Are employers allowed to pay tipped employees less than minimum wage?

In Arizona, employers are allowed to pay tipped employees less than the state-mandated minimum wage. Arizona law requires that employers pay tipped employees an hourly wage of at least $3.00—which is less than the hourly minimum wage rate of $12.15 for employers with more than 10 employees. Employers are only required to pay the tipped employees a lower hourly wage if the employee makes at least $30.00 per month in tips. The employer must make up the difference between the tipped employee’s hourly rate and minimum wage if the employee’s earned wage plus tips does not equal the minimum wage. This is called a “tip credit.” If the employee earns more than $30.00 per month in tips, the employer does not have to make up the difference that the tipped employee was not paid. Although tipped employees may be paid less than the minimum wage, employers must still meet all other state laws regarding minimum wage, overtime pay, and other labor regulations. Employers still must make sure that tipped employees receive the minimum wage when tips and wages are combined. Tipped employees can also file a complaint with the Arizona Department of Labor if they believe that their wages have been unlawfully withheld.

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Are employers allowed to pay tipped employees less than minimum wage?

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