Arizona’s Minimum Wage to Increase in 2023 – What Employers and Employees Should Expect

Arizona’s minimum wage is set to increase starting in January 2023, and employers and employees alike should prepare for the change now to be ready when it does.

The state’s minimum wage is already one of the highest in the nation, according to AZ Central/The Arizona Republic, but it’s rising again in just a few short months, with the increase tied to inflation by law.

The current state minimum wage is $12.80 an hour. It will increase to $13.85 an hour, an increase of $1.05, starting on January 1, 2023. 

The state minimum hourly wage is going up because annual increases are mandated by Proposition 206, which statewide voters approved in 2016. Increases are now tied to inflation, specifically the Consumer Price Index for urban workers tracked by the federal Bureau of Labor Statistics.

The increase could cause a problem for small businesses and their owners, but The Arizona Republic noted that many employers are already paying more than the minimum to attract and keep workers at a time of low unemployment and considerable job openings.

One way small business owners in Arizona could prepare for the wage increase ahead of the change is by claiming the Employee Retention Tax Credit (ERTC). 

Businesses that experienced major setbacks during the COVID-19 pandemic that kept W2 staff employed may qualify for the ERC, with business owners potentially receiving up to $26,000 per employee. That could help offset the cost of paying employees more in the short term. 

As for employees in Arizona who are awaiting the change, they should be aware that there are some exceptions to the law. For instance, employers can pay tipped employees who regularly receive tips or gratuities up to $3 an hour less than the minimum wage – as long as the employer keeps a record proving workers received at least the minimum for all hours worked, The Arizona Republic noted.

If you aren’t paid fairly as an employee once the new minimum wage increase passes in January, you may have legal recourse. The employment law attorneys at Phillips Law Group can help you with labor law concerns like employers that violate wage standards or who don’t pay out overtime pay accordingly. 

If you think you might have a case, give us a call for a free consultation, or fill out the form on this page and we will contact you to discuss your situation and potential legal options.