Arizona Supreme Court keeps challenge to Proposition 206 alive

by Dinita L. James

The uncertainty surrounding Proposition 206’s mandate of a $10 minimum wage for 2017 will continue for a few more weeks, as the Arizona Supreme Court has decided to consider business groups’ challenge to the voter-approved law. After a Valentine’s Day conference, Chief Justice Scott Bales announced in a five-sentence order that the court will hear argument on one of the two issues raised by the challengers.

The court set a hearing for March 9, 2017, on whether the Fair Wages and Healthy Families Act adopted by Arizona voters in November 2016 violates the Revenue Source Rule of the Arizona Constitution and, if it does, what the appropriate remedy would be. The rule requires that any citizen initiatives that require the expenditure of state funds specify from where those funds will come.

Backers of Proposition 206 argue that the Revenue Source Rule does not apply because the law exempted the state from its minimum wage and paid sick leave requirements. Challengers of the law argue that it will require indirect increases in state spending, such as higher payments to contractors who provide care for vulnerable citizens the state is duty-bound to protect.

The court refused to hear the other issue raised by the challengers, who asserted that minimum wage and paid sick leave were two separate issues that could not be combined in a single initiative. The court earlier declined to block the law from taking effect, which most observers interpreted as a clear signal that the measure, which was approved by 58% of Arizona voters, would not be thrown out entirely.

At the March 9 hearing, the court will hear from both sides of the dispute. While it is unlikely that the court will rule immediately, a final and definitive ruling is expected soon thereafter. Watch for future alerts and full coverage in upcoming issues of Arizona Employment Law Letter.

Dinita L. James, a partner in the Arizona law firm Gonzalez Law, LLC, is the editor of Arizona Employment Law Letter. You can reach her at or 480-565-6400.