PHOENIX (CN) — A state judge Tuesday will hear arguments on the Arizona Chamber Commerce’s challenge to a voter-approved increase to the state’s minimum wage: from $8.05 to $10 an hour on Jan. 1, up to $12 an hour in 2020.
Arizona voters approved Proposition 206 with 58 percent of the vote on Election Day. Tipped employees can be paid $3 an hour less than minimum wage under the proposition, which also requires employers to provide paid sick leave.
The state Chamber of Commerce, branches from Phoenix, Tucson and Flagstaff and the Arizona Licensed Beverage Association sued the state and its Industrial Commission on Dec. 15 in Maricopa County Court, claiming the new law violates two articles of the Arizona Constitution.
Maricopa County Superior Court Judge Daniel Kiley will hear arguments Tuesday on the Chambers’ request for an injunction.
Plaintiffs, which include the owners of a restaurant, claim the proposition violates the “self-funding” clause of the state constitution because it “does not have a mechanism to pay for the necessary increased costs for the state associated with the payment of private government contractors” who must be paid accordingly.
Proposition 206 does not apply to state employees.
“The proposition’s mandatory application to these state contractors will result in massive new expenditures to meet the state’s new, more expensive contractual obligations,” the complaint states.
The Chamber also claims that it violates the “Separate Amendment Rule” of the state constitution, by “‘log-rolling’ unrelated topics up into one constitutional amendment,” a practice the Chamber calls “pernicious.”
The “unrelated provisions” are the minimum wage and paid sick leave, the Chamber says.
The co-plaintiff owners of Valle Luna, a Mexican restaurant with three outlets in greater Phoenix, say the initiative will cost them more than $400,000 next year.
“These looming increased costs have forced Valle Luna to decide that it will wind up its operations once its current leases expire, if the proposition takes effect,” says Jane Ann Riddle, the nominal lead plaintiff and co-owner of Valle Luna with her husband.
Arizona Chamber of Commerce CEO Glenn Hamer, in a slap at unions, said in a statement that the law will devastate businesses.
“The organized labor-affiliated backers of Proposition 206 sloppily constructed their initiative to exempt state employees, yet failed to properly account for those employers who hold state contracts,” Hamer said. “This failure is poised to blow a giant hole in the state budget.
“According to a recent rulemaking notice, AHCCCS [Arizona Health Care Cost Containment System] and the Department of Economic Security are facing millions of dollars in additional costs for the remainder of just this fiscal year.”
The groups take issue with the proposition’s provision requiring employers to pay sick time to employees.
The Chamber of Commerce is represented by Brett Johnson with Snell & Wilmer, the private plaintiffs and the Arizona Licensed Beverage Association by Timothy LaSota, both of Phoenix.