Tucson can't require companies working on city projects to pay what the city decided is a "prevailing wage,'' the Arizona Court of Appeals has ruled.
The three-judge panel rejected claims that the fact voters agreed, in 2006 and again in 2016, to let cities set their own minimum wages also meant they could enact a law saying employees working on government contracts had to be paid at a rate equal to similarly employed workers in the same field in the same community. None of that, they said, overrules a 1984 ballot measure specifically outlawing prevailing wage laws.
There was no immediate response from Tucson officials on whether they will seek Arizona Supreme Court review.
"We are reviewing the Court of Appeals' ruling to determine next steps," Mayor Regina Romero said in a prepared statement.
"While we are disappointed with the court's narrow interpretation of the local permission provision of (the minimum wage law) allowing cities like Tucson to regulate minimum wages, the mayor and council will continue to fight for the living wages for working families, including those that do the important work that Tucsonans rely on through city contracts," Romero said.
The background on the issue is complex, going back to a 1933 law that required contracts for construction and other improvements paid for by the government to include provisions to pay their workers a prevailing wage. The law — similar to the federal Davis-Bacon Act — is designed to ensure that companies bidding on government don't undercut what is commonly paid in the area, known as prevailing wages, by hiring low-wage or out-of-town workers.
Attorneys for Tucson acknowledged the 1984 law, which brought an end to prevailing wage requirements.
But what changed is that in 2006, voters approved the creation of a state minimum wage of $6.75 when the federal minimum — the one that applied in Arizona until that point — was just $5.15. Voters updated it in 2016, adding automatic inflation adjustments. As a result, the state minimum wage is now $15.15.
Those laws specifically allow cities to have their own, higher minimum wages. That figure in Tucson is $15.45.
Based on that provision — and armed with a 2023 opinion by Arizona Attorney General Kris Mayes — Tucson and Phoenix each enacted their own prevailing wage ordinances in 2024 for contracts of at least $2 million.
In approving the ordinance, Tucson Mayor Regina Romero said the change was justified.
Tucson can't require companies working on city projects, such as the one shown here, to pay what the city decided is a "prevailing wage,'' the Arizona Court of Appeals has ruled.
"Workers are the foundation of our economy,'' she said at the time. "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. It helps bring workers into the middle class and helps to reduce pay gaps for women, Black, immigrant and Latino workers.''
The ordinance drew a lawsuit from three contracting groups, which argued that nothing in the minimum wage laws overrides the 1984 ballot measure. They argued there's a difference between a "minimum wage,'' which they concede is within a city's powers, and a "prevailing wage.''
Attorneys for the cities, by contrast, said state law defines "wage'' to include all monetary compensation to an employee. That settles the matter, they said.
The arguments got even deeper as each side advanced a different dictionary definition of "wage'' and argued for the judges to reject their preferred choices.
Appellate Court Judge Michael Catlett and his colleagues, however, didn't go down that path, instead focusing on what is — and is not — covered under the minimum wage laws. He said it is clear to him and his colleagues that voters in 2006 and 2016 never specifically intended to void the 1984 law.
He said the language of the minimum wage laws specifically said they were designed to ensure that "all working Arizonans deserve to be paid a minimum wage that is sufficient to give them a fighting chance to provide for their families.'' They were also designed with the idea that paying people more reduces the need for taxpayer-funded public services.
He said interpreting the law to allow local government to set their own minimum wage, as Tucson has done, "furthers those purposes.''
"But allowing local government to contractually require prevailing wages for certain employees performing certain work on certain projects does not,'' Catlett wrote. He said prevailing wages don't benefit all workers — the aim of the voter-approved minimum wage laws — but benefit "only a subset of the city's citizens when they perform certain work on a subset of projects.''
The ruling was cheered by Timothy Sandefur, an attorney with the Goldwater Institute, which represented the challengers.
"The real winners in today's ruling are Arizona taxpayers,'' he said in a written statement. Had the court decided otherwise, he said, it would have opened the door to cities deciding how much any employer pays any employee anytime a company contracts or subcontracts with the cities.
"That, of course, would cost taxpayers more — reducing their freedom of choice and their ability to invest in their own futures — all for the benefit of politicians and politically well-connected lobbyists,'' Sandefur said.
The appellate court decision comes after Maricopa County Superior Court Judge Bradley Astrowsky reached a similar conclusion in 2024.
"Prevailing wage regulations are substantially different from minimum wage statutes,'' Astrowsky wrote. "A prevailing wage ordinance is not a minimum wage law."
