Can an Arizona city require contractors on its public works projects to pay at least the prevailing wage, despite the state Prevailing Wage statute saying political subdivisions can't impose prevailing-wage rules?

Plain-English summary

In March 2023, the Phoenix City Council passed a Prevailing Wage Ordinance requiring that workers on city public works contracts over $250,000 be paid no less than the wages and fringe benefits prevailing for their trade in the local area, calculated by reference to federal Davis-Bacon rates. A new council majority repealed the ordinance a month later. Senator Catherine Miranda asked the AG whether such an ordinance was permitted under state law.

Attorney General Kris Mayes said yes. Two state statutes were in tension. The 1984-enacted Prevailing Wage statute, A.R.S. § 34-321(B), bars "agencies and political subdivisions" of Arizona from requiring public works contractors to pay no less than the prevailing rate of wages. The voter-approved Minimum Wage statute, A.R.S. § 23-364(I) (Prop. 202 in 2006, reaffirmed by Prop. 206 in 2016), authorizes counties, cities, and towns to "regulate minimum wages and benefits within [their] geographic boundaries."

The AG's analysis turned on three steps. First, a "prevailing wage" is a type of "minimum wage" under the statutory definition, federal Davis-Bacon usage, and a long line of Arizona case law going back to Jaastad (1934). Second, the two statutes conflict as to counties, cities, and towns and must be harmonized. Third, the harmonization that fits the text and context is to read the Minimum Wage statute as exempting counties, cities, and towns from the Prevailing Wage statute's prohibition, leaving the prohibition in place for other political subdivisions. The Voter Protection Act locks that result in: any later legislative attempt to limit the Minimum Wage statute's grant of authority to counties, cities, and towns is barred under Meyer v. State, 246 Ariz. 188 (App. 2019).

What this means for you

If you are a city, county, or town considering a prevailing-wage ordinance

You have authority. The opinion is non-binding but persuasive, and it explicitly endorses ordinances requiring contractors on local public works to pay no less than the prevailing wage in the area. Tie the ordinance to the statutory authority of A.R.S. § 23-364(I), define "prevailing wage" by reference to a defensible benchmark (Davis-Bacon was Phoenix's choice), and apply it to a clear class of contracts (Phoenix used a $250,000 threshold). Note the opinion's footnote 9: counties, cities, and towns continue to be subject to the non-wage provisions of § 34-321(C), which include restrictions on agreements with labor organizations.

If you are a public works contractor

Bid Arizona municipal projects with the assumption that a city or county may impose a prevailing-wage rate. Track ordinance threshold amounts and definitions, and price your bids accordingly. The opinion also noted that the prevailing-wage prohibition still applies to school districts, community college districts, water conservation districts, and special taxing districts, so those projects are different.

If you are a construction worker or union representative

The opinion opens the door to local prevailing-wage ordinances in the cities, counties, and towns where you operate. Where local elected officials are receptive, this is the legal pathway. Where they are not, the political process is your remedy. The Voter Protection Act limits the legislature's ability to roll back the local authority Prop. 206 created.

If you are a school district, community college, or special-district official

Your authority to impose prevailing-wage rules on your own contracts is unchanged by this opinion. The Prevailing Wage statute's prohibition continues to apply to you. The Minimum Wage statute's local-authority grant in § 23-364(I) reaches only counties, cities, and towns.

Common questions

Q: What does the Prevailing Wage statute prohibit?
A: A.R.S. § 34-321(B) provides that "[a]gencies and political subdivisions of this state shall not by regulation, ordinance or in any other manner require public works contracts to contain a provision requiring the wages paid by the contractor or any subcontractor to be not less than the prevailing rate of wages." The definition of "political subdivision" in § 34-321(E)(3) at the time was broad and included cities, charter cities, towns, counties, school districts, community college districts, and several types of special districts.

Q: What does the Minimum Wage statute authorize?
A: A.R.S. § 23-364(I) provides that "[a] county, city, or town may by ordinance regulate minimum wages and benefits within its geographic boundaries but may not provide for a minimum wage lower than that prescribed in this article. ... This article shall be liberally construed in favor of its purposes and shall not limit the authority of the legislature or any other body to adopt any law or policy that requires payment of higher or supplemental wages or benefits."

Q: Why is a 'prevailing wage' a type of 'minimum wage'?
A: A.R.S. § 23-350(5) defines "minimum wage" as "the nondiscretionary minimum compensation due an employee by reason of employment." A prevailing wage rate sets a non-discretionary minimum that a covered worker must receive. The Davis-Bacon Act treats "wages, scale of wages, wage rates, minimum wages, and prevailing wages" as a single defined term (40 U.S.C. § 3141(2)). Arizona courts going back to the 1934 Jaastad and Anklam opinions treated the state's prevailing wage and minimum wage laws as common parts of "the Minimum Wage Laws."

Q: Why does the Voter Protection Act matter here?
A: Section 23-364 was enacted by Prop. 202 in 2006 and reaffirmed by Prop. 206 in 2016. The Voter Protection Act (Prop. 105, 1998) shields voter-approved laws from legislative amendment unless three-fourths of each chamber agrees and the change "furthers the purposes" of the measure. The 2011 and 2015 amendments to the Prevailing Wage statute did not override the Minimum Wage statute, but to the extent any future legislative measure tried to limit the local authority granted in § 23-364(I), the Meyer decision controls and the limit would be invalid under the VPA.

Q: What about non-wage public-works rules in § 34-321(C)?
A: They still apply. The opinion's footnote 9 makes clear that counties, cities, and towns "continue to be subject to the non-wage-related provisions of § 34-321(C)" (for example, the prohibitions on agreements with labor organizations added by S.B. 1403 in 2011 and S.B. 1090 in 2015).

Q: Did Phoenix's repeal moot the question?
A: No. The AG treated the now-moot SB 1487 investigation request as an opinion request under A.R.S. § 41-193(A)(7), so the analysis stands as guidance for other cities and counties.

Background and statutory framework

Arizona's prevailing-wage history spans nearly a century. The 1933 statutes that the Arizona Supreme Court called "the Minimum Wage Laws" combined a per-diem floor for state highway work with a prevailing-wage rule for state and political-subdivision public works contracts. Those laws (later codified as the "Little Davis-Bacon Act") were repealed by a 1984 referendum, which is the source of the current § 34-321 prohibition.

Twenty-two years later, voters changed direction with Prop. 202, repealing a 1997 statute that had blocked local minimum wages above the federal floor and granting counties, cities, and towns the broad authority to "regulate minimum wages and benefits" within their boundaries. Prop. 206 reaffirmed and expanded that authority. The 2011 and 2015 legislative amendments to the Prevailing Wage statute did not (and constitutionally could not, after Meyer) cancel the local authority Prop. 206 created.

The harmonization the AG adopted preserves both statutes for what they actually do. The 1984 Prevailing Wage statute continues to bar prevailing-wage requirements imposed by school districts, community college districts, water conservation districts, industrial development authorities, and special taxing districts (the political subdivisions other than counties, cities, and towns). The 2006 and 2016 voter-approved Minimum Wage statute carves counties, cities, and towns out of that prohibition by giving them broader local authority over minimum wages.

Citations and references

Statutes:
- A.R.S. §§ 23-350(5); 23-364(I); 34-321; 41-193(A)(7); 41-194.01
- Ariz. Const. art. IV, Pt. 1, § 1(6)(C)
- 40 U.S.C. § 3141 et seq.

Cases:
- United States v. Binghamton Const. Co., 347 U.S. 171 (1954)
- Univs. Rsch. Ass'n, Inc. v. Coutu, 450 U.S. 754 (1981)
- Dillingham Const. N.A., Inc. v. Cty. of Sonoma, 190 F.3d 1034 (9th Cir. 1999)
- State v. Jaastad, 43 Ariz. 458 (1934)
- State v. Anklam, 43 Ariz. 362 (1934)
- Highland Park Realty Co. v. City of Tucson, 46 Ariz. 10 (1935)
- UNUM Life Ins. Co. of Am. v. Craig, 200 Ariz. 327 (2001)
- Fleming v. State Dep't of Pub. Safety, 237 Ariz. 414 (2015)
- State v. Cassius, 110 Ariz. 485 (1974)
- Meyer v. State, 246 Ariz. 188 (App. 2019)

Source

• Landing page: https://www.azag.gov/opinions/i23-004-r23-009
• Original PDF: https://www.azag.gov/sites/default/files/2025-06/I23-004.pdf

Original opinion text

To:

The Honorable Catherine Miranda
Arizona State Senate

Questions Presented

May a city enact a prevailing wage ordinance that requires contractors on municipal public works contracts to pay their workers no less than the wage rates that prevail for their trade in their geographic location?

Summary Answer

A city may regulate the minimum wages paid within its geographic boundaries under Arizona Revised Statutes § 23-364(I), so long as those wages are not less than the statewide minimum wage. This authority includes the ability to require that employees of contractors on local public works projects be paid not less than the prevailing wage.

Background

On March 21, 2023, the Phoenix City Council issued notice of a Special Meeting to be held the next day to consider a "Prevailing Wage Ordinance for City Projects" (the "Ordinance"). The Ordinance, which ultimately passed, amended Chapter 43, Article XIV of the City Code to require that every employee employed by a contractor or subcontractor working on a City public works contract in excess of $250,000 be paid "not less than the wages and fringe benefits prevailing for the same class and kind of work in the local area." Phoenix City Code § 43-53(A)(1). This amount was to be determined by the City Procurement Division.

On April 17, 2023, Senator Catherine Miranda submitted to this Office a request for investigation under A.R.S. § 41-194.01, asking whether the prevailing wage provision of the Ordinance was permitted under state law. On April 19, after newly-elected City Council members assumed their seats, the Council voted to repeal the Ordinance. Because Senator Miranda's request for investigation was mooted by the repeal, this Office will treat her inquiry to a request for an Attorney General Opinion under A.R.S. § 41-193(A)(7).

Analysis

The first statute (the "Prevailing Wage" statute) deals with wages paid to employees who work on public works projects contracted by state agencies and political subdivisions. This statute, initially enacted through a referendum referred to the people by the legislature in 1984, states:

Agencies and political subdivisions of this state shall not by regulation, ordinance or in any other manner require public works contracts to contain a provision requiring the wages paid by the contractor or any subcontractor to be not less than the prevailing rate of wages for work of a similar nature in the state or political subdivision where the project is located.

Codified at A.R.S. § 34-321(B). The law defines a "[p]olitical subdivision" as "a city, charter city, town, county, school district, community college district, multi-county water conservation district, industrial development authority or special taxing district." A.R.S. § 34-321(E)(3).

The second relevant statute (the "Minimum Wage" statute) authorizes counties, cities, and towns to "regulate minimum wages and benefits" paid within their localities. This law was enacted by initiative in 2006 as Proposition 202, and again in 2016 as Proposition 206. The pertinent section of Prop. 206 is codified at A.R.S. § 23-364, which provides:

A county, city, or town may by ordinance regulate minimum wages and benefits within its geographic boundaries but may not provide for a minimum wage lower than that prescribed in this article. ... This article shall be liberally construed in favor of its purposes and shall not limit the authority of the legislature or any other body to adopt any law or policy that requires payment of higher or supplemental wages or benefits, or that extends such protections to employers or employees not covered by this article.

A prevailing wage is a type of "minimum wage." Arizona law defines "minimum wage" as "the nondiscretionary minimum compensation due an employee by reason of employment, including the employee's commissions, but excluding tips or gratuities." A.R.S. § 23-350(5). Both the Phoenix Ordinance and the federal Davis-Bacon Act use the concept of a prevailing wage rate to describe the way in which minimum wages paid under federal and City public works contracts are to be calculated. See United States v. Binghamton Const. Co., 347 U.S. 171, 178 (1954); Univs. Rsch. Ass'n, Inc. v. Coutu, 450 U.S. 754, 758–59 (1981); Dillingham Const. N.A., Inc. v. Cty. of Sonoma, 190 F.3d 1034, 1041 (9th Cir. 1999).

This understanding is consistent with Arizona's historical understanding of these terms. As the Arizona Supreme Court noted in 1935, the 1933 Arizona statutes were "commonly known as the Minimum Wage Laws" that applied to "public work, direct or indirect." Highland Park Realty Co. v. City of Tucson, 46 Ariz. 10, 12, 14 (1935).

The Minimum Wage statute authorizes cities to set minimum wages, but the Prevailing Wage statute prohibits cities from setting prevailing wages. Because a prevailing wage is a type of minimum wage, these statutes conflict as applied to cities (and counties and towns).

When two statutes appear to conflict, courts attempt to reconcile them. The text and context of the Minimum Wage statute do not contain an exclusion for public works contracts, nor do they incorporate or reference the Prevailing Wage statute as a limitation on its grant of authority. To the contrary, the Minimum Wage statute states it is to "be liberally construed in favor of its purposes and shall not limit the authority" of counties, cities, and towns "to adopt any law or policy that requires payment of higher or supplemental wages or benefits." A.R.S. § 23-364(I).

Reading the earlier-enacted Prevailing Wage statute as creating an exclusion to the Minimum Wage law for public works contracts would violate this provision by limiting the unqualified authority that the later-enacted Minimum Wage statute expressly confers. Accordingly, the statutes are best harmonized by interpreting the Minimum Wage statute as exempting counties, cities, and towns from the list of political subdivisions subject to the Prevailing Wage prohibition.

The context in which Props. 202 and 206 were enacted supports this harmonization. Prop. 202 repealed a 1997 statute which provided that no political subdivision could establish a minimum wage that exceeded the federal minimum wage. Public policy clearly shifted among voters with the passage of Prop. 202 in 2006 and Prop. 206 in 2016.

Furthermore, as a voter-approved initiative, the Minimum Wage statute is shielded by the Voter Protection Act, which prohibits the legislature from amending or repealing voter-approved legislation unless the amending legislation furthers the purposes of such measure and is approved by at least three-fourths of the members of each house of the legislature. The Prevailing Wage statute, although enacted as a referendum, predates the VPA and is therefore not subject to its protections.

In Meyer v. State, the court of appeals considered a statute that "removed from cities, towns, and other political subdivisions the authority to regulate employee benefits, including nonwage compensation." 246 Ariz. 188, 193 ¶ 12 (App. 2019). The court determined that the measure "explicitly prohibits what the Minimum Wage Act permits," and therefore it violated the VPA's express prohibition on legislative changes to voter-approved laws.

Conclusion

The Minimum Wage statute gives counties, cities, and towns the authority to regulate minimum wages within their geographic boundaries. This authority includes the ability to enact an ordinance directing that contractors pay employees working on a locality's public works projects within its geographic boundaries no less than the prevailing wage in the area.

Kris Mayes
Attorney General