What Does Prop. 138 Do?
Prop. 138 protects the current tipping system in full service restaurants and other traditional full service industries. It does this by changing the stagnant and outdated $3 tip credit to a percentage pegged to the minimum wage. It also increases the guaranteed base wage for servers by $2 per hour.
If Prop. 138 were in place today, the guaranteed base wage for servers would be $16.35 per hour instead of $14.35 per hour.
Prop. 138 Benefits Everyone
Prop. 138 protects tipped workers, helps your neighborhood restaurant, and saves customers money
Tipped Workers
Tipped workers rely on the current tipping system. Under this system, workers have legal protections on the tips they receive. This allows servers in the restaurant industry to earn upwards of $27 per hour. Unfortunately, there are outside groups trying to blowup this system. That is why Prop. 138 is necessary, by ensuring workers' tips receive constitutional protections while increasing the guaranteed pay for servers by $2 per hour.
"If the tipping system was to change, it would cripple me. It would really mess up my life. My message to voters about this proposal is if it doesn't pass, our industry could be crippled. Take it from someone who's been in the industry for almost two decades."
- Ashley M.
Restaurants
Your local restaurants are a slim margin business. In fact, the average profit margin in restaurants is only 5%. Sadly, for your local and family owned restaurants, these margins are even smaller. Our local restaurants are dealing with the impacts of inflation along with everyone else while still keeping their prices affordable. The current tipping system is a key to many local establishments' ability to survive. Because of this system, restaurants are able to use resources more efficiently than many other states. Prop. 138 protects this system by switch the current $3 tip credit to a percentage. This ensures restaurants have predictable costs from year to year.
Customers
Restaurant customers in Arizona know how vibrant of a culinary scene we are lucky enough to have. Unfortunately, this is under attack by outside special interest groups that are trying to remove Arizona's successful tip credit, just like they did in California. The tip credit is the tool that allows restaurants to save costs on employees that receive tips while ensuring that tips received by employees stay with the employees. In the seven jurisdictions that have eliminated the tip credit, consumers have experienced surcharges and service fees added to their bills and massive increases in menu prices while employees have seen total compensation decrease. Prop. 138 keeps this from happening by ensuring the continuation of the current tip credit and a higher guaranteed income for employees.
Why Should I Care About the Tip Credit?
Prop. 138 maintains the status quo by protecting the tip credit and increasing the guaranteed wage for workers. The tip credit is crucial for Arizona's tipped workers, restaurants, and customers. This system blends the stability of an guaranteed base wage with the potential for significant earnings through tips for employees. This structure rewards exceptional service while saving customers from paying sales tax on the service they receive at restaurants and preventing mandatory service charges.
In fact, 90% of tipped workers support the current model, and 87% fear that their earning would drop if the tip credit was eliminated.
Moreover, this system supports the financial health of restaurants, allowing them to allocate resources wisely, sustain employment opportunities, and continue innovating in the culinary world. By voting for Prop. 138, you are supporting the current system that recognizes and rewards hard work, skill, and dedication to service excellence, ensuring that the restaurant industry remains vibrant, diverse, and driven by passion.
HOW THIS IMPACTS YOU AS A TIPPED WORKER
Tipped workers rely on the current tipping system. Under this system, any tips left are the legal property of the workers. Businesses are prohibited from retaining or using the tips in anyway. This allows tipped workers to earn significantly more than minimum wage. In fact, the average tipped worker earns upwards of $27 per hour and many earn closer to $40 per hour. Unfortunately, there are outside groups trying to blowup this system. That is why Prop. 138 is so important. Prop. 138 protects the current compensation model tipped workers rely on by ensuring workers' tips receive constitutional protections while increasing the guaranteed pay for servers by $2 per hour.
Without Prop. 138, the tip credit could be eliminated, leaving the future of tip protections in peril. In areas of the country that have eliminated the tip credit, tipped workers have seen their tips decrease, or disappear all together and replaced by mandatory service charges. Unlike tips, these service charges are the legal property of the business.
Meet the Servers Taking a Stand
HOW THIS IMPACTS YOU AS A CONSUMER
Imagine going to your favorite restaurant, where the staff always greets you with a smile and remembers just how you like your meal. This level of personalized, attentive service is something we often take for granted, but it's deeply connected to the tip credit system. As a customer, you have the power to reward excellent service directly through tipping, and this motivates servers to go that extra mile for you. If the tip credit were removed, restaurants might have to raise their prices or add fixed service charges to cover higher wages. This change could make your dining experience feel less personal - instead of tipping based on the quality of service, you'd be paying a set extra fee, regardless of how special the staff made your evening. It's a small change in the system, but it could subtly alter the familiar, warm experience we all cherish in our favorite dining spots.
What You Need to Know
If Prop. 138 fails and the tip credit is removed, the vibrancy of Arizona’s unique dining scene will be threatened.
Without Prop. 138, servers will lose a significant portion of their income, and menu prices will increase.
Without the tip credit, your neighborhood restaurant and bar would struggle to make it in such an environment.