Phoenix won’t appeal ruling striking down prevailing wage law

(The Center Square) - The city of Phoenix will not appeal a court’s decision to strike down its prevailing wage law for employees in trade professions.

“The City of Phoenix respects the Court of Appeals’ decision regarding our Prevailing Wage Ordinance. While we are disappointed in the ruling, the City has decided not to pursue further legal action,” Dan Wilson, the city’s director of communications, told The Center Square by email.  

“We remain committed to supporting workers and exploring lawful ways to ensure they receive fair compensation,” he added.

In February, the Arizona Court of Appeals ruled against Phoenix and Tucson’s prevailing wage laws. Prevailing wages tend to be higher than minimum wages and mean a higher cost for taxpayers.

The U.S. Department of Labor defines a prevailing wage as an “average wage paid to similarly employed workers in a specific occupation in the area of intended employment.”

Phoenix enacted a prevailing wage law in March 2023, but repealed it the following month. The city came back in January 2024 and passed another prevailing wage law.

Shortly afterward, the Phoenix-based Goldwater Institute filed a lawsuit on behalf of associations of trade companies against Phoenix over its prevailing wage law, then filed another lawsuit against Tucson after it passed a prevailing wage law that year. Maricopa County Superior Court Judge Bradley Astrowsky combined the two lawsuits into one.

In his decision, the judge voided these laws in 2024, arguing they violated state law preventing prevailing wages. In 1984, Arizona voters passed Proposition 300, which banned state and local governments from using prevailing wages on public works contracts exceeding $1,000.

In their appeal, the cities said the initiatives passed in 2006 and 2016 gave them the ability to implement prevailing wages.

Arizona voters passed Proposition 202 in 2006, which increased the state’s minimum wage. Ten years later, Arizona voters passed Proposition 206, which again raised the state’s minimum wage.

In the appeal court’s decision, the judges rejected the cities’ argument, saying prevailing wages don’t qualify as minimum wages under Arizona law.

“Our interpretation lets both laws cohabit. Again, the Local Permission Provision uses ‘minimum wages’ to mean ‘the minimum hourly rate all employers in a particular geographic area must legally pay all employees once an employment relationship exists,” the judges wrote. “And ‘a prevailing rate of wages’ does not meet that definition.”

Timothy Sandefur, the vice president for legal affairs at the Goldwater Institute, told The Center Square that a prevailing wage differs from a minimum wage.

“A minimum wage is what everybody who works must earn at a minimum. A prevailing wage is a rule that says if somebody’s doing a job for the government, then those people have to be paid based on a really complicated formula that is the average of what people in that industry in that location make for that kind of work,” he explained.

As an example of a prevailing wage, Sandefur said when a city hires a contractor to build a government building, instead of paying the market wage, the city will pay the contractor a “much higher rate than the market rate,” determined by a complicated formula.

  ”The contractors and the unions that make these sweetheart deals with the government, they get paid a lot more for a job than any other contractor would be paid for that job,” Sandefur explained.

Sandefur noted that prevailing wages tend to be “much higher” than minimum wages.

He called the court’s decision a “major victory for Arizona taxpayers.”

The Arizona Court of Appeals decision is a win “because the court explained how to interpret law,” which he said “is going to prove very helpful,” he stated.

If any other cities or towns had prevailing wage laws, the ruling from the court of appeals would vacate them, Sandefur said.

He told The Center Square that he was “a little surprised” by the city of Phoenix saying it was not going to appeal the court’s decision.

The government will appeal decisions it loses “even though it knows it really has no hope of winning” because it is “constantly trying” to expand its powers, Sandefur said.