If you're thinking of moving to Arizona and might get a minimum-wage job, getting the facts up front is important to your decision.
While there is a federal minimum wage ($7.25 in 2017), some states have passed laws that mandate a higher rate; if that's the case, employers in that state must pay the higher minimum wage. That's the case in Arizona as of 2017.
In November 2006 the voters approved an increase in Arizona'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 in subsequent years on Jan. 1 each year. This is called indexing. 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 November 2016 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 2017
- $10.50 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
The state of Arizona has a higher minimum hourly wage ($7, as of 2017) than federally required ($2.13) for tipped employees.
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. 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." No employee can agree to work for less than minimum wage, whether verbally, in a written agreement, or by contract. 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.