all wage-rate tables or schedules of the employer that provide the piece rates or other rates used in computing wages; and 3. Records of additions to or deductions from wages paid and records that support or corroborate the additions or deductions.

B.

Except as otherwise provided in this Section, every employer shall maintain and preserve payroll or other records containing the following information and data with respect to each employee to whom the Act applies: 1. Name in full, and on the same record, the employee's identifying symbol or number if it is used in place of the employee's name on any time, work, or payroll record; 2. 3. 4. 5. Home address, including zip code; Date of birth, if under 19; Occupation in which employed; Time of day and day of week on which the employee's workweek begins. If the employee is part of a workforce or employed in or by an establishment all of whose workers have a workweek beginning at the same time on the same day, then a single notation of the time of the day and beginning day of the workweek for the whole workforce or establishment is permitted; 6. Regular hourly rate of pay for any workweek and an explanation of the basis of pay by indicating the monetary amount paid on a per hour, per day, per week, per piece, commission on sales, or other basis, including the amount and nature of each payment; 7. 8. Hours worked each workday and total hours worked each workweek; Total daily or weekly straight-time wages due for hours worked during the workday or workweek, exclusive of premium overtime compensation;

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9.

Total premium pay for overtime hours and an explanation of how the premium pay was calculated exclusive of straight-time wages for overtime hours recorded under subsection (B)(8) of this Section;

10.

Total additions to or deductions from wages paid each pay period including employee purchase orders or wage assignments, including, for individual employee records, the dates, amounts, and nature of the items that make up the total additions and deductions;

11. 12. C.

Total wages paid each pay period; and Date of payment and the pay period covered by payment.

For an employee who is compensated on a salary basis at a rate that exceeds the minimum wage required under the Act and who, under 29 CFR 541, is an exempt bona fide executive, administrative, or professional employee, including an employee employed in the capacity of academic administrative personnel or teachers in elementary or secondary schools, or in outside sales, an employer shall maintain and preserve: 1. Records containing the information and data required under subsections B(1) through (B)(5), (B)(11) and (B)(12) of this Section; and 2. Records containing the basis on which wages are paid in sufficient detail to permit a determination or calculation of whether the salary received exceeds the minimum wage required under the Act, including a record of the hours upon which payment of the salary is based, whether full time or part time.

D.

With respect to employees working on fixed schedules, an employer may maintain records showing instead of the hours worked each day and each workweek as required under this Section, the schedule of daily and weekly hours the employee normally works, provided: 1. In weeks in which an employee adheres to this schedule, the employer indicates by check mark, statement, or other method, that the employee actually worked the hours; and 2. In weeks in which more or fewer than the scheduled hours are worked, the employer records the number of hours actually worked each day and each week.

E.

With respect to an employee that customarily and regularly receives tips, the employer shall ensure that the records required under this Article include the following information: 1. A symbol, letter, or other notation placed on the pay records identifying each employee whose wage is determined in part by tips; 2. 3. Amount of tips the employee reports to the employer; The hourly wage of each tipped employee after taking into consideration the employee's

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tips; 4. Hours worked each workday in any occupation in which the employee does not receive tips, and total daily or week straight-time payment made by the employer for the hours; 5. Hours worked each workday in occupations in which the employee receives tips and total daily or weekly straight-time wages for the hours; and 6. F. Copy of the notice required under R20-5-1207(C).

An employer who makes retroactive payment of wages, voluntarily or involuntarily, shall record on the pay records, the amount of the payment to each employee, the period covered by the payment, and the date of payment.

R20-5-1211. A.

Administrative Complaints

A person or organization alleging a minimum wage violation, shall file a complaint with the Labor Department within one year from the date the wages were due.

B.

A person or organization alleging retaliation shall file a complaint with the Labor Department within one year from the date the alleged violation occurred or when the employee knew or should have known of the alleged violation.

C.

The person or organization filing a complaint with the Labor Department shall sign the complaint.

D.

Any person or organization other than an affected employee who files a complaint shall include the names of affected employees.

E.

For good cause, and upon its own complaint, the Department may investigate violations under the Act.

R20-5-1212.

Conduct that Hinders Investigation

An employer hinders an investigation under the Act if the employer engages in conduct, or causes another person to engage in conduct, that delays or otherwise interferes with the Department's investigation, including: 1. Obstructing or refusing to admit the Department to any place of employment authorized under the Act; 2. 3. 4. Obstructing or refusing to permit interviews authorized under the Act; Failing to make, keep, or preserve records required under the Act or this Article; Failing to permit the review and copying of records required under the Act and this Article; and 5. R20-5-1213. A. Falsifying any record required under the Act or this Article. Findings and Order Issued by the Department

Except as provided in R20-5-1219, after receipt of a complaint alleging a violation of the

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minimum wage requirement of the Act, or alleging retaliation under the Act, the Department shall issue a Findings and Order of its determination. The Department shall send its Findings and Order to both the employer and the complainant at their last known addresses served personally or by regular first class mail. If the complaint named affected employees, the Department may send a copy of its Findings and Order to the affected employees. B. If the Department determines that an employer has violated the minimum wage payment requirement, the Department shall order the employer to pay the employee, amd if applicable, affected employees, the balance of the wages owed, including interest at the legal rate and an additional amount equal to twice the underpaid wages. C. If the Department determines that a retaliation violation has occurred, the Department shall direct the employer or other person to cease and desist from the violation and may take action necessary to remedy the violation, including: 1. 2. 3. Rehiring or reinstatement; Reimbursement of lost wages and interest; Payment of penalty to employees or affected employees as provided for in the Act and this Article; and 4. D. Posting of notices to employees.

If the Department determines that no retaliation has occurred the Department shall notify the parties and shall dismiss the complaint without prejudice. After notification of the Department's determination, the complainant may bring a civil action under A.R.S. 23-364(E).

E.

The Department may assess civil penalties for recordkeeping, posting, and other violations under the Act and this Article as part of a Findings and Order issued under subsection (A) or the civil penalties and other violations may be assessed as a separate Findings and Order. If issued as a separate Findings and Order, the Department shall serve, personally or by regular first class mail, the Findings and Order on the employer and, if a complaint has been filed, the complainant.

F.

The Director of the Department shall sign the written Findings and Order issued by the Department.

G.

If an employer does not comply with a Findings and Order issued by the Department within 10 days following finality of the Findings and Order, the Department may refer the matter to a law enforcement officer.

R20-5-1214.

Review of Department Findings and Order; Hearings; Issuance of Decision Upon Hearing

A.

Except as provided in R20-5-1213(D), a party aggrieved by a Findings and Order issued by the Department may request a hearing by filing a written request for hearing with the Department

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within 30 days after the Findings and Order is served upon the party. Failure to timely file a request for hearing means that the Findings and Order issued by the Department is final and res judicata to all parties. B. A request for hearing shall be in writing and contain: 1. 2. 3. C. The name and address of the party requesting the hearing; The signature of the party or the party's authorized representative; and A statement that a hearing is requested.

Upon receipt of a timely filed request for hearing, the Department shall refer the matter to the Administrative Law Judge Division of the Commission for hearing.

D.

Except as otherwise provided in this Section, the hearing shall be conducted under A.R.S. 411061 et seq.

E.

A person submitting correspondence or other documents, including subpoena requests, to an administrative law judge concerning a matter pending before the administrative law judge, shall contemporaneously serve a copy of the correspondence or other document upon all other parties, or if represented, the parties' authorized representative.

F.

The administrative law judge may dismiss a request for hearing when it appears to the judge's satisfaction that the parties have resolved the disputed issue or issues.

G.

The administrative law judge shall issue a written decision upon hearing containing findings of fact and conclusions of law no later than 30 days after the matter is submitted for decision. The decision shall be sent to the parties at their last known addresses served personally or by regular first class mail.

H.

A decision issued under this Section is final when entered unless a party files a request for rehearing or review as provided in R20-5-1215 or commences an action in the Superior Court as provided in R20-5-1216 and A.R.S. 12-901 et seq. The decision shall contain a statement explaining the review rights of a party.

R20-5-1215. A.

Request for Rehearing or Review of Decision Upon Hearing

A party may request rehearing or review of a decision issued under R20-5-1214 by filing with the Administrative Law Judge a written request for rehearing or review no later than 15 days after the written decision is served personally or by regular first class mail upon the parties.

B.

A request for rehearing or review shall be based upon any of the following causes that materially affected the rights of an aggrieved party:

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1.

Irregularities in the hearing proceeding or any order, or abuse of discretion that deprives a party seeking review of a fair hearing;

2. 3.

Accident or surprise that could not have been prevented by ordinary prudence; Newly discovered material evidence that could not have been discovered with reasonable diligence and produced at the hearing;

4. 5. 6.

Error in the admission or rejection of evidence, or errors of law occurring at the hearing; Bias or prejudice of the Department or administrative law judge; and The findings of fact or conclusions of law contained in the decision are not justified by the evidence or are contrary to law.

C.

A request for rehearing or review shall state the specific facts and law in support of the request and shall specify the relief sought by the request.

D.

A party shall have 15 days from the date of the filing of a request for rehearing or review to file a written response. Failure to respond shall not be deemed an admission against interest.

E.

The administrative law judge shall issue a decision upon review no later than 30 days after receiving a request for review or response, if one is filed.

F.

A decision upon review is final unless a party seeks judicial review as provided in R20-5- 1216. Judicial Review of Decision Upon Hearing or Decision Upon Review

R20-5-1216. A.

A party aggrieved by a decision upon hearing issued under R20-5-1214 or a decision upon review issued under R20-5-1215 may seek review by commencing an action in the Superior Court as provided in A.R.S. 12-901 et seq. within 35 days from the date a copy of the decision sought to be reviewed is served personally or by regular first class mail upon the party affected.

B.

A decision upon hearing issued under R20-5-1214 or a decision upon review issued under R20-51215 is final unless a party seeks judicial review as provided under A.R.S. 12-901 et seq.

R20-5-1217.

Assessment of Civil Penalties Under A.R.S. 23-364(F)

The Department may assess civil penalties for violations of the Act and this Article, including the assessment of civil penalties for engaging in conduct that hinders an investigation of the Department as specified in R20-5-1212. R20-5-1218. A. Collection of Wages or Penalty Payments Owed

Upon determination that wages or penalty payments are due and unpaid to any employee, the employee may, or the Department may on behalf of an employee, obtain judgment and execution, garnishment, attachment, or other available remedies for collection of unpaid wages and penalty payments established by a final Findings and Order of the Department.

B.

If payment cannot be made to the employee, the Department shall receive monetary compensation or penalty payments on behalf of the employee and transmit monies it receives as

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payment in a special state fund as provided in A.R.S. 23-356(C). C. The Department may amend a Findings and Order to conform to the legal name of the business or the person who is the defendant employer to a complaint under the Act, provided service of the Findings and Order was made on the defendant or the defendant's agent. If a judgment has been entered on the order, the Department may apply to the clerk of the superior court to amend a judgment that has been issued under a final order, provided service was made on the defendant or the defendant's agent. R20-5-1219. Resolution of Disputes

Notwithstanding any other provision of law, the Department may mediate and conciliate a dispute between the parties. R20-5-1220. A. Small Employer Request for Exception to Recordkeeping Requirements

In this section, unless context otherwise requires, "small employer" means a corporation, proprietorship, partnership, joint venture, limited liability company, trust, or association that has less than $500,000 in gross annual revenue.

B.

A small employer, or any category of small employer that is unreasonably burdened by the recordkeeping requirements of the Act and this Article may file a written petition for exception with the Department requesting relief from certain recordkeeping requirements under this Article. The petition shall: 1. 2. State the reasons for the request for relief; State an alternate manner or method of making, keeping, and preserving records that will enable the Department to determine hours worked and wages paid; and 3. Include the signature of the employer or an authorized representative of the employer.

C.

Subject to any conditions or limitations necessary to ensure fulfillment of the purpose and intent of Act, the Department may grant a petition for exception if it finds that: 1. The small employer, or category of small employer is unreasonably burdened by the recordkeeping requirements of the Act and this Article; and 2. The relief requested and alternative proposed will not hinder the Department's enforcement of the Act and this Article.

D. E.

For good cause, the Department may rescind a prior order granting relief under this Section. Relief under this Section is effective upon the Department's written authorization.

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