Guides

Arizona restaurant pay rules (2026): what to pay tipped and non-tipped staff

Mays TeamSeptember 30, 2026
The Time off & PTO accrual settings in Mays: the Vacation category with no accrual, and the Sick category set to accrue per hour worked

Arizona raises its minimum wage every January by inflation (A.R.S. § 23-363), and it lets cities set higher rates of their own (A.R.S. § 23-364). In 2026 the state rate is $15.15 an hour. An employer can pay a tipped employee up to $3.00 less, $12.15 an hour, as long as its records show that tips plus wages reached the minimum wage for every hour worked, week by week (A.R.S. § 23-363). Flagstaff and Tucson set their own rates, and Flagstaff no longer allows a tip credit at all (Flagstaff).

This page puts Arizona's figures in one place. It covers what you owe tipped staff like servers and bartenders, what you owe everyone else, and two example weeks with the math shown. Every figure links to the official page it comes from.

Updated October 6, 2026: we re-read the next minimum wage change on its official source that day. Arizona's minimum wage is $15.15 an hour ($12.15 cash wage for tipped employees) through December 31, 2026. It rises to $15.65 ($12.65 for tipped employees) on January 1, 2027.

This is general information, not legal advice. Whether a rule applies can depend on your business's size and your own facts; the note at the end says more.

Arizona pay rules at a glance

As of September 30, 2026:

Rule

Arizona

Minimum wage

$15.15 an hour, since January 1, 2026

Tipped employees: minimum cash wage

$12.15 an hour, if you take the tip credit

Maximum tip credit

$3.00 an hour

Who counts as tipped

Customarily and regularly receives more than $30 a month in tips

Overtime

1.5× the regular rate after 40 hours in a workweek; no daily overtime

Meal and rest breaks for adults

Not required by Arizona or federal law

Next change

$15.65 minimum wage and $12.65 tipped cash wage from January 1, 2027

Sources: Industrial Commission of Arizona; A.R.S. § 23-363; US DOL, tipped wages by state; US DOL, overtime; US DOL, state meal periods; US DOL, state rest periods; Arizona 2027 minimum wage poster.

Who counts as a tipped employee in Arizona

Arizona has no threshold of its own, so the federal one applies: a tipped employee is someone who customarily and regularly receives more than $30 a month in tips (US DOL, tipped wages by state).

In a restaurant that usually means servers, bartenders, bussers and counter staff who serve customers, including baristas who get tips. Cooks and dishwashers usually aren't tipped employees. Only tips the employee actually receives count. If someone works two jobs, say a server who also works prep shifts, the tip credit applies only to the hours in the tipped job (DOL Fact Sheet #15).

What you must pay tipped staff in Arizona

Servers, bartenders, bussers and baristas who get tips can be paid a lower cash wage, with part of their tips counted toward the minimum wage. That's the tip credit, and it comes with conditions:

  • Pay at least $12.15 an hour in cash wages. That's the $15.15 minimum wage minus the most you can credit from tips, $3.00 (A.R.S. § 23-363).
  • Cash wages plus tips must reach $15.15 for every hour worked, week by week. If tips fall short in a workweek, you pay the difference by the regular payday for that week (DOL Fact Sheet #15).
  • Tell them first. Before you take the tip credit, tell each tipped employee, in writing or out loud: the cash wage you pay, the tip credit you claim, that the credit can't be more than the tips they actually get, that they keep all their tips except through a valid tip pool, and that the credit doesn't apply unless you've told them all this (DOL Fact Sheet #15).
  • Overtime is figured on the full minimum wage. An overtime hour is worth 1.5 × $15.15 = $22.725. After the $3.00 tip credit, you pay at least $19.725 of it in cash wages (DOL Fact Sheet #15).
  • From January 1, 2027, the minimum wage is $15.65 and the tipped cash wage $12.65 (Arizona 2027 minimum wage poster).

You don't have to take the tip credit. If you pay tipped staff the full $15.15 an hour, their tips are all on top, there's nothing to make up at the end of the week, and you can put kitchen staff in the tip pool (see below).

Arizona's written tip-credit notices

Before you first take the tip credit, give the employee written notice, and after that, tell them in writing each pay period how much per hour you're taking as a tip credit. Your records for a tipped employee include the tips they report to you and their hours in tipped and non-tipped work, kept apart (A.A.C. Title 20, ch. 5).

What you must pay non-tipped staff in Arizona

Cooks, dishwashers, prep cooks, and cashiers or counter staff who don't get tips are paid like any other hourly employee:

  • At least $15.15 an hour for every hour worked, and at least $15.65 from January 1, 2027 (Arizona 2027 minimum wage poster). No tip credit applies.
  • The same goes for a tipped employee's hours in a non-tipped job, like a server's prep shift (DOL Fact Sheet #15).
  • Overtime is at least 1.5 times their regular rate for hours over 40 in a workweek. At $15.15 an hour, that's $22.725 (US DOL, overtime).
  • Can they share in the tip pool? Arizona's own rule lets you require pooling, but tips a server has to share with staff who aren't customarily tipped, such as food preparers, don't count toward the server's minimum wage (A.A.C. Title 20, ch. 5). Federal law is stricter for an employer it covers: with a tip credit, a pool you require can include only staff who customarily and regularly receive tips, and cooks and dishwashers can share only when no tip credit is taken and everyone in the pool gets at least the full minimum wage (US DOL, tips). Managers and supervisors can never take from the pool.

Worked examples (made-up numbers)

The names, hours and tips below are made up. The rates are Arizona's as of September 30, 2026.

A server's week: when you have to top up

Sam is a server paid the $12.15 cash wage. He works 28 hours in each of two weeks: a busy one with $360.00 in tips and a slow one with $50.00.


Busy week

Slow week

Hours worked

28

28

Cash wages (28 × $12.15)

$340.20

$340.20

Tips received

$360.00

$50.00

Cash wages + tips

$700.20

$390.20

Minimum for the week (28 × $15.15)

$424.20

$424.20

You pay on top

$0.00

$34.00

In the slow week, $50.00 in tips covers only part of the $84.00 tip credit (28 × $3.00), so you pay the difference by the regular payday: $424.20 − $390.20 = $34.00. In the busy week you owe nothing extra, and every dollar of tips is still Sam's.

A cook's week with overtime

Ana is a line cook paid the Arizona minimum wage, $15.15 an hour. Over five days she works 8, 9, 10, 9 and 9 hours: 45 hours in all.


Hours

Rate

Pay

Regular hours

40

$15.15

$606.00

Overtime hours (over 40)

5

$22.725 (1.5 × $15.15)

$113.63

Total

45


$719.63

Overtime is counted by the workweek, and hours can't be averaged across two weeks: a long week earns overtime even if the next one is short (US DOL, overtime). Bonuses can change the rate too; see Time clock, breaks and overtime: first-month payroll mistakes to avoid.

Tip pooling rules in Arizona

Arizona has its own tip-pool rules (A.A.C. Title 20, ch. 5): Arizona lets employers require or permit employees to pool, share or split tips. Employees who customarily and regularly receive tips may pool, share or split tips between them, and the amount each keeps counts as that employee’s tip. Tips an employer requires staff to share with employees who aren’t customarily tipped, including management or food preparers, don’t count toward that employee’s minimum wage.

Federal rules apply too, and where the two differ, follow the stricter one (US DOL, tips):

  • The business, its managers and supervisors never keep employees' tips. A manager can't take anything from a pool; they may keep only tips for service they directly and solely provide. An owner with a real stake who helps run the business counts as a manager too.
  • With a tip credit, a pool you require can include only staff who customarily and regularly receive tips: servers, bartenders, bussers, counter staff who serve customers.
  • Without a tip credit, when everyone in the pool gets at least the full minimum wage, you can include cooks and dishwashers.
  • Card fees: you may reduce a card tip by the percentage the card company actually charges you, and no more (DOL Fact Sheet #15).
  • Service charges: under federal law, a mandatory service charge isn't a tip: money you share from one is wages, and it counts in the regular rate for overtime (DOL Fact Sheet #15). Arizona adds its own rule: A compulsory service charge does not count toward an employee’s minimum wage unless the employer actually distributes it to the employee in the pay period in which it is earned (A.A.C. Title 20, ch. 5).
  • Pay pooled tips out by the regular payday for the week or pay period (DOL Fact Sheet #15).

How to split a pool fairly, with a worked example: Tip pooling for new restaurant owners.

Overtime in Arizona

Arizona has no overtime law of its own (US DOL, state minimum wage laws), so the federal rule applies: non-exempt employees get at least 1.5 times their regular rate for hours over 40 in a workweek (US DOL, overtime).

A workweek is any fixed, recurring stretch of seven days that you choose, and hours can't be averaged across two weeks. There's no daily overtime, no double time and no seventh-day premium under Arizona or federal law, and weekend or holiday hours don't earn a premium by law.

For tipped staff, overtime is figured on the full minimum wage, not the cash wage (see the tipped section above).

Breaks in Arizona

  • Meal breaks: No specific Arizona rule found — federal rules apply (US DOL, state meal periods). The FLSA does not require meal periods. A bona fide meal period (typically 30+ minutes) is not work time (US DOL, breaks).
  • Rest breaks: No specific Arizona rule found — federal rules apply (US DOL, state rest periods). The FLSA does not require breaks. Short breaks an employer offers (about 5 to 20 minutes) are paid work time (US DOL, breaks).
  • Minors: No separate Arizona rule for minors; the adult rules above apply to them too (US DOL, state meal periods).

Other Arizona rules that affect pay

  • Paid sick leave: Under the Fair Wages and Healthy Families Act, employees earn at least 1 hour of paid sick time for every 30 hours worked, from their first day. An employer with 15 or more employees must allow up to 40 hours a year, and one with fewer than 15 up to 24, unless it sets a higher limit. Unused hours carry over, subject to that yearly limit, or the employer can pay them out at the end of the year and give the same amount up front the next year. An employer can make new hires wait 90 days before using it (A.R.S. § 23-372).

Paid sick hours are paid at the employee's same hourly rate, and never less than the minimum wage (A.R.S. § 23-371). That rate leaves out tips (A.A.C. Title 20, ch. 5), so a tipped server's sick hour is paid at least $15.15, not $12.15.

Local rates in Arizona

These cities and counties set their own minimum wage, as recorded on October 6, 2026. An employer pays the highest rate that applies where the work is done.

Area

Minimum wage

Tipped cash wage

Next change

Flagstaff

$18.35 (since January 1, 2026)

same (no tip credit)

$18.95 on January 1, 2027

Tucson

$15.45 (since January 1, 2026)

$12.45

January 1, 2027 (rate not published yet)

Sources: Flagstaff; Tucson. "Not recorded" means we found no local tipped figure; check the city's page.

Arizona law lets a county, city or town set a higher minimum wage within its borders, never a lower one (A.R.S. § 23-364).

Flagstaff

Every employee in Flagstaff gets the full $18.35, tipped or not. The city's law covers anyone who works, or is expected to work, 25 hours or more in a year inside city limits (Flagstaff).

Tucson

Tucson still allows a tip credit of up to $3.00, and its rate covers anyone who works at least 5 hours a pay cycle inside the city. A larger employer, one that averaged 26 or more employees in the last quarter of the year before, owes at least 3 hours at the minimum wage when someone scheduled for at least that long reports on time, able to work the whole shift, and is given less work, or when it cancels such a shift with less than 24 hours' notice (Tucson).

In Maricopa County, every food-handling employee needs a food handler's certificate (Maricopa County).

How Mays helps

Mays runs the schedule, time clock, tip pool and payroll export for each location. For Arizona pay rules, that means:

  • Positions and wages. Give each position a default hourly wage, for example the tipped cash wage for servers and at least the minimum wage for cooks. Turn on Labor law compliance and Mays looks up each location's minimum wage from its address and warns you when a position's default wage, someone's hourly wage or a punch is below it, comparing tipped positions with the tipped cash wage when it has that figure. It never blocks the save. It switches to the new rate on January 1, 2027 by itself, and admins get a reminder 30 and 7 days before, listing the wages below the new rate.
  • A tip pool per location. Split pooled tips by hours worked, equally or by FTAR score, per pay period or day by day, and choose which positions receive. Until you pick positions under Who receives, the positions marked Tipped share the tips; if no position is marked, everyone who worked does, cooks included. So if you take a tip credit, tick Tipped position only on positions whose staff get tips, or pick them yourself. A punch with no position counts under its shift's position, or else the person's primary or only position at that location; with neither, its hours get no share, and the tip pool card shows how many punches that leaves out. Leave managers and admins out of the pool is on by default, so leave it on. The tips come from your connected POS at that location (Square or Union) or from tips synced with 7shifts time punches, and each person's share appears in the Tip Payouts report and the payroll export. With Labor law compliance on, Mays can take your card processor's fee out of card tips, but check Arizona's rule before you turn that on: the tip pool card links the official source.
  • The tip-credit make-up is yours to check. Mays doesn't compare a tipped employee's cash wages plus tips with the minimum wage, so check each workweek the way the server example above does.
  • Time clock and timesheets. Staff clock in on their phone, a shared kiosk or an NFC tag. Timesheets run by pay period. Overtime is counted by the workweek, and with Labor law compliance on, by any daily, double-time and seventh-day rule the location's state sets too, which Mays reads from its address; the schedule's labor cost, the reports and the pay summary all include it.
  • Payroll export. A standard CSV or a Gusto-format CSV with regular and overtime hours and pooled tips for each employee. A card surcharge you share with staff goes in as wages, not tips.
  • Earned paid sick time. With Labor law compliance on, the Sick category under Scheduling → Settings → Time off & PTO accrual shows Arizona's rules for each location, and Apply these rules fills them in: at least one hour for every 30 worked, Arizona's yearly limits on earning and using sick time, and its waiting period for new hires, counted from the Hire date on each person's Employment tab. Everyone who works hours earns it from approved punches, managers included, and unused hours carry into the next year. The limits shown are the ones for the largest employers, so a smaller employer lowers them to its own.
  • Flagstaff and Tucson locations. Set each location's position wages to its city's rate, and in Flagstaff give tipped positions the full $18.35.

Sources

Every figure on this page comes from these official pages, as they read on the date shown.

This page is general information, not legal advice. Laws change, and coverage rules (your business's size, whether federal law covers you) decide which of them apply. Check the pages above, and ask an employment lawyer or accountant about your situation.

Run Arizona payroll on the right numbers

Set each position's wage, turn on the tip pool with managers left out, and let the time clock count overtime by the workweek. Then payroll is an export, not an evening.

Start your free trial: 30 days, every module, no card needed. Setting up a tip pool? Read Tip pooling for new restaurant owners.