The Arizona minimum wage increased from $14.35 per hour to $14.70 per hour. The latest increase will take effect on January 1, 2025, and will remain in effect until December 31, 2025. This means that Arizona employers will need to start paying the higher minimum wage ($14.70 per hour) for all hours worked after January 1, 2025. If employees are classified as tipped employees, their minimum wage is also increasing to $11.70 per hour. There are certain requirements to be met to classify employees as tipped.
The Arizona minimum wage will likely increase yet again on January 1, 2026, because the Fair Wages and Healthy Families Act provides for a cost-of-living increase on January 1 of each year.
It is important to note that the Federal minimum wage remains unchanged at $7.25 per hour and is much lower than the Arizona minimum wage. With this latest increase, Arizona has one of the highest minimum wage rates in America. Arizona employers must pay the higher of the federal or state mandated minimum wage, which means Arizona employers must pay the higher Arizona minimum wage. Some Arizona cities, such as Flagstaff and Tucson, have an even higher minimum wage than the Arizona minimum wage is. Employers in those cities must pay the higher minimum wage.
Additionally, there were changes to overtime rules by the Department of Labor during the past year. Specifically, the rule updated the salary portion of the exemption test so that on January 1, 2025, salaried (even if classified as exempt) employees making less than $58,656 a year would be automatically eligible for overtime pay any time they worked more than 40 hours a week.
Arizona employers must also post the Arizona minimum wage poster in a conspicuous place. If the work force includes Spanish speaking employees, then the employer should post the poster in both English and Spanish. With many employees working hybrid or fully remote schedules, employers should include a link to the poster with their employees’ paychecks or through an employee intranet or portal. The poster is available at no cost from the Arizona Industrial Commission. An employer can face fines and penalties if they fail to post it in a conspicuous place or make it reasonably available to remote employees.
The failure to comply with wage laws can be very costly for employers. Depending on the type of wages not paid, the employee can recover two or three times the amount they should have been paid. Employees can also recover an award of attorney fees, which often exceeds the amount of unpaid or under-paid wages.
