Starting January 1, 2013, Arizona's minimum wage rate will increase by 15 cents an hour, to $7.80 per hour. As a result of a ballot initiative passed in 2006, the "Raise the Minimum Wage for Working Arizonans Act," Arizona adjusts its minimum wage annually to keep pace with the rate of inflation. The pending increase of 1.7 per cent is based on the change in the "Consumer Price Index for All Urban Consumers" between August 2012 and August 2013, as required by the state statute. A.R.S. § 23-363. When the new minimum wage kicks in, Arizona's minimum wage will be 55 cents higher than the federal minimum wage of $7.25 per hour.

This new wage requirement will apply to most employees in Arizona. Unlike the federal Fair Labor Standards Act (FLSA), which exempts several categories of employees such as trainees or students from minimum wage requirements, the Arizona Minimum Wage Act contains very few exemptions. Arizona does exempt the following categories of employees from the minimum wage requirements:

  • A person who is employed by a parent or a sibling;
  • A person who is employed performing babysitting services in the employer's home on a casual basis;
  • A person employed by the State of Arizona or the United States government; and
  • A person employed in a small business grossing less than $500,000 in annual revenue, if that small business is not required to pay minimum wage under the FLSA.

Additionally, Arizona allows employers to pay certain employees who receive tips or gratuities (such as waiters, waitresses, bellhops, busboys, car wash attendants, hairdressers, barbers, valets and bartenders) a wage up to $3.00 less than Arizona's minimum wage. However, employers must maintain records indicating that these employees earn at least minimum wage for all hours worked when their tips are combined with the employees' hourly wages. For employees who fall into this category, the new minimum wage will be $4.80 per hour.

The Industrial Commission, which just announced the pending change, made the change in an October 17, 2012 public meeting. In addition to Arizona, nine other states also annually adjust their minimum wages based on the rate of inflation.