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Bad for Business Statewide Initiatives and New Department of Labor Overtime Standards

McDanielThe Greater Flagstaff Chamber of Commerce advocates on behalf of the business community at all levels of government. As we move into the thick of the political season, it is important to be aware of three very dangerous ballot propositions that we oppose and encourage you to vote against. These are in addition to the local initiatives.


Regulation and Taxation of Marijuana Act

We are in strong opposition to this dangerous and risky proposition to legalize recreational marijuana.

Arizona is a very attractive place in which to do business. This measure would undermine that by making it more difficult for employers to find qualified workers and would lead to increased worker safety issue problems. Higher worker’s compensation costs and reduced productivity would make Arizona less appealing to prospective employers. Adding an additional layer of liability to small and large businesses alike will serve to increase costs and reduce our competitiveness.

The measure states that it will “regulate marijuana like alcohol” but provides no standards for what impairment is. Alcohol can be tested with a breathalyzer but marijuana can not be tested the same way and stays in one’s system for much longer. This makes it difficult for employers or public safety workers to determine the level of impairment.

Recreational use of marijuana is still illegal by federal law and businesses and landlords could be subjected to their properties being seized if tenants were to have the substance on the premises. This additional risk of exposure to the business community is too great a risk for an untested public policy.

Hospital Executive Compensation Act

The Chamber is in opposition to this proposition and urges you to vote NO. This proposition led by out of state labor unions seeks to cap the compensation amount hospital executives could make. This would only serve to drive quality professionals away from a critical field and harm our ability to attract top talent. The cost of health care would rise as it would artificially create a scarcity in the market.

We need to introduce more free market reforms where our economy can thrive instead of arbitrary governmental interference based on emotions that will be harmful to business. This is a very slippery slope. If the labor unions are successful in capping wages in the healthcare industry, they will most likely attempt to do the same thing in other industries.

This proposition sends the wrong message to all the businesses that we are trying to recruit and will only serve to harm our economy. We urge you to vote no.


Minimum Wage and Paid Sick Leave Act

We urge you to vote NO on the Fair Wages and Healthy Families Act.

This statewide proposition will be on the ballot in addition to an even more egregious local initiative that would mandate a $15 per hour minimum wage that we urge you to vote against.

This proposition would raise the minimum wage to $12 per hour by 2020 and require mandatory paid sick leave for all employees, including part-time workers. The financial burden to small businesses would be devastating.

Arizona’s minimum wage is already higher than the federal minimum wage and this proposition would increase by nearly 50 percent in only four years. Increasing the cost of labor to businesses will also raise the cost of goods and services provided.

Artificially creating a wage floor will result in loss of jobs and loss of opportunities for entry-level employees. Mandating increased wages through government action also has the detrimental effect of increased inflation, thereby further reducing any potential gains made by lower income employees. When minimum wage levels are set without regard to productivity, those without corresponding skill sets are priced out of jobs.

There is nothing compassionate about reducing the chances of someone getting a job.


U.S. Department of Labor More than Doubles Minimum Salary Levels for Fair Labor Standards Act Overtime Exemptions


Effective Dec. 1, new regulations from the Department of Labor affecting how employees are paid will go into effect.

The minimum salary required for the executive, administrative and professional employees (EAP) exemption will increase from $23,660 annually to $47,476 annually. This mandates that employers pay salaried employees who make up to $47,476 annually 1.5 times their hourly rate for any time worked over 40 hours.

This final rule imposes significant changes on how employers classify and pay their employees, and any employer that does not comply faces substantial penalties.

Congress is already looking for ways to block these new regulations but President Obama is likely to veto any such attempt and therefore would need widespread and bipartisan support to be effective. Therefore it is best to be prepared for the coming changes.

It is recommended that employers consult with their CPAs to ensure compliance. In addition, identify those exempt employees who will be converted to overtime eligible and start tracking their hours. This will enable you to make informed decisions about whether and how to absorb the new overtime costs. You can then choose to adjust salaries to maintain exemptions or account for overtime. Alternatively, if there are tasks that can be offloaded to part-time employees or contractors, there might be cost savings. It cost less to pay additional hours at a straight-time rate rather than overtime rates.

By Stuart McDaniel






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