Arizona MINIMUM WAGES

Arizona State Minimum Wage for 2025

Arizona’s minimum wage increased to $14.70 per hour in January 2025 from the previous hourly rate of $14.35 in 2024. This comes in accordance to the Fair Wages and Healthy Families Act and annual adjustments aligned to the Consumer Price Index (CPI).  The tipped minimum wage rates have also rose to $11.70 per hour, allowing employers to claim a tip credit of up to $3.00 per hour, provided the combined cash wage and tip equals or exceeds the state minimum wage rate.

As per the Fair Labor Standards Act (FLSA), non-exempt employees are entitled to 1.5 times their regular pay for working beyond the standard 40-hour workweek. Thus, making the 2025 overtime rate $22.05 per hour.

Employers must keep track of the tipped minimum wage rates to ensure employees receive fair wages. Failure to do this will lead to strict actions under the Arizona Labor Laws.

Minimum Wages in Arizona Cities

Here’s a city-wise breakdown of Arizona’s minimum wages:

Threshold For Employees Exempt

The U.S. Department of Labor (DOL) has recently updated the Fair Labor Standards Act (FLSA) regulations, increasing the salary thresholds for exempt employees.

The minimum salary thresholds for executive, administrative, and professional (EAP) exemptions to $1,128 per week ($58,656 annually) effective from January 1, 2025. Similarly the highly compensated employee (HCE) exemption threshold was set to $151,164 annually on January 1, 2025, with automatic updates every three years.

However, these changes were blocked by a federal court rule in late 2024. Thus, the current salary thresholds for EAP employees stands at $684 weekly ($35,568 annually) and the annual threshold for Highly Compensated Employees stands at $107,432.

Employers must continue to apply the salary basis test and duties under the 2019 regulations to determine the exempt status of their employees. Employees earning below these thresholds are entitled to overtime protections unless they meet exemption criteria.

Historical Data of Arizona Minimum Wages

Minimum wage laws in the United States were first implemented at the state level, with Massachusetts leading the way. These laws were later extended to the federal level in the 1930s, driven by the “living wage” movement. Monsignor John A. Ryan’s book, A Living Wage, published in 1906, was a key influence in advocating fair pay for all workers.

Responding to the growing need for fair wage pay, Arizona established the Arizona Minimum Wage Act through Proposition 202. This ensured that the state’s minimum wage aligned with the cost of living of people.

Here are the key milestones of Arizona:

• First Wage Increase (2007): Arizona witnessed its first wage increase in 2007. It marked a move away from static wage structures to gradual and incremental wage rate raises.
• Proposition 206 (2016): 2016 was a critical year when Proposition 206 was passed to increase the minimum wage rate to $12 per hour by 2020. The approach also aimed to address income inequality and align wage growth with the cost of living.
• Incremental Wage Increases (2017-2020): Following Proposition 206, Arizona saw a gradual increase in minimum wages and achieved the $12 per hour minimum wage goal in 2020.
• $12 per Hour Achieved (2020): The achievement reflected the state’s commitment to ensure fair compensation and offer an equitable environment to the workers.
• Annual Inflation Adjustments (2021 and beyond): Understanding the importance of fair pay, Arizona has introduced a system to ensure annual pay adjustments for inflation. This will protect workers against economic fluctuations and other unforeseen events.

The table below explains all the changes witnessed by the state:

Source: https://www.dol.gov/agencies/whd/state/minimum-wage/history

Exemptions in Minimum Wages of Arizona

The Arizona Minimum Wage Act applies to almost all workers, except for a few exceptions. These exceptions are as follows:

• Individuals employed by a parent or sibling.
• Those offering babysitting services in an employer’s home on an occasional basis.
• Employees of the State of Arizona or the federal government.
• Employees of small businesses with an annual revenue under $500,000, provided they are not required to pay minimum wage under the Federal Fair Labor Standards Act. However, most small businesses in Arizona must comply with the state minimum wage laws.