Minimum Wage Increases

Passed on November 2, 2021, Tucson’s Proposition 206 (the Tucson Minimum Wage Act (TMWA)) goes into effect April 1, 2022. The new minimum wage law impacts all employees who perform at leave five hours of work per pay cycle “within the geographic boundaries of the city” of Tucson, raising the minimum wage from $12.80 to $13.00 per hour.

The TMWA mandates a progressive increase in the local minimum wage over the next several years and has a built-in rate of inflation increase that goes into effect January 1, 2026. Increases are as follows:

• $13.50 on January 1, 2023
• $14.25 on January 1, 2024
• $15.00 on January 1, 2025

Inflation percentage rates will increase by the percentage rate of inflation multiplied by the minimum wage on December 31^st of the prior year, rounded to the nearest multiple of five cents.  

Additional TWMA Provisions

The TWMA also impacts other aspects of the employer/employee working relationship in the following ways:

Show-Up Pay

Employers with 26+ employee will be required to pay all covered employees a minimum amount of “show-up pay” under the following circumstances:

• “[E]mployee is scheduled to work at least three hours; the employee timely reports for duty; the employee is able to work the entire shift; and the employer engages the employee for fewer than three hours;” or
• “[E]mployee is scheduled to work at least three hours and the employer cancels the employee’s shift with less than twenty-four (24) hours’ notice.”

Compensable Work Hours

The definition of “compensable work hours” has been expanded under the TMWA to include the following circumstances:

1. “security screening immediately prior to or following a work shift;”
2. whenever the employer “requires” employees “to be on the employer’s premises” or “at a prescribed work site;” or
3. when the employer requires employees “to be logged in and actively attentive to an employer-provided computer program, phone application, or similar device.”

Pay Card Provisions

In a controversial move, the TMWA contradicts existing state and federal laws governing the use of pay cards. State and federal laws allow an employer to require an employee receiving minimum wage payments by way of a pay card, reloadable debit card, or similar method, to possess a valid social security card. The TMWA prohibits Tucson employers from using these pay methods if in doing so they require the employee to possess a valid social security card. As this prohibition contradicts state/federal laws, employers utilizing these payment methods for Tucson employees should seek legal guidance.

ABC Test and “Worker For Hire” Provision

The TMWA adopts the ABC Test[i] for determining worker classification for minimum wage purposes and creates a new category of worker. Qualified individuals will be classified as a “worker for hire” subject to minimum wage provisions unless the hiring entity can show:

A. “the individual is free from the control and direction of the hiring entity in connection with the performance of the work;
B. the individual performs work that is outside the usual course of the hiring entity’s business; and
C. the individual is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed for the hiring entity.”

Tucson employers should keep in mind the ABC Test is an “all or nothing test” meaning the ‘worker for hire’ will be entitled to earn at least the TMWA minimum wage unless all three prongs of the test can be answered in the affirmative.     

Members with questions about the TMWA should contact Western Growers.