I've lived in AZ for over 40 years and I've never heard of any laws prohibiting the practice you describe. However, your daughter would be wise to run this by the AZ Dept of Labor or an employment law attorney.
Meantime, I make the following observations:
Those limitations should be in a written document with signed acceptance by the employees.The employees are required to come to work on time. Employee's are not allowed to stand around, mingle or gossip or having personal non business conversation's with people walking by in the mall. The employee's are not permitted to use their cell phones during their work schedule unless it's an emergency.
You must include a specific statement by the employee that the employee consents to the penalty being deducted from pay. Otherwise you cannot deduct from pay. And regardless of how many deductions you still must pay minimum wage.The employee's sign and agreeing to the companies policies and receiving a penalty fee for not following the company policies.
No good. Warnings should be in writing even if they don't result in the financial penalty. That precludes any argument "You never told me." And there is a written record of the warnings. Warnings should be signed by the employee that the employee acknowledges receipt of the warning.The employee's are given 3 verbal warning's for not following these policies.
There should also be a limit to how many financial penalties are imposed before an employee is terminated for misconduct. Your daughter should study up on misconduct as it's defined for unemployment compensation because misconduct will make an employee ineligible for unemployment compensation.My daughter and her business partner feel it is more appropriate to impose this penalty fee each time the employee does not following the company policies rather than just sending the employee home.
It's not a good idea to retain misbehaving employees too long.
That's nice. But it's irrelevant with regard to the penalty practice itself.The company retains the penalty fee's collected throughout the year then donates the money to a non-profit charity or a religious organization at the owner's choice. The company does not need to retain this money withheld from their employee's to put it into their pocket.

