Court Greenlights Crucial Vote on Tipped Workers Ballot Measure

A judge has dismissed an attempt to prevent a public vote on a proposal that would allow restaurants to reduce the wages of their tipped employees.

Maricopa County Superior Court Judge Peter Thompson, appointed by former Governor Jan Brewer, ruled that Proposition 138 is not inherently misleading. This measure, promoted by the Republican-controlled Legislature and the Arizona Restaurant Association, would permit restaurants to pay their workers 25% less than the minimum wage, currently set at $14.35 per hour. This would mean restaurants pay only $10.76 per hour instead of the current $11.35 under existing tip credit laws.

The national committee One Fair Wage, advocating for higher wages, opposes this proposition. Their attorney, Jim Barton, argued that the measure’s unofficial title “Tipped Workers Protection Act” is deceptive, suggesting various scenarios where tipped workers could end up earning less if Proposition 138 passes. However, Judge Thompson noted that this is not the official title and deemed the label not misleading.

The Arizona Restaurant Association supports the proposition, claiming it provides an “economically sustainable minimum wage” for employers, which would prevent the elimination of tipped jobs due to increased business costs. According to the proposed 25% credit, employers must show that tipped workers received at least the minimum wage plus $2 per hour through tips.

Judge Thompson emphasized that the debate over whether paying tipped workers less benefits them economically is a matter of political opinion. The official title of the proposition, “Amending Article XVIII by adding Section 11, Constitution of Arizona,” and its descriptive language were ruled to clearly inform voters of its impact.

Attorney Barton has pledged to appeal the decision. Meanwhile, One Fair Wage is proposing a competing ballot measure to incrementally increase the minimum wage to $16.35 by 2025 and phase out the $3 tip credit, requiring restaurants to pay the full minimum wage regardless of tips.

The Arizona Restaurant Association has filed another lawsuit to remove this competing measure, Proposition 212, from the ballot, alleging insufficient valid signatures. A hearing is scheduled for next week.

Anticipating potential voter support for Proposition 212 based on past trends favoring minimum wage hikes, the association pushed for Proposition 138 as a constitutional amendment. This would ensure that, if both measures pass, Prop 138 would override the tip credit elimination in Prop 212, even if Prop 212 garners more votes.

If Proposition 212 passes, restaurants could see the minimum wage increase to $17 by 2026, significantly raising their wage obligations. However, if Proposition 138 also passes, restaurants would only need to pay $12.75 of the $17 minimum wage due to the 25% tip credit, resulting in considerable savings.