Minimum Wage – The Fair Wages & Healthy Families Act

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The Fair Wages & Healthy Families Act raises the minimum wage for Arizona Employers as well as provides for employees to earn paid “sick time”. The Act was Proposition 206 – a ballot initiative approved by voters on November 8, 2016 and effective January 1, 2017. Although recently challenged by a number of Arizona Businesses and Chambers of Commerce, the Arizona Supreme Court rejected the challenges to the constitutionality of Prop 206, thus the Fair Wages & Healthy Families Act is the law in Arizona today!

Minimum Wage

The Minimum Wage will be as follows beginning January 1, 2017:

Effective Date Min Hourly Wage
1/1/2017  $10.00
1/1/2018  $10.50
1/1/2019  $11.00
1/1/2020  $12.00
1/1/2021  $12.44*
*Estimated based upon average CPI Increase

A few interesting exceptions….

Counties, Cities & Towns may trump the State’s Minimum Wage & Enforce It!

The City of Flagstaff imposed its own Minimum Wage (higher than the wage defined by the Fair Wages & Healthy Families Act). Since the wage is higher, the City may enforce the higher minimum wage. The Act provides that counties, cities and towns within the State may enforce higher minimum wage standards within their boundaries, but they must at least pay the State’s minimum wage.

What about employees that work on tribal land?

Although the law does not apply to tribal employers on tribal land, the Act does not specify whether it applies to Arizona (non-tribal) employers whose employees work on tribal lands (think AZ Loop 101, Scottsdale Businesses). The Industrial Commission of Arizona has indicated that they will not seek to enforce the Act on Employers that employ employees on tribal land.

“Small Business” Exception does not really apply!

Due to the definition of “Small Business” in the Act, there are very few, if any, businesses that will be excepted from paying the new minimum wage. Unless all of the following conditions are met: the business grosses less than $500,000 annually AND takes cash & checks written on Arizona Banks only, AND buys all of its supplies solely from Arizona suppliers, it is required to pay the Minimum Wage imposed by the Fair Wages & Healthy Families Act,

 

Who is affected? What can be done to mitigate the increased cost of labor?

 

Retail chains, food service and unskilled labor industries will be most affected. These businesses employ a number of minimum wage workers. When you think about it, an increase from $8.05 per hour to $10 per hour is roughly a 25% increase in labor cost. Businesses will need to mitigate the increase by driving efficiency, reducing labor hours with creative scheduling and potentially increasing prices! Tracking is critical to drive efficiency!

Best source of information: Industrial Commission of Arizona

 

Stay tuned for more information about the Earned Sick Time Provisions coming soon….