PHOENIX (CN) — Local organizers seeking to increase the minimum wage in Arizona sued the state Friday to challenge a ballot referral they say will mislead voters and reduce wages for restaurant workers and others who rely on tips.
Raise the Wage Arizona is seeking an injunction to remove Senate Concurrent Resolution 1040, known as the Tipped Workers Protection Act, from the ballot in November because the title is “deceptive.” Members of the nonprofit say the referral gives no protections to tipped workers and, if anything, would only serve to decrease wages.
“We have rarely seen the level of chutzpah required to call a pay cut a protection,” attorney James Barton said in a press conference outside the Arizona Supreme Court building Friday morning. He said the Legislature only created the referral to distract voters from a potential voter initiative that would increase the state minimum wage and gradually bring wages of tipped workers to the same amount as the rest of Arizona’s workforce.
The minimum wage in Arizona is $14.35 per hour, and will likely increase in 2025 to keep up with inflation, thanks to the Fair Wages and Healthy Families Act passed in 2016. Businesses are allowed to pay tipped employees as low as $3 below that wage, as long as their tips make up the difference on average per pay period. Employers are required to make up the difference otherwise.
The Tipped Workers Protection Act would allow businesses to pay their workers 25% less than minimum wage rather than the flat $3, as long as the employee makes $2 above the minimum wage with tips included. For most workers, employers could pay a base rate of $10.76 per hour rather than $11.35 per hour.
Barton later explained that if a worker makes a low amount of tips, the employer would still be required to make up the difference to get them up to the minimum wage. But if a worker regularly makes enough tips to surpass $14.35 by $2.00 per hour, then their employer could choose to make a smaller contribution to their pay, meaning they would make less overall than under the current law.
“It either keeps their wages the same, so it’s not a protection, or it reduces their wage,” Barton said outside the Supreme Court building. “In the vast majority of circumstances, tipped workers will make less money under SCR 1040 because the employer’s contribution will go down and the worker’s tips will remain unchanged.”
Bill sponsor J.D. Mesnard said the opposite is true — that the measure would ensure tipped workers make $2 more than the minimum wage if their employer cuts their base pay by 25%.
“The only guarantee they have right now is minimum wage,” he said in a phone call with Courthouse News. “This plan would say minimum wage plus $2.”
But in the same conversation, he said the worst case scenario is that the worker just makes the minimum wage.
Barton gave mathematical examples in the lawsuit to illustrate that if a worker receives high tips, they would receive less per pay period under the proposed measure than under current law.
In either case, the tipped employee should still make at least $14.35 per hour. But Saru Jayaraman, president of the national nonprofit One Fair Wage, said Friday that most restaurants are regularly out of compliance with hourly wage laws. She pointed to a study conducted by the U.S. Department of Labor that found that 84% of restaurants violated pay requirements and cheated workers out of $5.5 million in wages between 2010 and 2012.
“This act does nothing to protect workers,” she said. “This act is actually the tipped workers reduction act.”
Raise the Wage Arizona is asking that a state judge remove the referral from the ballot on the grounds that the title is misleading, and that its presence on the ballot next to their own ballot initiative would create voter confusion.
That initiative would do two things: First, it would raise the minimum wage by $1 in addition to the increase for inflation in 2025 and 2026, and would continue to raise it to keep up with inflation in subsequent years in accordance with the Fair Wages and Healthy Families Act.
Second, it would raise the subminimum wage for tipped workers from $3.00 to only $2.00 less than minimum wage in 2025 and $1.00 less in 2026, bringing the wage for tipped workers to the same level as that of non-tipped workers by 2027.
“It’ll get up to $18 pretty quick,” Barton said.
The initiative has already garnered more than 200,000 signatures, One Fair Wage ballot initiative director Mariah Ross said. It needs 255,959 signatures by July 3 to appear on the ballot in November. Ross said she’s confident her team of canvassers will collect enough signatures.
The Arizona Restaurant Association didn’t reply to a call and email for comment.
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