On Tuesday, a Maricopa County Superior Court rejected a complaint filed by Raise the Wage AZ to block the Tipped Workers Protection Act (SCR 1040) from being included on the ballot this November. The Act would amend Arizona’s constitution, ensuring that tipped workers receive at least the current minimum wage.
It will appear on the ballot under the name Proposition 138.
Phoenix-based Holtzman Vogel attorney and former Arizona Supreme Court Justice Andrew Gould represented the Arizona Restaurant Association in this matter.
“The proposed amendment, SCR 1040, protects the jobs of tipped workers while allowing the businesses that employ them to survive financially. This is a victory for the people of Arizona against anti-business politics,” said Gould.
“This was a bogus lawsuit from the start,” said Steve Chucri, President & CEO of the Arizona Restaurant Association, “and the Arizona Restaurant Association thanks the court for granting our request to have the complaint promptly denied. It is clear the out-of-state special interests behind the lawsuit simply don’t want Arizona voters to have their say this November on the Tipped Workers Protection Act.”
The progressive activist group, Raise the Wage AZ, sought a preliminary injunction against the Tipped Workers Protection Act, arguing that the ballot measure’s name was misleading.
The group is pushing a ballot measure, the “One Fair Wage Act,” which would raise the state minimum wage from $14.35 to $18 per hour.
In 2016, Arizona voters passed the Fair Wages and Healthy Families Act, which requires employers to pay employees at least the statutory minimum wage. The minimum wage is regulated by the Industrial Commission of Arizona (ICA) and is annually adjusted based on changes in the Consumer Price Index, a measure of the cost of living, as published by the U.S. Department of Labor. Effective January 1, 2024, Arizona’s minimum wage is $14.35.
An employer may pay a tipped employee up to $3 per hour less than the minimum wage if the employer can demonstrate that for each week, when combined with tips, the tipped employee received at least the minimum wage per hour for all hours worked. Tip earnings are averaged over the employer’s payroll period, or another period chosen by the employer that complies with ICA regulations, to ensure compliance with minimum wage regulations (A.R.S. § 23-363; ICA).
SCR 1040 Provisions
Subject to voter approval, constitutionally establishes minimum hourly wage requirements for employees who customarily and regularly receive tips or gratuities from patrons or others (tipped employees).
1. Authorizes an employer to pay a tipped employee a wage of up to 25 percent per hour less than the statutory minimum wage if the employer can establish that for each week, when adding tips or gratuities received to wages paid, the employee received not less than the minimum wage plus $2 for all hours worked, as evidenced by either:
a) the employer’s records of charged tips or gratuities; or
b) the tipped employee’s declaration for Federal Insurance Contributions Act purposes.
2. Specifies that compliance with the required tipped employee wage is determined by averaging tips or gratuities received by the tipped employee over the course of the employer’s payroll period or any other period selected by the employer that complies with laws enacted by the Legislature.
3. Designates this legislation as the Tipped Workers Protection Act.
4. Requires the Secretary of State to submit the proposition to the voters at the next general election.
5. Becomes effective if approved by the voters and on proclamation of the Governor.