On January 1, 2025, Flagstaff’s minimum wage will increase from $17.40 to $17.85 per hour. For local businesses, this update means reviewing operations and finding ways to grow alongside their teams. 1 As Flagstaff’s dedicated staffing partner, across the city navigate similar changes successfully. Here are strategies to help you prepare for this transition.
Why Is the Minimum Wage Increasing?
Since Flagstaff voters passed the Minimum Wage Act in 2016, regular wage updates have helped local workers meet the city’s higher living costs – which run 30 percent above the national average. This latest adjustment continues that commitment to supporting working families while maintaining a strong business community. For tipped employees, the minimum wage will rise to $16.85 per hour.2
This means reviewing how you operate and serve your customers. Early planning helps you manage costs while keeping your experienced team members who know your business and customers best.
What This Means for Compliance
The Minimum Wage Act covers anyone working 25 hours or more per year within Flagstaff city limits, including part-time and seasonal workers. As an employer, you need to ensure:
- All regular employees earn at least $17.85 per hour
- Tipped employees receive a base wage of $16.85 per hour
- Combined tips and base wage meet or exceed $17.85 per hour
- These rates apply even for employees who occasionally work outside city limits
The law affects various payment structures – hourly wages, salaries, commissions, piece rates, and any combination of these methods must meet minimum wage requirements.
Meeting Compliance Requirements
To stay compliant with Flagstaff’s minimum wage law, focus on these key areas:
Record Keeping
Proper documentation is essential for wage compliance. This includes tracking daily hours worked, including overtime. As an employer, you must document all wages paid, including tips, commissions, and piece rates. For tipped workers, maintain daily tip reports. Keep these records, along with copies of posted minimum wage notices, for at least four years.
Workplace Notices
Current minimum wage information must be visible to all employees. Your notices should display both regular ($17.85) and tipped ($16.85) wage rates in clear, readable format. Remember to update these when rates change.
Payroll Systems
Update your payroll systems by January 1, 2025, to reflect the new rates. This includes reviewing employee classifications, whether regular, tipped, or commissioned. For tipped workers, ensure your system can track that combined earnings meet minimum wage requirements.
If managing these payroll changes feels overwhelming, Performance Staffing’s payroll service program can help. We handle administrative and payroll matters while ensuring compliance with Flagstaff’s wage requirements.
Practical Strategies for the 2025 Wage Update
As Flagstaff’s minimum wage rises to align with local living costs, this is a chance for businesses to support their employees while setting themselves up for growth. Here are some smart adjustments to consider:
1. Update Your Prices
As rising labor costs become a reality, there may be the need to adjust your prices so you can continue to contribute to your team’s well-being while maintaining business growth. Here are a few practical tips to consider:
Be Open About Price Updates
If higher wages affect your costs, communicate changes clearly with customers. Many local businesses find success by explaining price adjustments directly. For example, local service providers often send a simple note: ‘To maintain our quality service and support our team, our rates will increase by [amount] starting [date].’
This approach works across industries – whether you’re adjusting service fees, hourly rates, or product prices. Most customers appreciate honest communication and want to support businesses that take care of their employees.
Plan Around Seasonal Demand
Flagstaff’s $563 million tourism industry brings a summer surge in visitors.3 This allows businesses to adjust for seasonal demand differently: manufacturing facilities might use shift scheduling to manage costs, professional services could review billing rates, tourism-related businesses can plan for seasonal staffing, and tech companies might set flexible contractor rates.
This helps balance costs while keeping the service efficient during peak periods. By showing how price changes directly support local employees, you help customers see their role in strengthening the local economy.
2. Rethink Your Staffing Plan
A flexible staffing plan helps you manage higher wages while also keeping your employees happy and secure, and your business profitable. When your employees feel secure and valued, they are less likely to leave, which saves you from costly hiring cycles and helps your business stay strong all year long.
Offer Consistent Work Opportunities
Instead of cutting jobs during slower months, try adjusting hours to give employees more predictable schedules. For example, a local manufacturing business might reduce shifts slightly in off-peak times instead of laying off workers.
This helps keep employees secure and loyal, which is essential for maintaining a strong, committed team and it shows your dedication to supporting the Flagstaff community.
Cross-Train Employees
Cross-training employees to handle multiple roles helps you stay nimble and avoid layoffs. For instance, a local warehouse business could train employees in both logistics and inventory management.
This makes it easier to adjust to changes in demand while keeping employees engaged. It is a way to show your employees you are invested in their growth, which builds stronger ties within the local community.
Use Temporary Staff
During Flagstaff’s busy seasons, like the summer tourism rush, bringing in temporary staff can ease the pressure on your full-time team. By offering fair wages and treating temporary staff with respect, you support your core team and show your commitment to the local community, creating a positive reputation for your business.
A positive workplace reputation helps you keep both full-time and seasonal workers happy, making it easier to manage peak demand without sacrificing long-term employee satisfaction.
3. Boost Efficiency to Manage Labor Costs
Managing increased wages does not mean sacrificing service quality or employee satisfaction—it is about finding smarter ways to work that benefit both the business and the team. Here are practical ways you can do that:
Use Technology to Streamline Processes
Technology can be a game changer for businesses that want to save time and increase productivity. Automating repetitive tasks, like scheduling or payroll, allows managers to focus on what really matters: their employees and customer service.
Local businesses can implement simple software tools to streamline these processes, freeing up hours each week. This extra time can be used to engage employees more deeply, leading to higher morale, improved productivity, and a better overall work culture – key tools for achieving profitability in any business.
Use Data to Plan Staffing
Understanding when and how many people to schedule is essential for managing labor costs effectively. Many Northern Arizona business owners—whether in retail, services, or manufacturing—can benefit from tracking customer traffic, order volumes, or production cycles to adjust staffing levels more accurately.
For instance, a local retail store can use sales data to predict busier times of day, ensuring they have the right number of employees without overstaffing, or being understaffed. This kind of strategic scheduling helps prevent unnecessary expenses while ensuring you can maintain excellent customer service without burning out employees.
Available Local Programs and Incentives
The Work Opportunity Tax Credit (WOTC) offers up to $9,600 in tax benefits when you hire qualified candidates like veterans or long-term unemployed workers. These savings can help manage increased wages while bringing valuable talent to your team.
Flagstaff also offers Neighborhood Sustainability Grants of up to $7,500 for projects that promote community sustainability.4 For example, a local business could use the grant to start a workplace recycling program or install water-saving fixtures. These initiatives can reduce operating costs while supporting Flagstaff’s environmental goals.
Prepare for the Minimum Wage Increase by Investing in Your Team
Preparing for Flagstaff’s 2025 minimum wage increase starts with keeping your team strong. When you offer growth opportunities, foster a positive culture, and support employee well-being, your staff sees value beyond just higher wages. This stability reduces hiring costs and helps your business thrive through change, creating lasting connections within the Flagstaff community.
Ready for the 2025 Wage Update?
At Performance Staffing, we have helped businesses across Flagstaff adapt to changes through smart staffing solutions. Whether you need temporary staff during busy seasons, help with payroll management or guidance on building a stable workforce, we are here to help. Contact us to discuss how we can support your business’s specific needs. Schedule a Consultation today!
References
- Minimum Wage. (n.d.). City of Flagstaff. Retrieved November 1, 2024, from https://www.flagstaff.az.gov/3520/Minimum-Wage
- Neighborhoods, Housing, & Urban Conservation. (n.d.). Flagstaff Chamber of Commerce. Retrieved October 31, 2024, from https://www.flagstaff.az.gov/DocumentCenter/View/64818/Neighborhoods-Housing-and-Urban-Conservation-XIII-PDF
- Flagstaff’s Leading Industries. (n.d.). Choose Flagstaff – the City of Innovation. Retrieved October 31, 2024, from https://www.chooseflagstaff.com/doing-business-here/leading-industries/
- Sustainability Office Grants, Incentives & Rebates. (n.d.). City of Flagstaff. Retrieved October 31, 2024, from https://www.flagstaff.az.gov/5024/Sustainability-Office-Grants-Incentives-
