News

New AZ minimum wage takes effect January 1

by Dinita L. James
Gonzalez Law, LLC

The minimum wage in Arizona will jump from $8.05 to $10 on January 1 as a result of the passage of Proposition 206 in November.

A last-minute barrage of litigation by the Arizona Chamber of Commerce and Industry failed to block the increase from taking effect. On December 29, the Arizona Supreme Court entered a one-sentence order refusing to put the increase on hold.

Under the new law, the minimum wage will increase each year until it reaches $12 per hour in 2020. Employers can take a tip credit of up to $3 per hour for tips earned by workers who regularly and customarily receive tips.

According to data from the U.S. Bureau of Labor Statistics (BLS), about 770,000 Arizonans make less than $10 per hour. That means about a quarter of the state’s workforce will get an immediate wage boost in 2017.

The increase to $10 per hour is the largest statewide minimum wage hike ever in Arizona. However, minimum wage workers in Arizona were due for an increase even if Proposition 206 had failed.

On October 27, the Arizona Industrial Commission applied the formula mandated by voters in 2006 to determine what the minimum wage would have been for 2017 under previous law. The minimum wage would have increased, but only to $8.15 per hour.

The formula pegged annual adjustments to the minimum wage to the percentage increase in the cost of living as measured by the Consumer Price Index for urban areas calculated by the U.S. Department of Labor (DOL). That method will resume for 2021 and subsequent years after the $12 minimum has been reached.

For more information on Arizona’s Proposition 206, see the December issue of Arizona Employment Law Letter.

Dinita L. James is the editor of Arizona Employment Law Letter and an attorney with Gonzalez Law, LLC, in Tempe, Arizona. She can be reached at dinita.james@gnzlaw.com.