By Chris Samuels
In a survey distributed to members of the Tempe Chamber of Commerce, about half of the business owners responding said they’re facing difficulties in adjusting operational strategies to meet the requirements of Proposition 206, the wage and time-off measure adopted by Arizona voters last November.
In the questionnaire, distributed two weeks ago, a majority of businesses said they are taking steps to offset the increase in payroll-related expenses.
Of those surveyed, over a third reported having to raise prices of goods or services for consumers as much as 10 percent to rebalance the costs of maintaining profits. Another third said they will need to reduce the working hours of their employees.
Sixteen percent of Tempe businesses surveyed have reported layoffs, or expect to begin them, the number estimated to fall in a range of four to as many as 10 employees.
By contrast, nearly half of the businesses that responded have not taken or do not plan to make any adjustments as a result of the measure’s passage. Most, especially those in law, medical, finance or jewelry businesses, said it was because their employees already were being paid above the new minimum.
The trend is a direct consequence of action taken at the polls last November. Voters passed a measure stipulating an increase of the minimum wage from $8.05 in 2016 to $12 by 2020. January saw the most dramatic result of the wage hike, increasing the level from $1.95 to $10 per hour.
In a recent meeting with the Chamber Board of Directors and U.S. Sen. Jeff Flake (R-Ariz.), Flake described the measure as “awful” and noted it could have a negative effect on Arizona’s economy and the state’s small business owners.
Flake also mentioned that federal regulations, which a Republican-controlled Congress will hope to eliminate, will hopefully let small-business owners reduce costs and help their profits.
Additionally, the provisions of Prop. 206 require paid sick time proportional to the number of hours worked and how big the company is. The law mandates that one hour of paid sick time be given for every 30 hours of work. If a company has 15 or more employees, the minimum the law can establish is 40 hours per 12 months.
With fewer than 15, the minimum is 24 hours in the same time period.
The policies for paid sick time come into effect July 1 of this year.
At a recent forum held by the chamber, Rick Mahrle of the law firm Gammage & Burnham outlined the stipulations of paid sick time.
It is important to note, he said, that the law only mandates the minimums that employers could give. Companies with more generous policies can continue to implement those.
Mahrle also discussed other stipulations that will be adopted with the new law.
For example, it is now necessary to give a report of the hours of paid sick time gained and spent by the employee in each employee’s regular paychecks, Mahrle said.
Some in the chamber-group audience, including Matt Roumain with Managestaff, an HR and staffing company, expressed concern about the new policy, who suggested the sick-time measure may be an overlooked policy.
“For our company, as well as the companies that we work with,” Roumain said, it is important to stress compliance, “making sure that employees are actually seeing and being made aware of what is required of the employer.
“Having the employer take those proactive steps to ensure that their company is doing what is required of them to prevent them from being…fined or having to pay back things they didn’t intend to do.”
Recently, several Arizona chambers of commerce filed a lawsuit challenging Prop. 206 in the state courts. The case is waiting to be heard by an appellate court.
The Tempe Chamber of Commerce is not among plaintiffs in the lawsuit, but is cooperating with the other chambers named.
Chris Samuels is communications director for the Tempe Chamber of Commerce.
