Arizona Minimum Wage Faces Legal Challenges

Judge's gavel with law booksAs we reported last week, citizens of Arizona city Flagstaff will get the chance in 2018 to decide whether to eliminate the “escalator” clause mandating that the municipal minimum wage remain $2.00 above state levels. It turns out, however, that the state minimum wage will undergo examination even sooner—and not by voters, but by the courts.

The November 2016 general election which established Flagstaff’s minimum wage also saw the passage of Proposition 206, a voter-led ballot initiative which raised Arizona’s minimum wage from $8.05 to $10.00 on January 1, 2017. Prop 206, passed into law as the Fair Wages and Healthy Families Act, also entitles employees state-wide to accrue and use paid sick time as of July 1, 2017.

Fair Wages and Healthy Families was originally challenged in December of 2016, when a coalition of business groups led by the Arizona Chamber of Commerce asked the Maricopa County Superior Court for a preliminary injunction before the Act could go into effect. The plaintiff groups claimed that the Act was in violation of the Arizona Constitution’s rule prohibiting unrelated laws from being passed on the same ballot measure, as well as the Revenue Source Rule, which prohibits the passage of laws requiring state expenditure without a funding source, as well as a constitutional provision prohibiting unrelated laws from being passed on the same ballot measure. Although employees of the state are exempt under the Act, contractors hired by state agencies, such as home health care workers for the elderly and disabled, are still subject to the minimum wage requirements.

Maricopa County Judge Daniel Kiley denied the request for a stay, stating that minimum wage and paid leave were sufficiently related that they were not required to occupy separate ballot measures. He also ruled that the Act was not in violation of the Revenue Source Rule because the Act did not directly require state expenditure, and because Arizona law specifies that the state is not required to spend money that it does not have. The plaintiff groups quickly filed a Petition for Civil Action with the Arizona Supreme Court.

On February 14, the Arizona Supreme Court accepted the petition and agreed to hear arguments on the case. Those hoping for dissolution of the Fair Wages and Healthy Families Act will be disappointed, however, as the Court ordered the plaintiffs to limit their arguments to the Revenue Source Rule. In effect, this means that even if the Supreme Court sides with the plaintiffs, the only employers likely to be affected are state contractors.

The Arizona Supreme Court will hear oral arguments on March 9, 2017. In the meantime, private employers still have hope: the Arizona Legislature is eyeing a measure that would repeal the Voter Protection Act, which prohibits lawmakers from changing laws passed by voters unless the alterations further the intent of the law. The bill, as well as several others which would make it more difficult for voter initiatives to end up on a ballot in the first place, is likely inspired by the success of the minimum wage measure, as well as other controversial voter initiatives such as the unsuccessful bid for recreational marijuana.

We will continue to monitor the responses of the Legislature and Supreme Court to keep you up to date on the fate of the minimum wage. Follow us on Facebook or Twitter to keep up with the latest news.

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