Efforts to change the amount of money that employers in Arizona can take from the wages of their tipped workers have not been successful.
The amendment to the Arizona Constitution that would have changed this is Proposition 138, also known as the “Wages for Tipped Workers Amendment.”
The amendment was first introduced to the Arizona State Legislature on Feb. 5, and it passed the state’s Senate on March 12.
After being modified to focus on tipped workers, the amendment passed the state’s House of Representatives on April 3, and it passed the Senate again on June 12.
Officials who supported the amendment include Sen. Javan Daniel Mesnard and Rep. Justin Wilmeth, who both align with the Republican Party.
An official who opposed the amendment is Tucson Mayor Regina Romero, who is a Democrat.
Mesnard said that the way that the description of the amendment was written on the ballot might have led people to vote against it.
“Those who came up with the wording were opposed to it,” Mesnard said.
Mesnard also said that he supported the amendment in order to protect the Arizona Constitution from people who wanted to get rid of tip credit.
“We wanted to put a protection around it in the state constitution,” Mesnard said. “In order to achieve agreement from the side of employers and the side of employees, we had to come up with a compromise, essentially.”
Wilmeth said that he supported the amendment because employees in Arizona are able to provide for themselves through their own labor.
“I heard from so many professional servers that wanted Prop 138 to pass because they bet on themselves and their ability to drive their own salary via their own hard work, hospitality and timeliness.” Wilmeth said.
Wilmeth also said that he is disappointed that the amendment failed to pass, and what this will mean for restaurants.
“Higher prices at restaurants—which already have a very small profit margin—and possibly even fewer restaurant options for consumers, as closures could be a result for forced salary changes,” Wilmeth said. “I’m disappointed that Prop 138 failed. As a former server, I know the benefits of being a tipped employee and one can absolutely earn more money off a tipped environment than a fixed wage.”
Teddy Myers, manager at Wren & Wolf, said that the tip credit in Arizona helps out workers in places such as restaurants who are valuable team members who do not get tips.
“This is crucial, especially for back-of-house workers like dishwashers, prep cooks, and line cooks, who…are essential to the operation,” Myers said. “It helps create a more balanced wage structure between front-of-house and back-of-house staff, who often work equally hard but earn less.”
Myers also said that the tip credit has significance beyond simply taking away money from the wages of employees.
“If the tip credit were eliminated, businesses would see a 27% increase in labor costs per employee, which is a big hit,” Myers said. “To cover that, many restaurants would have to raise prices or, worse, reduce staffing levels, automate jobs, or cut hours to make up the difference. It’s not just about paying workers more; it’s about the practical implications of running a business that depends heavily on labor.”
If passed, Proposition 138 would have allowed employers to pay 25% less per hour than the minimum wage to employees who are able to earn $2 in tips from customers.
The current tip credit in Arizona is $3 per hour, and the minimum wage in the state is $14.35; this means that employers can pay employees $11.35 per hour if the extra money that they get from tips adds up to the minimum wage amount.
With Proposition 138’s reduction of 25% less per hour, employers would be able to pay employees $10.76 per hour if they earn $2 from tips on top of the minimum wage.
Edited by Shi Bradley
