By BEX Staff for AZBEX
The Arizona Court of Appeals has ruled “prevailing wage” ordinances by the cities of Phoenix and Tucson violated a 1984 statewide voter approved measure barring the practice.
Under prevailing wage rules, employees working on government contracts must be paid at comparable rates to workers in the same field in the same region. Such regulations have been opposed by many construction industry groups, which allege they favor certain groups of workers, are more expensive to taxpayers, are overly burdensome to administer and distort the market.
Tucson and Phoenix both passed prevailing wage ordinances after voters twice approved laws to allow cities to set minimum wages greater than the state or federal minimums. The cities argued the minimum wage law provided authority to require prevailing wages as well.
In 2023, Arizona Attorney General Kris Mayes issued an opinion supporting the minimum wage/prevailing wage argument, and Tucson and Phoenix passed ordinances requiring prevailing wage agreements for contracts of $2M or more in 2024.
Three civic interest and contractor-related groups filed a lawsuit that argued the minimum wage laws did not supersede the 1984 prohibition, stressing a fundamental difference between “minimum wage” and “prevailing wage.” A Maricopa County Superior Court ruling in 2024 struck down the ordinances. That ruling was appealed.
The arguments presented to the Appeals Court became highly nuanced. Both sides even offered a different definition of “wage.”
The Court, however, chose to focus on what the minimum wage authorizing laws specifically do and do not address. Using that criteria, the three-judge panel found nothing in the 2006 or 2016 laws specifically addressed or countered the 1984 prohibition.
Appellate Court Judge Michael Catlett said the minimum wage laws were intended to make sure “all working Arizonans deserve to be paid a minimum wage that is sufficient to give them a fighting chance to provide for their families.” He also said enabling local governments to set their own minimums to address local conditions serves that goal.
He went on to say, however, “…allowing local government to contractually require prevailing wages for certain employees performing certain work on certain projects does not.” He wrote prevailing wages only benefit “a subset of the city’s citizens when they perform certain work on a subset of projects.”
Local officials have said they are reviewing the ruling and have not yet indicated if they plan to advance the matter to the Arizona Supreme Court for review.