Court: Cities can vary job benefit rules

Ruling also affirms voter roles in creation of laws

Imagine getting a job transfer from your company’s office in, say, Mesa or Phoenix to another location in Tempe or Tucson — and seeing your benefits package change.

That prospect is possible now that the Arizona Court of Appeals has determined that cities, towns and counties can set their own job-benefits requirements for private companies operating within their boundaries — provided that the benefits meet statewide minimums.

The ruling raises the possibility that certain Arizona municipalities could require more paid sick time, more generous parental leave, more scheduling certainty, enhanced retirement packages, different vacation policies, bonuses or other workplace benefits.

As part of its opinion issued on Tuesday, the Appeals Court also affirmed the right of voters to create laws through initiatives and referendums. The case could be appealed, though the state Attorney General’s Office hasn’t yet announced any decision to do so.

Effects on businesses, economy

The ruling could make certain municipalities more or less attractive for employers, critics say. The potential for a “patchwork of regulations” across the state could discourage employment growth in Arizona, said Sen. J.D. Mesnard, R-Chandler, who along with fellow Republicans in the state Legislature opposed giving municipalities that option.

In 2016, they passed a bill, House Bill 2579, that was signed into law by Gov. Doug Ducey to limit the power of municipalities to regulate non-wage benefits.

It was challenged in court, with plaintiffs including Democratic lawmakers in the Legislature. A Maricopa County Superior Court judge found that it violated the state’s Voter Protection Act by trying to amend an earlier, 2006 minimum-wage initiative.

The opinion on Tuesday by Judge Jennifer Campbell and the two other judges on the Appeals Court affirmed that decision.

Jennifer Ward, an attorney and Arizona president of the Employers Council, pointed to “a compliance challenge for businesses with multiple locations throughout Arizona if they have to offer different benefits to employees in different cities.” The group was not involved in the lawsuit.

But James Barton, a partner at Torres Law Firm in Tempe, disagrees with the argument that municipalities adopting more worker-friendly requirements would necessarily become undesirable places for private companies to operate.

Such policies also could make those places attractive to workers in a tight labor market, said Barton, who was on the legal team that successfully argued the case before the Appeals Court.

He said the appellate decision shows the courts continue to resist the Legislature’s efforts to overturn voter initiatives, and he downplayed concerns that the job-benefits decision would hurt job growth and economic development.

“That’s the complaint you hear all the time,” said Barton. “Yet the state’s minimum wage has gone up, and it seems the Arizona economy has done pretty well.”

Wage increases, more sick time

Arizona employment laws have become more favorable to workers in recent years. For example, Proposition 206, which voters passed in 2016, has mandated three minimum-wage hikes already, with a fourth that will take the state’s minimum from $11 an hour now to $12 in 2020.

The federal minimum wage, still used in 21 states, is $7.25 an hour and hasn’t budged in a decade.

Proposition 206 also gave Arizona one of the nation’s most generous policies on paid sick leave, mandating a minimum of five such days annually at most larger employers.

Arizona’s jobless rate, meanwhile, continues to decline, mirroring a tight labor market nationally.

The current level of unemployment, 4.8 percent, is down from 5.2 percent in November 2016, when voters approved Proposition 206.

However, Arizona’s jobless rate remains almost a full point above the national average.

Neither Barton nor Mesnard said they were aware of any specific pending ordinances that would change the benefit requirements in any cities, towns or counties.

But assuming state Attorney General Mark Brnovich doesn’t appeal further, municipalities would have a green light, if they chose, to enhance benefits requirements for non-government employers operating within their boundaries.

For example, Ward said the latest ruling could lead some Arizona cities or counties to follow a national trend to require paid family leave as a benefit.

The Attorney General’s Office hasn’t yet commented on the appellate ruling.