Arizona businesses to appeal minimum-wage ruling

Arizona business leaders will appeal a court ruling refusing to halt the new minimum-wage rates from going into effect Jan. 1.

"Given the fast-approaching implementation date of Jan. 1, 2017, we believe an appeal to the state Supreme Court is appropriate and necessary," said Arizona Chamber of Commerce and Industry spokesman Garrick Taylor on Thursday.

Various business organizations, including the Arizona Chamber of Commerce and Industry, banded together to file the lawsuit challenging Proposition 206 and seeking to halt it from going into effect.

Delay would impact workers, judge says

On Wednesday, Judge Daniel Kiley said that while the groups raise legitimate legal questions, they do not outweigh the burden employees would face if the minimum-wage increase were delayed as the court addresses those questions.

"The court must consider the hardship that will be visited upon employees at the bottom of the income scale by a delay in the implementation of the Act ... many of whom struggle on a daily basis to make ends meet," Kiley wrote.

In addition to the Arizona Chamber of Commerce and Industry, the plaintiffs include the Greater Phoenix Chamber of Commerce, Tucson Hispanic Chamber of Commerce, Greater Flagstaff Chamber of Commerce, Arizona Licensed Beverage Association and the owners and some employees of the Valle Luna restaurants.

Voters in November overwhelmingly approved an increase to the state's $8.05 minimum wage and required 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.

Under the new sick time regulations, full- and part-time employees earn one hour of sick time for each 30 hours worked. Employers with fewer than 15 employees may limit the sick time hours an employee earns and uses each year to 24. Employers with 15 or more employees may limit the sick time hours earned and used each year to 40.

Judge: Serious questions raised by suit

The lawsuit focused on two legal arguments:

• That the increase violates the Arizona Constitution by creating a new cost to the general fund without providing a revenue source. Prop. 206 does 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 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 wage and benefits issues.

Kiley in his ruling said the ballot measure does not require the state to spend tax revenues for a specific purpose, nor does it directly impact the state's payroll. "The Act does not mandate increases in payments to state contractors," he wrote.

But Kiley also said the argument raises serious questions. He said he doesn't doubt an increased financial burden will be placed on employers, including state contractors, because of the wage increase. But he said he had to also consider the hardship employees would face if the increase was delayed.

Kiley in his ruling also said the state laws restricting ballot measures to a single issue only apply to proposed changes to the Arizona Constitution or to legislative acts. Prop. 206 did not change the state Constitution and was not legislation.

The Attorney General's Office on Wednesday anticipated that the businesses would appeal. “We will continue to fight and uphold the rule of law,” Attorney Mark Brnovich said through his spokesperson Wednesday.

This ruling only addressed the request for a preliminary injunction. The underlying case challenging Prop. 206 will continue to advance through the courts.