Key Points:
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Arizona Court of Appeals rules against prevailing wages
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That means cities cannot require out-of-state companies to pay local minimum wages
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The court says voters’ approval of minimum wage laws does not override 1984 law outlawing the act
Tucson and Phoenix can’t require companies working on city projects to pay what the city has decided is a “prevailing wage,” the Arizona Court of Appeals has ruled.
And neither will any other city that decides to follow suit.
The three-judge panel rejected claims that, because voters agreed in 2006 and in 2016 to let cities set their own minimum wages, those cities could also enact a law requiring employees working on government contracts to be paid at a rate equal to someone working a similar position in the same field and community. None of that, they said, overrules a 1984 ballot measure specifically outlawing prevailing wages.
There was no immediate response from Tucson on whether it would seek Supreme Court review.
The background of 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 contracts don’t undercut what already is being commonly paid in the area by hiring low-wage or out-of-town workers.
Attorneys for the city acknowledged the 1984 law which brought an end to prevailing wages.
But in 2006 voters approved 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. And voters updated it again in 2016, with automatic inflation adjustments. That figure is now $15.15.
Significantly, those laws specifically allow cities to have their own even-higher minimum wages. That figure in Tucson is $15.45.
Based on that provision — and armed with a 2023 opinion by Attorney General Kris Mayes — Tucson and Phoenix in 2024 each enacted their own prevailing wage ordinances for contracts of at least $2 million.
In approving the ordinance, Tucson Mayor Regina Romero said the change is justified.
“Workers are the foundation of our economy,” she said in a prepared statement 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,” the mayor said. “It helps bring workers into the middle class and helps to reduce pay gaps for women, Black, immigrant and Latino workers.”
That drew a lawsuit from three contracting groups who argued that nothing in the minimum wage laws overrides the 1984 ballot measure. They argued that 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. And that, they said, settles the matter.
The arguments got even deeper as each side advanced a different dictionary definition of what is a “wage” and argued for the judges to reject their preferred choices.
Appellate court Judge Michael Catlett and his colleagues, however, weren’t about to go down that path, instead focusing on what is — and is not — covered under the minimum wage laws. And 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.” And they also were 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 statement. He said had the court decided otherwise 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 does not come entirely as a surprise.
In a 2024 ruling, Maricopa County Superior Court Judge Bradley Astrowsky reached a similar conclusion.
“Prevailing wage regulations are substantially different from minimum wage statutes,” he wrote. Astrowsky wrote. “A prevailing wage ordinance is not a minimum wage law.”


