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What Does Proposition 206 Mean for Tipped Employees?

In Arizona, employers are allowed to pay tipped employees $3 per hour less than non-tipped employees, as long as the tipped employees earn at least the minimum wage when tips and direct wages are combined.

Starting on Jan. 1, Proposition 206 raised the minimum wage to $10 an hour in Arizona. Here are answers to important questions for hourly workers who earn tips.

Does the employer now have to ensure that a tipped worker earns at least $10 an hour?

Yes. In fact, Proposition 206 gradually raises the minimum wage above $10 an hour in the next few years. In 2018, it will be $10.50. In 2019, it will be $11. And in 2020, it will be $11.50. In each of those years, employers will have to ensure that tipped employees earn at least the minimum wage. If the sum of an employee's tips and direct wage does not amount to the minimum wage, the employer is obliged to make up the difference.

Is an employer allowed to take a credit against the minimum wage for a tipped worker's uniform or other work-related items such as aprons or corkscrews?

No. Although some restaurants do try to cover the cost of shirts, aprons, clip-on ties and other items by deducting the cost from the employee's paycheck, this activity is illegal. If your employer's policy is to deduct from your wage to cover these costs, contact an employment lawyer.

Does the new minimum wage apply to part-time or temporary employees who earn tips?

Yes. The minimum wage applies to full-time, part-time and temporary employees.

Can a tipped employee agree to work for less than the minimum wage?

No. Arizona's minimum wage may not be waived in any kind of verbal agreement or written contract. If your employer tries to talk you into such an agreement, you should know that it is illegal.

If a tipped employee participates in a tip-sharing pool, does the total amount earned, including tips and direct wages, still have to amount to $10 an hour or more?

Yes. The amount of money you actually retain, including direct wages and tips, must come to at least $10 an hour after you've split or pooled your tips. If the amount doesn't come to $10 an hour, your employer is responsible for making up the difference.

For more on wage and hour laws in Arizona, please see The Zoldan Law Group's wage and hour overview.

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