Arizona tax and labor law guide - HomePay

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Arizona tax and labor law guide

Household employment requirements for families hiring a caregiver in Arizona

Finding helpful Arizona nanny tax information is not always easy. That’s why we’ve combined all the state and federal tax and labor law information you’ll need! Check out the information below that HomePay is here to help with.

Checklist for Arizona household employers

We know you’re busy! Here’s a quick “to-do” list with links to extra details below.

Beginning of employment 

During employment 

Optional benefits for your employee

Ending employment

Beginning of employment 

Workers’ compensation

Household employers in Arizona are not required to get coverage for workers’ compensation insurance, but we recommend to do so. These policies pay for medical expenses and lost wages if an employee has a work-related injury or illness. Obtain an instant quote and purchase a policy online, or by contacting our partner, Clarke White, at 804-267-1210 or

Employment contract

Household employers in Arizona are required to provide a written employment contract to their employee at the time of hire. The contract must include the employee’s hourly rate of pay, when paydays will occur and how the employee will be paid (i.e. Direct Deposit, mailed a check, etc.).

Employment posters 

Families in Arizona are required to notify their employee(s) of their rights by sharing these posters. 

During employment 

Minimum wage rates

  • Arizona state: $12.80/hour
  • Flagstaff: $15.50/hour
  • Tucson: $13.00/hour 

Note: Whenever more than one minimum wage rate applies, employers are required to pay the higher rate

Arizona overtime requirements

  • Live-out employees must be paid 1.5x their hourly rate for all hours worked over 40 in a workweek.
  • Live-in employees are not required to be paid overtime. 
  • Overtime is not required to be paid when work is performed on a holiday. 

Household employees in Arizona are required to provide up to 24 hours of paid sick time to their employee each calendar year. HomePay will handle the accruals on your account. 

Optional benefits for your employee 

Health insurance

Families with only 1 employee can make contributions toward their employee’s health insurance premiums and treat the amount as non-taxable compensation. In this scenario, neither the employee nor the employer are required to pay any taxes on that portion of the compensation.

Families with 2 or more employees have 3 options:

  1. Set up an Individual Coverage Health Reimbursement Arrangement (ICHRA).
  2. Set up a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA).
  3. Purchase a policy through SHOP (Small Business Health Options Program). 

Visit our health insurance page for more information about these options.  

Mileage reimbursements

The current federal mileage reimbursement rate is 58.5 cents per mile and only covers miles driven by your employee while on the job. Miles driven commuting are not eligible for reimbursement.

Ending employment 

Managing unused PTO 

Arizona household employers must pay their employees for unused sick and/or vacation time.

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