It has been nine months since Arizona citizens cast their vote in favor of Proposition 206, a measure to increase the State’s minimum wage and mandate businesses provide paid sick time to employees.

Since January, employers and the State have felt the pain of the minimum wage changes.  The Legislature struggled to fill budgetary gaps for contracted care providers, and businesses have faced retracting their workforce or closing altogether. It will only get worse as workers begin to encounter the Seattle experience of less pay and fewer hours when the wage ratchets up to $12/hour by 2020.

Now, at the beginning of this month, the second kicker of the 9-page proposition takes effect.  The new law requires employers provide one hour of paid sick time per every thirty hours worked; with up to 24 hours per year for employers with fewer than 15 employees, and 40 hours of paid sick time a year for employers with more than 15 employees.

These mandates come with real hard costs for all businesses large and small – both in the ways of new bureaucratic requirements, higher legal standards to defend themselves against possible suits, and a less reliable workforce.

With the sick time allowance comes a slew of new accounting and reporting burdens.  Employers will now be required to reformat pay stubs to include employees’ accrued time, amount of pay earned as sick time, as well as sick time used to date.  In addition to this, employers will have to retain these payroll records up to four years and post a notice in their workplaces outlining employee “rights” under Prop 206. The law applies to part-time and temporary workers as well – which means employers will have to think long and hard about whether the costs associated with these additional requirements are worth the investment in employees who may or may not provide longer term value to the company.  These considerations are compounded when the minimum $250 penalty for record-keeping noncompliance is factored.

More significant however, will be the new legal reality employers face.  Companies are prohibited from taking a negative action in response to an employee’s use of paid sick time.  That means within 90 days of a sick time request or use, the employer will be under a microscope, whereby any action perceived as negative by the employee may be scrutinized as retaliation or deterrence.    And because employees are permitted to take their sick time in the smallest increment of time within the business’s accounting system, an employee could spread out their sick time in a way that puts employers within perpetual 90-day duress.

This policy change threatens the very nature of Arizona’s “Right to Work” laws that make the state such an attractive place for businesses.  Employers will need to meticulously document every reason for changing or cutting an employee’s hours, denying or requiring transfers, or denying vacation time use in peak times.  Anytime there is a dispute, the higher burden for defending any changes will always fall upon the employer.

Despite the inevitable damages and economic drain of these liberal, socially-engineered policies, paid sick leave is a “solution” wanting a problem.  Comprehensive studies of employer paid leave policies demonstrate most businesses provide paid sick days, workplace illness is not a widespread issue, and mandatory sick laws do not reduce employee turnover.  Arizonans will see no real benefit from this policy change.

Over time, the greatest effect of paid leave will be the expansion of government authority into employment contracts and the adoption of one of the highest-cost paid leave mandates in the country.  It undermines Arizona’s “right-to-work” law, emboldens big unions, and erodes the trust and synergy of the employer/employee relationship.

For more information on compliance with the new minimum wage or paid sick time laws, businesses should visit the Arizona Industrial Commission: https://www.azica.gov/frequently-asked-questions-about-wage-and-earned-paid-sick-time-laws

The Arizona School Board Association (ASBA) is a non-profit organization known for supporting a wide array of liberal education causes.  While their membership includes individual members, most of their funding comes from taxpayer funded K-12 school boards, accredited community colleges, charter school boards, and state accommodation schools.

This is significant given their involvement with the referendum effort on SB1431, legislation that expanded the Education Scholarship Accounts (ESAs) program for all students in Arizona. Under the bill, students and parents who decide to utilize the program will receive an ESA scholarship to attend the school of their choice.  ASBA is strongly opposed to the program, and has partnered with the political committee Save Our Schools to collect the needed 75,321 signatures to refer SB1431 to the November 2018 ballot.

Over the last month, ASBA has sent emails urging people to contribute, volunteer and sign up for the referendum efforts. They even hosted a panel discussion where they boasted that it would be a great opportunity for people to sign, collect, and drop off petitions in support of the referendum effort.

Suffice to say, taxpayer dollars being diverted to overt electioneering activities—public funding specifically allocated to educate students—should be setting off alarm bells at the state capitol. Under A.R.S. 15-511(F), it states that “a school district shall not spend monies for membership in an association that attempts to influence the outcome of an election.”  Arizona campaign finance law is clear on this point; organizations that engage in support of the circulation of a petition is by definition attempting to influence the outcome of an election. ASBA has decided to jeopardize their largest funding source on a partisan electioneering crusade.

In addition to the potential legal issues associated with taxpayer funded electioneering by ASBA, it is a bit surprising that the same organization that has been relentless in their attacks against the legislature and Governor for refusing to “fully fund” education have the ability to divert precious resources away from the classroom and into campaign activities.

While individual School Board members have a right to personally advocate for the education policies they believe in, they owe a sacred duty to utilize every tax dollar they receive for its intended purpose – educating our children – not pushing their own political agendas through 3rd party non-profit organizations.

Regardless of where one stands on the ESA issue, it is not too much to ask that taxpayer money intended for education is actually used for education. Lawmakers should take a very close look at this issue and do whatever it takes to end the abuse.

As reported by the Club last year, Pinal County officials began turning the political wheels to send a $640 million-dollar tax increase to voters to fund a wide array of transportation projects throughout the region.  This new 20-year ½ cent transportation excise tax would be in addition to the existing ½ cent tax for transportation that is set to expire in 2025.

After unveiling the plan, the effort quickly spurred opposition from retailers, home builders, auto dealers and multiple taxpayer watchdog groups. However, instead of taking this as a sign that the community wouldn’t accept their proposal, Pinal officials developed a new plan to try to buy-off their political opposition.

Added to the plan was a special carve-out for purchases over $10,000 from paying the new incremental tax amount, language specifically designed to eliminate opposition from certain businesses.  Only one problem—special sales tax carve-outs are illegal. They attempted to remedy this issue last session with House Bill 2156, but fortunately for taxpayers the legislation was quickly killed by lawmakers and the authority to provide the exemption was not granted.

End of the story? Not quite.

The proponents of the tax hike are moving forward anyway, and have included the carve-out in the transportation plan. Despite their public acknowledgement that this can’t be done, Pinal officials are now citing a Legislative Council opinion to defend their actions. Such an opinion is not legally binding and is heavily questioned by attorneys and tax policy experts. If pursued by the County, it is very likely that this power grab will be challenged in court.

It is pretty clear at this point that the various special interests looking to benefit from the tax hike will do whatever it takes to get it passed. With the vote scheduled for November, Pinal taxpayers should expect a well-funded, glitzy campaign that won’t discuss the insider deal making and highly questionable legal maneuvers that made it all possible.



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The Arizona Free Enterprise Club is a free market policy and advocacy group dedicated to promoting a strong and vibrant Arizona economy.