The current Arizona minimum wage rate is $13.85. Employers are required to pay employees Arizona’s minimum wage rate for every hour worked unless the employer or employee is exempt by state or federal law. Regarding the tip wage rate, Arizona allows employers to pay employees who earn tips a rate that is $3.00 per hour lower than the standard minimum wage so long as the wage rate plus tips result in the employees earning standard minimum wage when combined. Additionally, Arizona’s laws may allow employers, in limited situations, pay certain employees a subminimum wage.
Beginning on January 1, 2021, Arizona’s minimum wage will increase each year on January 1. The amount of the minimum wage increase will be based on the percentage increase in the cost of living from August to August of the immediately preceding year. The percentage change in the cost of living will be calculated using the consumer price index (all urban consumers, U.S. city average for all items) or its successor index as published by the U.S. Department of Labor or its successor agency, with the amount of the minimum wage increase rounded to the nearest multiple of five cents. AZ Statute 23-363(B)
Arizona employers must also comply with federal minimum wage laws, which currently sets the federal minimum wage at $7.25. See FLSA: Minimum Wage.
If an employer chooses to pay employees minimum wage, the employer must pay those employees in accordance with the minimum wage law, either federal or state, that results in the employees being paid the higher wage. In most instances in Arizona, the Arizona minimum wage will apply as it generally guarantees a higher wage rate for employees than federal law.
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Tip minimum wage
Arizona allows employers to take a $3.00 tip credit towards its minimum wage obligation for tipped employees. AZ Statute 23-363(C) When taking the tipped credit, employers must ensure that tipped employees are paid the regular minimum wage rate when the tipped wage rate is combined with tips received. If the tipped wage plus tips does not meet the regular minimum wage threshold, the employer is required to make up the difference. AZ Statute 23-363; AZ Admin. Code R20-5-1206(B)
Employers may only pay the tipped minimum wage to employees who customarily and regularly receive tips or gratuities from customers and if the employee receives the tip free of the employer’s control as to how the tip may be used. AZ Statute 23-363(C); AZ Admin. Code R20-5-1207(B)(1)-(2) Employees are considered to receive tips customarily and regularly if they receive tips on a consistent and recurrent basis that is more than occasional but can be less than constant. Examples of occupations that typically qualify for tipped wage rate include, but are not limited to, waiters, waitresses, bellhops, busboys, car wash attendants, hairdressers, barbers, valets, and service bartenders. AZ Admin. Code R20-5-1207(A) Additionally, employers may not credit employees, for purposes of the state’s minimum wage threshold, with tips that are the result of compulsory service charges unless the employer pays the employee for the service charges in the pay period in which the employee earned the service charge. AZ Admin. Code R20-5-1206(B)
Arizona minimum wage laws require employers to provide notice to employees when they are hired or first assigned to a position that customarily and regularly receives tips that they will be paid the tipped minimum wage or any wage greater than the tipped minimum wage but less than the standard minimum wage. Thereafter, the employer must provide such tipped employees written notice each pay period of the amount per hour the employer has taken as a tip credit (the difference between the standard minimum wage and the hourly wage paid the employee). AZ Admin. Code R20-5-1207(C)
Tip pooling and sharing
Arizona minimum wage laws allow employers to require or permit employees to pool, share, or split tips. AZ Admin. Code R20-5-1206(E) The amount each employee receives after the tips are split is considered the tips of the employee for reporting purposes. AZ Admin. Code R20-5-1207(B) Employers may require employees who customarily and regularly to share tips with employees who do not customarily and regularly receive tips, such as managers and food preparers; however, the employer may not pay the tipped minimum wage to the employees who do not customarily and regularly receive them. AZ Admin. Code R20-5-1207(B)(4)
Employees with disabilities
In most instances, Arizona minimum wage laws do not permit employers to pay employees with disabilities a subminimum wage rate that is less than the standard minimum wage. However, in certain limited situations, employers may have individuals with disabilities perform work-related activities without compensating them. These limited situations exist when the individuals engage in the work primarily for their own benefit and not for the benefit of the employer and when the employer receives no immediate advantage from the individuals work. See AZ Industrial Commission of Arizona
Arizona law does not allow employers to pay trainee employees a subminimum wage rate that is less than the standard minimum wage.
Arizona minimum wage laws do not allow employers to pay apprentice a subminimum wage rate that is less than the standard minimum wage.
Arizona minimum wage laws do not allow employers to pay learners a subminimum wage rate that is less than the standard minimum wage.
Arizona minimum wage laws do not allow employers to pay student learners a subminimum wage rate that is less than the standard minimum wage.
Arizona minimum wage laws do not allow employers to pay student workers a subminimum wage rate that is less than the standard minimum wage.