by Dinita L. James, Gonzalez Law, LLC
In a three-sentence order entered just before the close of business March 14, the Arizona Supreme Court rejected a constitutional challenge to the Fair Wages and Healthy Families Act, commonly known as Proposition 206. The unanimous ruling dashed the last remaining hope of business groups trying to block the voter initiative, which raised the state’s minimum wage to $10 per hour on January 1 and mandates paid sick leave for most employees beginning July 1, 2017.
More than 58% of Arizona voters approved the law on the November 2016 ballot. The Arizona Chamber of Commerce and Industry led the legal challenge to the law, arguing it violated the Revenue Source Rule in the Arizona Constitution, which makes any citizen initiative that requires the expenditure of state funds specify from where the funds will come.
Proposition 206 exempts the state from its mandates and does not specify a revenue source. The business groups claimed the law should specify the revenue that will fund the inevitable indirect costs to the state such as increased payments to contractors that provide care under the state’s Medicaid system. That argument did not find any support with the newly expanded seven-member court.
The court acted quickly to end the uncertainty that has loomed over the law since it went into effect. After hearing 40 minutes of legal arguments on March 9, the court announced the ruling only five days later, without explaining its reasoning. An opinion with the court’s full legal analysis will be issued “in due course,” according to Chief Justice Scott Bales’ order.
Watch for a full analysis of the court’s reasoning and information to help you comply with both the minimum wage and paid sick leave provisions in future issues of Arizona Employment Law Letter.