Voluntary Payments for Unemployment Taxes

On March 14, 2017, Arizona Governor Doug Ducey signed legislation (S.B. 1166) regarding voluntary payments for unemployment taxes. Pursuant to the bill, an employer may make voluntary payments, in addition to the contributions required for the unemployment compensation fund, that will be credited to the employer’s account. The voluntary payments will be included in the employer’s account as of its most recent computation date if they are made on or before the following February 28 (rather than January 31). Voluntary payments when accepted from an employer will not be refunded in whole or in part. Additionally, an employer against whom any delinquency assessment is made may petition for reassessment within 30 days (previous law was 15 days) after written notice of the assessment is served personally or sent by certified mail to the employer’s last known address. If the petition for reassessment is not filed within those 30 days, the amount of the assessment will become final and the lien imposed attaches.

The bill goes into effect 91 days after adjournment of the legislative session (June 7, 2017 is the projected adjournment date).

Read AZ S.B. 1166

Arizona Supreme Court Upholds Proposition 206

On March 14, 2017, the Arizona Supreme Court unanimously ruled to uphold Proposition 206 (Minimum Wage and Paid Time Off Initiative) that was passed by Arizona voters on November 8, 2016.

Proposition 206 increased the minimum wage in Arizona to $10 per hour effective January 1, 2017, and provides for incremental increases to reach $12 per hour by 2020. Additionally, effective July 1, 2017, the law requires employers to provide paid sick leave to Arizona employees.

On December 15, 2016, several business groups filed a lawsuit challenging the law’s constitutionality for two reasons. First, they alleged that because the law covered both the minimum wage and paid sick leave, the law violated the separate amendment rule of the Arizona Constitution which provides that “if more than one proposed amendment shall be submitted at any election, such proposed amendments shall be submitted in such manner that the electors may vote for or against such proposed amendments separately.” Second, they argued that the law created new costs to the state’s general fund without providing a new revenue source as required by § 23 of Article 9 of the Arizona Constitution.

On December 21, 2016, Judge Daniel Kiley of the Maricopa County Superior Court rejected the plaintiff’s request to enjoin the minimum wage requirements from taking effect on January 1, 2017. Upon the court’s denial of the injunction, the plaintiffs announced that they would appeal the ruling.

On December 28, 2016, the Arizona Supreme Court agreed to hear the appeal. On March 14, 2017, the court unanimously rejected the plaintiff’s claims without issuing an opinion.