Starting off the new year, the minimum wage in Arizona is increasing to $7.35 per hour. This increase is ten cents more than the federal minimum wage for covered nonexempt employees. The increase is a result of the increased cost of living.
For any employee who customarily and regularly receives tips or gratuities, an employer may pay a wage up to $3.00 per hour less than the minimum wage if the employer can establish by its records that for each week, when adding tips received to wages paid, the employee received not less than the minimum wage for all hours worked. That means an employer must pay not less than $4.35 per hour in direct wages for a tipped employee. However, if an employee’s tips combined with the employer’s direct wages do not equal the Arizona minimum hourly wage, then the employer must make up the difference.
Arizona isn’t the only state set to raise minimum wages on January 1. Approximately 647,000 minimum wage workers in seven states will be seeing an increase in their pay.
Most private employers in Arizona are subject to these minimum wage requirements. There is a limited exclusion for small businesses that (1) are not subject to the Federal Fair Labor Standards Act; and (2) have less than $500,000 in gross annual revenue.