Tipped Employee Rights: AZ Law &
the Fair Labor Standards Act ("FLSA")
The FLSA protects you from substandard wages and oppressive working conditions
The FLSA prescribes standards for wages and overtime pay, which affect most private and public employment.
Congress enacted the FLSA with the goal of protecting all covered workers from substandard wages and working conditions.
The FLSA requires employers to pay their employees at least the federal minimum wage ($7.25/hour) and to pay one-and-one-half times the regular rate of pay for all overtime (time worked in excess of 40 hours per week).
The Arizona minimum wage is $10/hour
The current Arizona wage, as of January 1, 2017, is $10 per hour.
Arizona law, Arizona Revised Statutes § 23-363, requires all employers to pay their employees at least the Arizona minimum wage, and, under § 23-364, to pay one-and-one-half times the regular rate of pay for all overtime worked.
Because Arizona's minimum wage exceeds the Federal minimum wage, Arizona's minimum wage supersedes and controls. As such, no hourly employee in Arizona can be paid less than $10, with the exception of certain tipped employees (see below).
I'm a server, bartender, or other tipped employee, why can my employer pay me less than minimum wage?
Section 3(m) of the FLSA and Arizona Revised Statutes ("ARS") § 23-363 permit an employer to take what is called a "Tip Credit" toward its minimum wage obligation for tipped employees, as long as the tipped employees' hourly wage and tips combined to at least the minimum wage.
As of January 1, 2017, Arizona's minimum wage is $10 per hour, and Arizona allows a tip credit of $3.00. This means that tipped employees in Arizona must receive a wage of at least $7.00 per hour.
This also means that tipped employees in Arizona must receive an overtime wage of at least $12 per hour.
Legal Barriers to the Tip Credit:
What Must My Employer Do?
Under federal and Arizona law, in order to be able to legally take the tip credit, your employer must explain the tip credit system to you, as follows:
1. The amount of hourly cash wage to be paid to you;
2. The amount of tips that you must receive in order to reach the full minimum wage threshold, and that the amount of the tip credit taken by your employer may not exceed the amount of tips you receive; and
3. That you are entitled to retain all tips you receive (except for a valid tip-pooling arrangement - see below)
If your employer failed to do any of these, you may be entitled to recover money that should have been paid to you. Your employer cannot take the tip credit, and must pay back wages, where it fails to satisfy each of these requirements.
The FLSA contains stiff penalties & damages for employers that violate
Many employers want the best of both worlds - they want to pay you as little as possible and get the most work out of you that they possibly can. They think that
Some common FLSA violations by employers include:
Failing to pay proper minimum wage;
Failing to pay overtime for all time worked over 40 hours per week;
Requiring off-the-clock labor;
Not paying a last paycheck;
Improperly paying the tipped employee hourly rate (see below)
The FLSA provides that any such violation by an employer entitles the wronged employee to recover not only the improperly unpaid wages, but also:
An additional equal amount (thus, totaling twice the amount you're owed);
Attorney fees; and
I think my employer has violated the FLSA.
What can I do?
The FLSA allows you to recover:
Back Pay (unpaid wages owed to you),
An Additional Equal Amount of Back Pay (thus, totaling TWICE the amount of unpaid wages owed to you),
Attorney Fees & Costs incurred in pursuing your unpaid wages.
If you believe you have a claim, speak with an attorney immediately regarding your rights and options.
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