Small Business Exemption - Detailed Explanation
Under Arizona Revised Statute 23-362(C) Small business means any corporation, proprietorship, joint venture, limited liability company, trust, or association that has less than five hundred thousand dollars in gross annual revenue AND that is exempt from having to pay a minimum wage under section 206(a) of title 29 of the United States Code.
USC 206(a) of title 29 of the US Code
Since Arizona defers to United States Code 206(a), you have to go there to determine if there is an exemption. Section 206(a) of Title 29 of the United States Code reads:
Every employer shall pay to each of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, OR is employed in an enterprise engaged in commerce or in the production of goods for commerce, wages at the following rates: (1)(C) $7.25
USC 203 Definitions
The United States Code 203 Definitions (q)(1)(A)(ii) defines "enterprise engaged in commerce" as an enterprise whose annual gross volume of sales made or business done is not less than $500,000 (in other words: $500,000 or more).
The Problem
The problem is that United States Code 206(a) says "employees . . . engaged in commerce" OR "an enterprise engaged in commerce". So while a business may be exempt because they are not an enterprise engaged in commerce (because they have Gross Sales < $500,000), the employee is most likely considered to be engaged in commerce as the courts have held a very broad interpretation of being engaged in commerce (e.g. mailing letters to out-of-state addresses, making phone calls to out-of-state phone numbers, accepting out-of-state checks or credit cards, and merely the handling of materials that either are going out-of-state or came from out-of-state). Personally, it's hard for me to imagine an employee who is not "engaged in commerce". If an employee is "engaged in commerce", then they are not exempt from minimum wage law.
The Determination
If you feel like you may qualify for the Small Business Exemption, I would highly recommend getting legal counsel, who specializes in labor issues, to help you with the determination.
