2018 Challenges in the Arizona State Legislature

Date: June 05, 2017

Protecting the right to use independent contractors, stopping local governments from setting their own minimum-wage rates top priorities

The second regular session of the Arizona State Legislature convenes January 8, 2018 with three issues NFIB expects to see return.

Protecting the Right to Hire Independent Contractors
A perennial issue in state legislatures across the nation is Big Labor’s annual assault on independent contractors. NFIB/Arizona is ready for another fight to stop Big Labor from forcing independent contractors from being classified as W-2 employees.

This protection of independent contractors is one of NFIB/Arizona’s signature issues. In 2016, NFIB teamed up with then-Rep. Warren Peterson (now a senator) and employment law specialist David Selden of the Kavanaugh Law Firm to establish a national model that took the uncertainty, confusion, and risk out of W-2 or 1099 classifications. Peterson’s House Bill 2114 was signed into law by Gov. Doug Ducey. The Declaration of Independent Business Status the trio came up with can be read here.

According to U.S. General Accounting Office estimates, the number of contract workers and freelancers is about 42 million Americans, which the Office expects to grow to 65 million by 2020. These are people who want to work for themselves and be their own bosses and are extremely beneficial for the Arizona economy. More about them can be read at NFIB/Arizona State Director Farrell Quinlan’s guest editorial in the Phoenix Business Journal.

Stopping Local Governments From Establishing Their Own Minimum Wage
The minimum wage is earned by just 2.7 percent of the nation’s workers, according to the U.S. Bureau of Labor Statistics, and most of them “tend to be young. Although workers under age 25 represented only about one-fifth of hourly-paid workers, they made up about half of those paid the federal minimum wage or less. Among employed teenagers (ages 16 to 19) paid by the hour, about 10 percent earned the minimum wage or less, compared with about 2 percent of workers age 25 and older.”

In short, the minimum wage is an entry level wage earned mostly by teenagers and young adults still living at home. Increases in the minimum wage have only one major effect—eliminating entry-level jobs. Despite these facts, proponents of ever-increasing rates wrongly argue that they’re needed to lift people out of poverty, even though little to no evidence back it up.

Big Labor will once again seek to exacerbate this job-killing problem by pushing legislation that would allow local governments to set their own minimum-wage rates. This would create a crazy quilt of minimum-wage rates throughout Arizona and a commensurate paperwork migraine for every business. Also, If a business is in a higher than normal minimum-wage locality, the selling prices would increase in proportion, which could lead customers to shop in other jurisdictions. NFIB/Arizona will continue its fight against such measures.Fighting a Sales Tax on Labor and Services

Fighting a Sales Tax on Labor and Services
Big government champions are relentless in seeking to expand Arizona’s sales tax to fund their priorities and programs, regardless of their cost and effectiveness. Just as relentless have been NFIB’s Arizona members in their opposition to expanding the sales tax to include labor and services. When asked to vote on their NFIB/Arizona Member Ballots for the past 10 years, small businesses have been adamant in saying ‘No’ by huge margins:

2008—88 percent

2010—83 percent

2014—83 percent

2015—84 percent

2017—89 percent

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