By Staff Reporter |

On Monday, an Arizona court ruled that government “prevailing wage” mandates for businesses were unlawful.

The Maricopa County Superior Court issued a ruling against the cities of Phoenix and Tucson concerning their prevailing wage ordinances, which required contractors on public works to pay its workers according to city and federal rate determinations. The Department of Labor defines prevailing wage as that average wage paid to similarly employed workers in a specific occupation in that area of intended employment. 

The Maricopa County Superior Court agreed that state law (A.R.S. § 34-321(B)) prohibited any city from enacting such prevailing wage ordinances as the cities of Phoenix and Tucson had done in January.

“This Prevailing Wage Statute, by its plain language, prohibits any Arizona political subdivision, such as the City of Phoenix and the City of Tucson, from enacting an ordinance that requires contractors and subcontractors to pay their workers less than the prevailing rate of wages. Nevertheless, both cities did just that on January 9, 2024,” read the ruling.

Phoenix Ordinance G-7217 and Tucson Ordinance No. 12066 required city contractors or subcontractors under a contract with an aggregate value of $4 million or more and $2 million or more, respectively, to pay workers not less than the prevailing wage rate for the same class and kind of work in the Phoenix metropolitan area. Both cities required certain record keeping and instilled penalties for violations including contract rescission, disqualification from future city contracts, and liquidated damages up to three times the wages owed. 

Yet, the cities argued that their ordinances were protected under Proposition 202, or the Raise the Minimum Wage for Working Arizonans Act. The cities claimed that the act functioned under the doctrine of implied repeal: since the act and state law were inconsistent, the act took precedence since it came after state law. The superior court rejected that interpretation, since the act itself didn’t address the term prevailing wage, and there remained definable differences between prevailing wage and minimum wage.

“A prevailing wage ordinance is not a minimum wage law, and the Minimum Wage Law did not impliedly repeal the prevailing wage prohibition because the two laws can be harmonized by ‘reasonable construction,'” stated the court. “They have fundamentally different underlying policy goals. Moreover, unlike minimum wage laws, which set a single, across-the-board floor on wages, prevailing wage measures impose a complex, fluctuating schedule of wage standards (determined by federal law and regulation) meant to approximate average wages for specific occupations and localities.”

The Goldwater Institute, in partnership with attorney Robert G. Schaffer, sued Phoenix over its prevailing wage ordinance on behalf of the Associated Minority Contractors of Arizona, the Arizona Chapter of the Associated General Contractors of America, and the Arizona Builders Alliance. 

The institute’s vice president for legal affairs, Timothy Sandefur, said in a press release that the ruling protected fairer wages for workers. 

“Today’s decision is a victory for Arizona taxpayers — who deserve to have public works projects run as closely as possible to true market conditions, instead of having their costs decreed by politicians in order to benefit their political friends,” said Sandefur. “It’s also a win for workers themselves, who deserve to do work in a competitive environment where wages are based on merit, instead of political dictate.”

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