Arizona Business Magazine


Special Inserts:	Greater phoenix economic council \| east valley partnership



		Trojan Horse?	By David A. Selden
		New wage law burdens employers
		ow comes the hard part. On November 7, 2006, Arizona voters approved Proposition 202, which establishes Arizona’s first state minimum wage law. Proposition 202 was presented to Arizona voters like a Trojan horse. The attractiveness of increasing the minimum wage caused voters to approve it. Most voters, however, were unaware of the fine print buried within the new law that will impose costly new burdens on Arizona businesses.
		The new law does more than require Arizona employers to pay $6.75 per hour instead of the federal minimum of $5.15, effective on January 1, 2007. The wage increase is just the tip of the proverbial iceberg. The law includes burdensome enforcement procedures and provisions under which employers will be assumed to have violated the law unless they prove their compliance. The new minimum wage law applies to all Arizona employees and employers, except: (1) workers employed by a parent or sibling; (2) “casual” babysitters; (3) the Arizona government; (4) the federal government; and (5) businesses with less than $500,000 in gross annual revenue. The law places on the employer the burden of proof to establish by clear and convincing evidence that the worker is an independent contractor and need not be paid the minimum wage. Employers must be very cautious that any workers deemed to be independent contractors do not actually fall within the statutory protections for “employees.” The minimum wage will be indexed to the rate of inflation and will increase automatically in the future. Employees who regularly receive tips may be paid $3.00 per hour less than the new minimum. However, the employer must make up this difference if the employee fails to report that amount in tips for tax purposes. The Industrial Commission of Arizona recently issued emergency regulations governing the statute’s enforcement. The new law prohibits employers from retaliating against employees or “others” for asserting or supporting claims or rights under the law. If an employer takes any adverse action against a person within 90 days of the person engaging in any action to assert or support minimum wage claims, the law will presume that the employer violated the law by retaliating against the employee. The law requires that punitive damages of at least $150 per day be awarded in all cases of retaliation. Employees may also recover triple wages and attorneys’ fees. The law also imposes notice, recordkeeping and records inspection requirements on employers. Employers must post a notice about the minimum wage law, and furnish each newly-hired employee the company’s name, address and phone number. The law also requires employers to maintain payroll records showing the hours worked each day and the wages paid to all employees for four years. The emergency regulations require records be kept to permit calculations that salaried employees’ income exceeds the minimum wage. The enforcement procedures summarized above will be used as a tool by union organizers to harass employers and to attempt to force employers to agree to impose labor union representation on their workers to avoid the union’s continuation of minimum wage enforcement activities against the employer. Employers should adopt policies to require that all employees report any minimum wage issues or concerns to the employer so that the employer may address those issues early and constructively, rather than having costly lawsuits or administrative proceedings initiated against the employer. Ogletree Deakins is one of the nation’s largest management labor and employment law firms. The firm offers national representation in every aspect of labor and employment law, represents a diverse range of clients and has 25 offices across the country including Phoenix. www.ogletreedeakins.com