Originally Assigned to ED AS PASSED BY HOUSE
Now FICO-related
ARIZONA STATE SENATE
Fifty-Sixth Legislature, Second Regular Session
AMENDED
FACT SHEET FOR S.C.R. 1040
permanent school fund; distribution; uses
(NOW: tipped workers; wages)
As passed by the Senate, S.C.R. 1040 required, subject to voter approval and beginning in
FY 2026, the State Treasurer and the Arizona State Land Department to annually transfer
Permanent State School Fund monies to provide guaranteed financing to common schools for
capital facilities before transferring Permanent School Fund monies for any other authorized
purpose.
The House of Representatives adopted a strike-everything amendment that does the
following:
Purpose
Subject to voter approval, constitutionally establishes minimum hourly wage requirements
for employees who customarily and regularly receive tips or gratuities from patrons or others
(tipped employees).
Background
In 2016, Arizona voters passed the Fair Wages and Healthy Families Act, which requires
employers to pay employees at least the statutory minimum wage. The minimum wage is regulated
by the Industrial Commission of Arizona (ICA) and is annually adjusted based on changes in the
Consumer Price Index, a measure of the cost of living, as published by the U.S. Department of
Labor. Effective January 1, 2024, Arizona's minimum wage is $14.35.
An employer may pay a tipped employee up to $3 per hour less than the minimum wage if
the employer can demonstrate that for each week, when combined with tips, the tipped employee
received at least the minimum wage per hour for all hours worked. Tip earnings are averaged over
the employer's payroll period, or another period chosen by the employer that complies with ICA
regulations, to ensure compliance with minimum wage regulations (A.R.S. § 23-363; ICA).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Authorizes an employer to pay a tipped employee a wage of up to 25 percent per hour less than
the statutory minimum wage if the employer can establish that for each week, when adding
tips or gratuities received to wages paid, the employee received not less than the minimum
wage plus $2 for all hours worked, as evidenced by either:
a) the employer's records of charged tips or gratuities; or
b) the tipped employee’s declaration for Federal Insurance Contributions Act purposes. FACT SHEET – Amended
S.C.R. 1040
Page 2
2. Specifies that compliance with the required tipped employee wage is determined by averaging
tips or gratuities received by the tipped employee over the course of the employer’s payroll
period or any other period selected by the employer that complies with laws enacted by the
Legislature.
3. Designates this legislation as the Tipped Workers Protection Act.
4. Requires the Secretary of State to submit the proposition to the voters at the next general
election.
5. Becomes effective if approved by the voters and on proclamation of the Governor.
Amendments Adopted by the House of Representatives
• Adopted the strike-everything amendment relating to tipped worker wages.
House Action
COM 3/19/24 DPA/SE 6-3-0-1
3
rd
Read 4/3/24 35-24-0-0-1
Prepared by Senate Research
April 3, 2024
MG/JC/cs