Judge: Local governments can require private employers to provide fringe benefits

Judge: Local governments can require private employers to provide fringe benefits

A judge has slapped down efforts by Republican lawmakers to block local government from requiring private employers to provide greater fringe benefits to workers than the minimum required by state or federal law.

Maricopa County Superior Court Judge Joshua Rogers rejected arguments that a voter-approved law setting a state minimum wage and allowing cities and counties to go even higher affects only the actual salary of employees. He said a plain reading of what voters approved also permits them to enact their own mandates dictating what fringe benefits companies must provide.

That conclusion is important because the Arizona Constitution sharply restricts the ability of lawmakers to tinker with anything approved at the ballot. And Rogers said that means the Legislature acted illegally last year in telling local governments they have no right to force employers to provide fringe benefits.

Unless overturned, the ruling paves the way for citizens to petition local governments to require private firms to provide things they may not now, ranging from vacation time and maternity leave to even employer-subsidized health insurance.

It already is having an effect.

Regina Romero, a member of the Tucson City Council, said the ruling, released Wednesday, frees her to once again pursue her bid to require employers in the city to offer paid maternity leave.

Romero’s efforts had stalled after lawmakers approved the 2016 legislation pushed by Rep. J.D. Mesnard, R-Chandler, which forbade local elected officials from mandating any fringe benefits.

Now, Romero said, she will work with not only her colleagues on the council but with community leaders to craft a new ordinance.

She said such a requirement, part of what she calls a “working families agenda,” is long overdue.

“The U.S. is so far behind when it comes to providing paid time off to new mothers and new parents,” she said.

It is precisely that kind of local law that the Republican-controlled Legislature sought to prevent.

Mesnard said he opposed both the original 2006 initiative that set the state’s first-ever minimum wage at something higher than required in federal law, as well as the 2016 initiative that increased it further.

Employers now must pay workers at least $10 an hour as compared with the $7.25 figure set by Congress. That is slated to increase to $12 an hour by 2020.

Last year’s initiative also requires employers to provide at least three days of paid personal leave.

Having been approved by voters, Mesnard and his GOP colleagues are powerless to alter any of that. But Mesnard, seeking to limit the effect of the measure, wrote a law to redefine “wages” — the thing that the state cannot preempt because it was approved at the ballot — to include only the salaries being paid to workers.

Everything else was defined as “nonwage compensation,” ranging from sick pay, vacation pay and severance benefits to commissions, pension contributions and maternity leave. More to the point, his measure dictated that local governments cannot approve any forms of nonwage compensation beyond what is already required by law.

Mesnard defended the move.

“The challenge becomes businesses trying to adhere to a patchwork of regulations,” he said. “One place they have to offer certain benefits and right down the street they don’t.”

Anyway, Mesnard said, the Legislature wants to create “an environment that’s conducive to new businesses” as well as help those here to grow. “That creates jobs,” he said.

Rogers, however, said none of that overcomes the legal flaws in Mesnard’s legislation. That includes that what voters approved spells out that local governments can require not only that companies pay higher wages but also “benefits.”

That left Assistant Attorney General Rusty Crandell to try to persuade Rogers that the word “benefits” is ambiguous and can have many meanings beyond the additional forms of compensation that employers provide to their workers. For example, he argued, a “benefit” could mean things like the “advantages and privileges” given to workers.

Rogers sniffed at that contention.

He said the key to concluding what a word means is to look at it in context. That includes not only how the word is traditionally understood but also how it is used.

“The most obvious and commonly understood relationship between the word ‘wages’ and ‘benefits,’ especially in the broader context of a labor law such as this, is that both represent two complementary parts of employee compensation,” Rogers wrote. And he said the fact there are other definitions of “benefits” doesn’t alter that.

“While the meaning proposed by the state may be a permissible meaning of ‘benefits’ according to a dictionary definition of the word, it is not a reasonable meaning in light of the context of the word,” he said.

There was no immediate response from the Attorney General’s Office on whether it would appeal the ruling.

On Twitter: @azcapmedia

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