Props 205 and 206: 2 Ballot Propositions That Impact Arizona Employers

The upcoming election is just days away and includes Propositions 205 and 206 in Arizona, which places company benefits front and center in the minds of employers- accompanied by a collective sigh.

A quick review of what’s at stake in terms of considerations for Arizona employers reveals that questions are more prevalent than answers, especially regarding Proposition 205.

To place employers' questions in their strategic context, here is a framework in which to consider what to do:

• Consider the role your employees play in giving your enterprise a competitive edge. Benefits plans and policies are key employee attraction and retention tools, as savvy CEOs know.
• Consider that your benefits plans and policies can work to keep your workforce healthy and productive. It doesn’t end there: when the families of your employees are healthier, your employees remain more productive too.
• The right benefits policies strategically aligned to your workforce are likely to increase your employees’ engagement with their jobs—which leads to happier, more productive employees who are eager to pitch in outside their job descriptions.
• Keeping your workforce and their families healthier saves you money in healthcare costs in the long run.
• Consider, too, that this election season offers you the perfect opportunity to strut your stuff by staying ahead of mandates and creating new policies now. Why? It sends a message that your enterprise cares about its employees and their families—which is appealing not only to employees (and potential employees), but also to customers.

Now let’s look at the key issues for Arizona employers involved in Propositions 205 and 206.

Proposition 205: What if recreational marijuana use becomes legal?

Backstory: Ballotpedia explains that “The passage of Proposition 200 in 1996 legalized medical marijuana. A battle ensued between medical marijuana proponents and legislative opponents thereafter.” The result is Prop 205 which seeks to make legal the personal, recreational use of up to one ounce of marijuana.

Prop 205, as described by the Arizona Secretary of State, “allows individuals to possess, grow, and purchase marijuana from state-licensed facilities for personal use.”

How might this proposition, if enacted, affect Arizona businesses? That is not yet crystal clear.

As with any ballot questions, enforcement details tend to be added after the fact. At this point, the prospect of the passing of Prop 205 raises multiple questions for employers.

For instance, the Secretary of State’s “yes” vote description states that, if passed, the proposed legislation would establish “the Department of Marijuana Licenses and Control, which includes a 7-member Marijuana Commission appointed by the Governor, to regulate and license entities involved in cultivating, manufacturing, distributing, selling, and testing marijuana products; granting local jurisdictions limited authority to enact ordinances and rules to regulate marijuana and marijuana products….”

This lacks specifics as to the scope of the Marijuana Commission’s regulatory authority as well as that of localities, raising new questions for employers:

• Can the Governor’s new commission create new regulations that affect my business (assuming that business is unrelated to the sale and/or use of marijuana)?
• Does Prop 205 create new ways in which my business can be regulated by localities?

Add these questions:

• How will the passage of Prop 205 affect my business license? Will it mean that I have to provide an affidavit, for example, that my business premises are free of marijuana?
• Can I still do drug testing if recreational pot usage is allowed in Arizona?
• Will occasional pot smokers be considered "smokers" by insurance companies? What is “occasional?” How would that be determined?
• Would the terms smoker, smokers, and smoking also apply to marijuana users legally? Medically?
• Finally, if enacted, to what extent will Prop 205 impact my employees’ health? My company’s healthcare costs? My employees’ co-pays? Productivity?

For answers, we turn initially to J.P. Holyoak, Chair of the Campaign to Regulate Marijuana Like Alcohol, whose response is quoted in Ballotpedia:

“The idea that this would cause insurance premiums to go up or workplace accidents, or some of the other arguments that they’re making, it ignores the fact that marijuana is already out there, it’s easily and readily accessible to anybody and everybody that wants it....”

On the other hand, one could envision that legalizing the recreational use of marijuana and increased access to the drug will result in a higher incidence of its use. The fact that it’s “already out there” does not address the fact that business executives cannot project the extent of the increase in use if the proposition passes, or what effects that increased use will have on their employees and their business.

It is also important to note that the Arizona Chamber of Commerce and Industry opposes Prop 205, as does the Arizona Small Business Administration. In the face of all the unknowns, that opposition is understandable.

What control do employers have? The Arizona Republic recently noted, “Prop. 205 says anyone who owns, manages, or leases a property can prohibit or regulate ‘the smoking, production, processing, manufacture, or sale of marijuana and marijuana products on or in that property.’ Missing from that list: possession and consumption of marijuana.” It is important to add here that if any of your employees needs to drive as part of their job, it will still be illegal to do so while under the influence of marijuana.

Prop 206 and Your Company's Paid Leave Policies

Currently, Arizona employers set their own paid leave policies. That may change if Proposition 206, the Healthy Working Families Initiative, passes. Prop 206 would not only raise Arizona’s minimum hourly wage from $8.05 to $12 by 2020, it also mandates that employers offer earned paid sick leave.

If Prop 206 passes with a sizeable mandate, the writing on the wall will be clear for Arizona employers: paid leave benefits attract and retain valued employees.

Prop 206 paid leave details:

• One hour of paid sick time for every 30 hours worked—or a minimum of 40 hours annually for companies with 15 FTE or more employees. For companies with fewer than 15 employees: a minimum of 24 hours of paid sick leave annually.
• The proposition defines the conditions under which paid sick leave can be used: mental or physical illness, family member caregiving, a public health emergency, domestic violence or sexual violence, abuse, or stalking.

Opponents of Prop 206 contend that, if passed, the higher wages will lead to shrinking shifts, layoffs, and higher prices.

Proponents argue that a rising tide (in wages) will lift all boats. More income will lead to more spending and, therefore, more income for all businesses.

Real income has fallen behind over several decades, given that the cost of living has overtaken wage hikes, especially for minimum wage earners. That scenario translates into less buying power for the lowest income wage earners. And certainly, less buying power affects merchants.

The Arizona Republic offers several cases here of small businesses that have already raised their minimum wages—and how they managed their new expenses.

If your business will be affected by Prop 206 wage hikes, plan to review your benefits policies and packages soon with a trusted, experienced benefits consultant.

Are you ready to pivot to a more strategic, creative review of your benefits plans and company policies in a way that will help your enterprise retain a competitive edge? Then it’s time to turn to a savvy broker consultant firm that is steeped in the range of possibilities for Arizona companies, ready to ramp up your HR automation, and experienced in partnering with companies to design the right programs for each working group.

At JP Griffin Group, we understand the link between benefits and your bottom line. To learn more about the ballot propositions that impact Arizona employers, please contact us.