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August 14, 2017

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Arizona’s Voter-Approved Minimum Wage, Paid Sick Leave Law Constitutional, State High Court Affirms

In a much-anticipated decision, the Arizona Supreme Court has unanimously ruled to uphold Proposition 206, the November 2016 ballot initiative that increases the Arizona minimum wage and requires employers in the state to offer paid sick leave to employees.

Chief Justice Scott Bales stated in the March 14 order that the seven-member court unanimously rejected the plaintiffs’ arguments on the law’s constitutionality. He further stated that a detailed explanation of the Arizona Supreme Court’s reasoning will be provided later.

Prop 206 raised the minimum wage for Arizona employees to $10.00 per hour beginning January 1, 2017, and provides for incremental increases to a minimum wage of $12.00 per hour by 2020. Additionally, effective July 1, 2017, the law requires employers to provide paid sick leave to Arizona employees.

In December 2016, a group of business organizations led by the Arizona Chamber of Commerce and Industry filed a lawsuit challenging the law’s constitutionality under two separate theories. First, they pointed to the “Separate Amendment Rule,” which mandates that any proposed amendment to the Arizona constitution be limited to related matters of substance. They argued that Prop 206 addressed the two distinctly unrelated subjects of minimum wage and paid sick leave. Additionally, they claimed Prop 206 created new costs to the state’s general fund without providing a new revenue source, in contravention of the Arizona Constitution’s requirement that bills increasing state expenditures identify a specific revenue source. Principally, the plaintiffs argued that while the state was exempt from the minimum wage requirement, vendors providing goods and services to the state were required to pay the higher wage, thereby increasing costs to the state.

In December, a judge on the Maricopa County Superior Court denied the plaintiffs’ request to enjoin the minimum wage requirements from taking effect on January 1, 2017. Following the court’s denial, the plaintiffs filed a special action with the Arizona Supreme Court, which quickly agreed to hear the appeal. On March 14, the Arizona Supreme Court rejected the plaintiffs’ claims without issuing an opinion.

Many Arizona employers were waiting patiently for the Supreme Court’s decision before developing policies to comply with the Prop 206’s new paid sick leave requirements. Following the Court’s decision, employers should begin to prepare for the upcoming July 1, 2017, date for implementation of these new requirements.

While the Industrial Commission of Arizona has issued a series of updated Frequently Asked Questions (“FAQs”) regarding Prop 206’s requirements, questions remain. In the coming months, the Industrial Commission may promulgate regulations and additional guidance.

Jackson Lewis P.C. © 2017

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About this Author

Jeffrey W. Toppel, Employment Attorney,  wrongful termination, Jackson Lewis Law Firm
Principal

Jeffrey W. Toppel is a Principal in the Phoenix, Arizona, office of Jackson Lewis P.C. He represents employers in a wide range of employment-related disputes, including wrongful termination and discrimination claims before various state and federal governmental agencies, as well as the entire spectrum of NLRB, general labor relations and employee relations matters.

Mr. Toppel also represents parties in restrictive covenant and trade secret litigation. In addition to his litigation practice, Mr. Toppel regularly advises employers on issues that arise in the...

602-714-7044
Stephanie Cerasano, Jackson Lewis Law Firm, Litigation Attorney
Principal

Stephanie M. Cerasano is a Principal and Litigation Manager in the Phoenix, Arizona, office of Jackson Lewis P.C. She has over 15 years of experience practicing exclusively in the area of employment law.

A significant portion of her practice involves advising businesses in their day-to-day employment decisions. She also represents employers in federal and state court, as well as before administrative agencies, with particular focus in the areas of disability discrimination, the Family and Medical Leave Act, and wage and hour compliance. She has significant experience in preparing confidentiality and non-competition agreements, employment contracts, and personnel handbooks.

602-714-7056