Some restaurants are adding surcharge to bills as a result of minimum wage increase

PHOENIX - Some unsuspecting customers have gotten a surprise while eating out, as a result of a new minimum wage hike.

The wage hike, which raised Arizona's minimum wage from $11 to $12 per hour, is a result of Proposition 206.

Each business is doing something different to respond to the wage increase, but some in the Valley are passing the extra costs onto customers and putting it on the receipt.

At the bottom of the receipt at Tennessee Grill and Bar in Anthem. underneath Sales Tax, is a line that reads Prop 206 fee. According to the restaurant's menu, a 3.5% surcharge is added to every guest's check to provide increased wages and benefits to our employees. 

"What we have seen is that restaurants have added a surcharge," said Dan Bogert with the Arizona Restaurant Association, in a phone interview. "Anywhere from 1% to 3% surcharge to help cover increased labor costs."

Bogert says this is one way restaurants are coping with the increased labor costs. They say some restaurants are reducing employee hours, operation hours, and increasing the productivity of existing staff.

Proposition 206 was approved by voters in 2016 to increase pay across the state. Proposition 206 requires the state to increase the minimum wage to a pre-determined level from New Year's Day 2017 to New Year's Day 2020.

In 2017, the minimum wage level was set at $10. That was then increased to $10.50 in 2018, and $11 in 2019.

For 2020, it's $12, and beginning New Year's Day 2021, minimum wage increases in Arizona will be based on increases in the cost of living.

Bogert says 2020 is a big year because it is the largest increase. 

"You can imagine just a $1 increase, from $11 an hour to $12 an hour in 2020, is a 9% increase in their baseline labor costs," said Bogert.

FOX 10 has reached out to several restaurants, including Tennessee Grill and Bar and other restaurants with the surcharge on the receipt, but the restaurants have yet to respond.