Arizona business owners are likely very much aware of the statewide minimum wage changes going into effect due to the passage of Proposition 206. However, business owners in some municipalities are dealing with even more stringent local minimum wage laws, passed by city and county governments. While the local minimum wage laws in places like Flagstaff are in full effect for now, in other parts of the country, state legislatures are overruling local minimum wage measures. While this battle between state and local governments is not unique to minimum wage laws, business owners are understandably particularly interested in this facet. And while the debate over whether states or local governments should dictate minimum wage laws is another article for another blog. Let’s just dig into what business owners should know to be prepared for a variety of scenarios based on where they do business. Here, we take a look at exactly what is happening and whether or not we will see similar measures to overturn local minimum wage laws in Arizona.
Local Minimum Wage Laws vs. State Laws
Local minimum wage laws in Arizona
In addition to sick leave requirements of at least 24 hours per year for businesses with fewer than 15 employees and at least 40 hours per year for organizations with more than 15 employees, Prop. 206 passed in November of last year changes Arizona minimum wage laws to require incremental increases beginning with the increase that already took place to $10 per hour, followed by upcoming increases to $10.50 per hour in 2018, $11 per hour in 2019, $12 per hour in 2020 with the minimum wage potentially increasing further on a yearly basis depending on changes in the cost of living starting in 2021.
In some Arizona communities, local minimum wage laws go even further. In Flagstaff, for example, the minimum wage is set to incrementally increase to $15 per hour by 2021. While the minimum wage law was set to start off with an increase to $12 per hour in July of this year, the local city council did take measures to slow down the increases, so instead, the minimum wage law in Flagstaff currently dictates $10.50 per hour. A proposition requirement also previously dictated that the minimum wage in Flagstaff be a full $2 higher than the state minimum, but that requirement has also been removed by a new city law. While another proposition for Flagstaff voters would change the local minimum wage laws there even further and is set to appear on ballots in November of 2018, some business groups are looking to move to preempt local minimum wage laws like Flagstaff with legislative action similar to that taken in 27 other states.
States overturning local minimum wage laws
You may have heard about the aggressive minimum wage increase in Seattle, Washington. But you may be surprised to learn that there is a trend nationwide toward local minimum wage laws that set wages higher than their surrounding states. It is a relatively recent trend; before 2012, there were only five cities and counties with local minimum wage laws. By the last count, there are 40. In turn, state legislatures (which tend to be more conservative overall than city governments) have started passing legislation to overturn those local minimum wage laws and maintain whatever state laws (if any) they have in place regarding the issue. In a total of 27 states so far, state lawmakers have been successful in this endeavor. Most recently, the state of Missouri took action to preempt the city of St. Louis’ local minimum wage law.
What should Arizona business owners keep in mind about local minimum wage laws?
While the Arizona legislature recessed earlier this year, it would not be crazy to think that Gov. Ducey and other state lawmakers will be looking to create some sort of state preemption bill of their own to neuter local minimum wage laws. However, whether or not any such legislation could gain the support it needs to pass into law is another question entirely. It is a complicated issue that, in some cases, transcends party lines and involves many stakeholders.
For now, business owners are best off by acting as if any existing local minimum wage laws that apply to their businesses are here for the long haul. This can be especially tricky for businesses that may have employees both inside and outside of city and county boundaries — it leaves a patchwork of minimum wage laws applying to employees rather than a blanket standard. In these instances, it is especially critical to ensure that all payroll and HR related tasks are completed in complete compliance. And it is just one of the many reasons some of the companies we work with have turned to us to help navigate the patchwork with comprehensive HR support. If you could use some help, reach out for a free consultation today. There’s no job too big or too small!