The Minimum Wage in Arizona

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If you're thinking of moving to Arizona and might get a minimum-wage job, knowing what you can expect from local employers can help you budget for the first year in your new home. While there is a federal minimum wage ($7.25 in 2018), some states including Arizona have passed laws that mandate a higher rate, which employers are required to pay despite the lower federal regulation.

In November 2006, Arizona voters approved an increase in the state's minimum wage that would go up in steps, year by year. At that time the minimum wage went from $5.15 per hour to $6.75 per hour. That initiative also called for a cost-of-living increase—called indexing—in subsequent years, which would be applied on January 1 of each year. As of January 1, 2018, the minimum wage in Arizona has been increased to $10 per hour.

All full-time, part-time, and temporary employees are covered by the minimum wage law, but independent contractors, sometimes called freelancers, are not covered. In addition, some occupations and employees including tipped workers, students in high school and college, and certain disabled workers are excluded from these regulations.

Scheduled Minimum Wage Increases in Arizona

In November 2016, Arizona voters approved a new minimum wage measure that would raise the minimum to $12 per hour by the year 2020. Per the law in Arizona, the progression from the current minimum wage rate in Arizona to 2020 is:

  • $10 per hour effective January 2018
  • $11 per hour effective January 2019
  • $12 per hour effective January 2020
  • Beginning in January 2021, Arizona's minimum wage will be adjusted each year based on cost of living

Tips and Minimum Wage

While waiters and service industry workers are typically exempted from the minimum wage rule for Arizona, there are still state and federal laws in place that ensure this type of worker is entitled to fair wages. Fortunately for industry folks moving to Arizona, the state has a higher minimum hourly wage ($7 as of 2017) than federally required ($2.13) for tipped employees.

Furthermore, employers can pay an employee that receives tips an hourly rate that is $3 less per hour than Arizona's minimum wage as long as the tips that are earned and distributed to the employee would bring that rate at least up to the minimum wage.

For example, if a server in a restaurant has an hourly wage of $7 per hour, the tips earned by the employee must bring the earnings up to at least the required Arizona minimum wage for that year. If the tips aren't enough to bring the cumulative earnings up to the minimum wage, the employer must make up the difference to the employee.

Who Must Pay Minimum Wage

All employers in the state of Arizona except the state itself, the U.S. government, and small businesses as defined by the law must pay employees at least the state's mandated minimum wage.

If the employer is not exempt from the minimum wage law, all employees must be paid at least the legal minimum wage in effect for that year or the legal minimum wage as it relates to tipped employees. No employee can agree to work for less than minimum wage, whether verbally, in a written agreement, or by contract.

A small business is defined by Arizona law as "any corporation, proprietorship, partnership, joint venture, limited liability company, trust, or association that has less than $500,000 in gross annual revenue."