As of January 1, 2024, the ICA (Industrial Commission of Arizona) has determined that Arizona’s hourly minimum wage was set at $14.35, a $0.50 increase compared to 2023.
Every year, the minimum wage can be increased in line with the inflation rate and is based on the cost of living as indicated by the Consumer Price Index, or CPI.
As there has been inflation during 2023, the ICA has decided that the 2024 minimum wage level needed to be increased to compensate for the increased cost of living. In Arizona, there are around 25.000 minimum wage workers. The ICA is the state’s body for administrating and enforcing Arizona’s minimum wage.
Minimum Hourly Wage for Tipped Workers in Arizona
For tipped employees, the hourly minimum wage went from 10.85 to $11.35 per hour ($3.00 maximum tip credit against Arizona’s minimum wage ($11.35 in cash).
Tipped workers are employees who, in general, are receiving tips, and include usually workers in the hospitality and personal services sectors.
These include generally bartenders, food servers, hairdressers-barbers, bellhops-valets, car wash attendants, and bussers.
Arizona’s ‘cash wage’, or ‘direct or basic wage rate’, is what your employer must minimally contribute to your hourly minimum wage, and your ‘maximum tip credit’ is how much in tips you must make (on top of the cash wage) to reach the level of the hourly minimum wage.
In case you did not get enough tips during your workweek to reach the Arizona minimum wage for the hours you worked during that week, your employer is obligated to furnish the difference.
Minimum Wages
The ICA not only sets the hourly minimum wage, but also the minimum standards for full-time employed employees per day, per week, and per year. These numbers are based on 8 hours per day, 5 days per week, so 40 hours a week, and 52 weeks annually, and before taxes.
Trainees and interns who are functioning more or less as regular employees rather than merely as trainees, and who are employed in a private for-profit company, must also be paid no less than the State’s minimum wage and also qualify for overtime compensation in case they work more than 40 hours per week.
Arizona’s Minimum Wage Act comes with only few exemptions. You may only be exempt from minimum wage coverage if you are employed by the United States, by the State of Arizona, by a parent or sibling, if you do babysitting work on a casual basis or if you work for a business that is held by the Federal Fair Labor Standards Act, or FLSA, and that has a gross annual revenue than not exceeds $500.000.
Overtime Pay in Arizona
It is good to note that Arizona has no overtime law, but when your employer is regulated by the FLSA, federal overtime laws are applicable. ‘Overtime Pay’ is financial compensation for hours that are worked in excess of what a regular workweek includes, forty hours!
Federal regulations state that overtime compensation is 150%, or 1.5 times the working hour pay rate. Federal and State laws may be different, the federal minimum hourly rate is, for example, $7,25) and the higher standard ALWAYS applies. For tipped workers, the standard rule is that overtime pay must always be at the level of your minimum wage!