Arizona business leaders sue to stop minimum wage hike

December 15, 2016
AZ Central
Alia Beard Rau

There is a new effort afoot to stop Arizona's new voter­approved minimum wage hike, which raises pay to $10 an hour in January. 

Hispanic Chamber of Commerce, Greater Flagstaff Chamber of Commerce, Arizona Licensed Beverage Association and the owners and some employees of the Valle Luna restaurants on Thursday filed a lawsuit challenging Proposition 206. They are seeking to stop it from going into effect.

"We recognize people are good­hearted and have sympathy for people who are working hard and making lower wages," said Arizona Chamber president and CEO Glen Hamer. "But we are now seeing in other parts of the country very, very negative effects. It was the responsibility of the party pushing this to say, 'Hey, we're going to harm the disabled community ... we're going to put out of business a lot of small businesses.' I don't recall them ever mentioning that."

Voters in November overwhelmingly voted to raise the state's $8.05 minimum wage and require businesses to provide paid sick time. The minimum wage will go to $10 per hour in January, $10.50 in 2018, $11 in 2019 and $12 in 2020. Employees who receive tip income can continue to earn $3 an hour less than the minimum wage if their employer can prove the employee is earning at or more than the minimum wage when tips are counted.

Employers with fewer than 15 employees must provide each worker 24 hours of paid sick time a year. Employers with 15 or more employees must provide each worker at least 40 hours of paid sick time a year. Prop. 206 also defined the conditions under which paid sick time could be used, including physical or mental illness, to care for a family member, a public­health emergency, domestic violence, sexual violence or stalking.

The lawsuit focuses on two legal arguments:page2image40168512

That the increase violates the state constitution by creating a new cost to the general fund without providing a revenue source. Prop. 206 did not apply to state employees, but the lawsuit argues it will require state agencies to increase the amount it pays companies for contracted services. For example, companies that provide services to individuals with developmental disabilities pushed the state to increase their funding contracts because of the added cost of a higher minimum wage. The state announced Thursday it would provide them additional funds.

That the proposal should have allowed voters to weigh in separately on the wages and benefits issues. Hamer said those with the power and authority to do something must make responsible decisions.

“Throughout the campaign, the business community argued that Proposition 206’s passage would have devastating effects on Arizona’s economy,” Hamer said. “Unfortunately, those predictions are being proven true. Special interests that want to use Arizona’s ballot initiative process to carry out their job­killing agendas should have to play by the rules set out in the state constitution. Proposition 206’s backers haven’t done so. We are confident that the court will agree with us.”

Attorney Tim LaSota is representing the owners and employees of Valle Luna. He said Prop. 206 would cost the business half a million dollars in the first year.

page2image40166976page2image40162752page2image40166208"And that's just for people who are already making more than the new minimum wage," he said. "With tipped employees, you've got people making well,

well in excess of the new minimum wage who this law mandates an hourly wage increase. Those types of costs are extremely difficult on businesses."

While the business organizations opposed Prop 206 during the election, none invested any money in campaigning against it. Sota said he doesn't know why there wasn't a more robust opposition effort, but he said the law requires a lawsuit such as theirs to come after the measure passes.

"It would be better titled the 'jobs reduction act,' " he said. "Many people who probably think they're going to be getting a raise are going to be getting a pink slip and a trip to the unemployment line. It's crippling for businesses, it's crippling for schools and it's very harmful to state government."

Healthy Families campaign Chairman Tomas Robles, whose group put Prop. 206 on the ballot, said he believes the lawsuit is without merit. He said his organization will file to defend the wage hike.

"It's a gross attempt to ignore and undo the will of the voters," he said.

He said the state and recent corporate tax cuts are to blame for financial problems that social service organizations and schools are facing, not Prop. 206.

Sign Up For Our News Updates

Website Sponsors

AAPPD proudly presents our website sponsors.

Interested in becoming a website sponsor?

Click Here