Battle Brews as Restaurants Challenge $18 AZ Minimum Wage Proposal Before November Vote

The Arizona Restaurant Association has filed a lawsuit to block a ballot initiative aimed at raising the state’s minimum wage to $18. The association claims that the union-backed group behind the initiative, Raise the Wage AZ, did not gather enough valid signatures to qualify for the November ballot.

Since November 2022, Raise the Wage AZ has been collecting signatures for the “One Fair Wage Act.” This measure proposes increasing the minimum wage from $14.35 to $18 per hour initially and thereafter adjusting it annually for inflation. Additionally, it plans to escalate the wages of tipped employees gradually, eventually eliminating the lower hourly rate currently used by businesses employing tipped workers.

Arizona law currently allows employers to pay tipped workers a reduced hourly rate as long as tips bring their earnings up to the standard minimum wage. The proposed measure needs 255,949 valid signatures to appear on the ballot. Earlier this month, the group submitted 354,278 signatures, as noted by the Secretary of State’s Office. County recorders are now in the process of verifying these signatures.

This initiative is not the only one concerning wage policies. A competing measure, supported by the Arizona Legislature and the Arizona Restaurant Association, seeks to allow restaurants to pay tipped workers 25% less than the minimum wage.

The legislative counter, known formally as Senate Concurrent Resolution 1040, or the “Tipped Workers Protection Act,” passed the Senate with a 16-12 vote. All Republicans and a few Democrats in the House supported it, leading to approval with a vote of 35-24.

Currently, state law permits restaurants to pay tipped employees $3 less than the minimum wage. Employers then use tips to make up the difference. The new ballot measure, if approved, would let employers pay tipped employees 25% less than the minimum wage, provided these workers earn at least $2 per hour more than the minimum wage through tips.

Opponents of this restaurant-backed measure have filed a lawsuit, arguing that the title of the ballot measure is misleading and unconstitutional, as it fails to protect tipped workers.

Meanwhile, Raise the Wage AZ faces its own legal challenge. The Arizona Restaurant Association alleges that Raise the Wage AZ submitted 28,000 fewer signatures than claimed and that many signatures were from non-Arizona voters or collected by unregistered petition circulators.

Steve Chucri, president & CEO of the Arizona Restaurant Association, stated, “After an exhaustive analysis, we are very confident the initiative is tens of thousands of signatures short of the minimum number required to qualify for the November ballot.”

In response, Jim Barton, an attorney representing Raise the Wage AZ, commented that the challenge was anticipated and expressed confidence that enough valid signatures remain to qualify for the ballot. Barton also questioned the data used by the Arizona Restaurant Association in their estimates.

A ruling on the matter is expected soon, as ballots must begin printing by August 22. Barton anticipates a decision by mid-August.

These two ballot initiatives are part of a bigger national debate on raising the minimum wage, encountering strong opposition from business groups. Opponents have previously highlighted Washington, D.C.’s experience, where a similar move led to controversies and changes in restaurant pricing strategies.

In Arizona, a group named “Save Our Tips” registered as a political action committee shortly before a House Commerce Committee hearing on the “Tipped Workers Protection Act.” This group is an extension of the Restaurant Association, although this relationship was not disclosed during the committee hearing.