Tempe Chamber Of Commerce

Your Success Is Our Business

Tempe Businesses Bending, Not Breaking, After 206 Enforcement

Posted on | January 27, 2017 | No Comments

by Chris Samuels, Tempe Chamber of Commerce

In a survey distributed to members of the Tempe Chamber of Commerce, local business owners reported facing difficulties in adjusting their business strategies following the implementation of Proposition 206 in 2017.

Hot Topics and Lunch forum, Thursday, Jan. 19, 2017.

Hot Topics and Lunch forum, Thursday, Jan. 19, 2017.

In the survey distributed two weeks ago, a majority of businesses said they are taking measures to offset the increase in payroll expenses. Of the business 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 of businesses surveyed said they will need to reduce the working hours of their employees.

Sixteen percent of Tempe businesses surveyed have reported layoffs or will begin layoffs, an average of 4 employees per business and as much as ten employees.

Nearly half of businesses who responded have not taken or do not plan to make any adjustments after the passing of Prop 206.

The trend is a direct consequence of action taken on Election Day last November. Voters passed Proposition 206, which stipulates an increase of the minimum wage from $8.05 in 2016 to $12 by 2020. January 1st saw the most dramatic increase of the wage hike, increasing $1.95 to ten dollars per hour.

In a recent meeting with the Chamber Board of Directors and U.S. Sen. Jeff Flake (R-AZ), Sen. 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 that a Republican-controlled Congress will hope to eliminate will hopefully help small business owners reduce costs and help their profits.

Additionally, the provisions of Prop 206 requires paid sick time, proportional to the number of hours worked and to 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 issue is 40 hours per 12 months. If a company has fewer than 15 employees, 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 the recent forum held by the Chamber last Thursday, Rick Mahrle of the law firm Gammage & Burnham outlined the stipulations of paid sick time. It was important to note, he said, that the law only mandated the minimums that employers could give. Companies that have more generous policies could continue.

Rick Mahrle of the law firm Gammage & Burnham speaks about Prop 206

Rick Mahrle of the law firm Gammage & Burnham speaks about Prop 206

However, it is now necessary to give a report of the hours of paid sick time gained and hours spent by the employee in each of the employee’s paychecks, Mahrle said.

This new policy concerns Matt Roumain with Managestaff, an HR and staffing company, that this 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 make those proactive steps to ensure that their company is doing what is required of them to prevent them from being in a position of being fined or having to pay back things they didn’t intend to do.”

Currently, several chambers of commerce have filed a lawsuit challenging Prop 206 in the Arizona courts. The case is currently waiting to be heard by an appellate court.

The Tempe Chamber of Commerce was not named as a plaintiff in the lawsuit, but is cooperating with the other chambers named.

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