Judge overturns Phoenix, Tucson ‘prevailing wage’ ordinances

PHOENIX — A Tucson ordinance requiring workers on city contracts be paid “prevailing wages” is illegal, a judge has ruled.

In a decision released Monday, Maricopa County Superior Court Judge Bradley Astrowsky acknowledged Arizona voters have twice approved laws creating a minimum wage. And those laws, he said, allow cities to enact even higher minimums.

But the judge said none of that permits Tucson — or Phoenix which has a similar ordinance he also overturned — to conclude that companies must pay an even higher figure to employees working on municipal projects.

“Prevailing wage regulations are substantially different from minimum wage statutes,” Astrowsky wrote.

Strictly speaking, the new ruling affects only Tucson and Phoenix.
But the case could wind up going to the Arizona Supreme Court.

What the justices rule will determine whether any of the other 89 cities in the state can follow suit.

The new ruling is a victory for the Goldwater Institute, which sued on behalf of several organizations that represent contractors.

“We are thrilled with the court’s decision, which upholds the principles of a free market and removes unnecessary burdens from contractors,” said David Martin in a prepared statement. He is president of the Arizona Chapter of the Associated General Contractors, one of the groups that sued.

Tucson City Attorney Mike Rankin had a different reaction.

“Obviously, we are disappointed in the result,” he said.
Rankin also suggested it came as a bit of a surprise after Attorney General Kris Mayes issued a formal opinion last year saying cities can, in fact, enact prevailing wage ordinances as long as they are not less than the state’s minimum wage.

For the moment, however, there is no immediate impact.
Tucson delayed implementation until July 1, meaning the prevailing wage mandate is not part of any existing contracts or bid solicitations.

“Over the next few weeks, we will review our appeal options and discuss those options with our elected officials,” Rankin said.
At the heart of the legal fight — and the judge’s ruling — is the difference between a minimum wage and a prevailing wage.

The current minimum wage is $14.35 an hour, though tipped workers can be paid $3 an hour less if their tips bring them up to the minimum. That minimum increases annually based on inflation.

By contrast, a prevailing wage is meant for certain public works contracts. It links what those who win those contract have to pay to what the US Department of Labor determines what is the prevailing wage for mechanics and laborers who work on contracts funded by the federal government.

In approving the ordinance earlier this year, Tucson Mayor Regina Romero said the change is justified.

“Workers are the foundation of our economy,” she said in a prepared statement.

“To me, a prevailing wage is important because it helps to stabilize families and protect construction workers who, by the way, are often victims of wage theft and classification,” the mayor said. “It helps bring workers into the middle class and helps to reduce pay gaps for women, Black, immigrant and Latino workers.”

There is no question but that state law bars cities from enacting prevailing wage laws.

What the cities were relying on, however, is the fact the minimum wage laws were adopted by voters. That means they are protected and cannot be amended by the Legislature.

More to the point, they argued voter adoption of the minimum wage law effectively overruled that state law that precludes prevailing wages.

Not true, said Astrowsky.

“A prevailing wage ordinance is not a minimum wage law,” he wrote.
“They have fundamentally different underlying policy goals,” the judge said. “Moreover, unlike minimum wage laws, which set a single, across-the-board floor on wages, prevailing wage measures impose a more complex, fluctuating schedule of wage standards (determined by federal law and regulation) meant to approximate average wages for specific occupations and locations.”

Nor was Astrowsky convinced voter approval of the minimum wage law — including the provision allowing cities to set an even higher figure — trumps that state legislation barring cities from adopting prevailing wages.

“Certainly, the laws when read together, mean that the prevailing wage cannot be less than they minimum wage,” the judge wrote. But he rejected arguments by the cities that, in adopting prevailing wage ordinances, they were deciding that is the minimum wage that they are entitled to enact.

“Unlike minimum wage laws, they set entire schedules of pay rates for specific industries,” Astrowsky wrote.

“Moreover, these schedules are highly variable, and they represent an average based on a particular trade and locality, not an across-the-board floor,” he continued. “A superficial overlap in the colloquial meaning of the word ‘minimum’ does not mean that ‘minimum wage laws,’ as a term of art, encompasses ‘prevailing wage laws.’”

He added it might have been one thing had politicians adopted the ban on prevailing wages after voters had approved the minimum wage law and its provision allowing cities to even higher minimums.

In this case, however, Astrowsky pointed out the ban on cities adopting prevailing wage ordinances already was on the books. So he said that means state lawmakers didn’t do anything to violate the constitutional provision that keeps them from tinkering with what voters approved.