Arizona does not have a prevailing wage law. Under ARS § 34-321, no state agency, city, county, school district, or other political subdivision may require contractors to pay locally prevailing wage rates on public construction projects.1Arizona Legislature. Arizona Code 34-321 – Public Policy; Prevailing Wage Contract; Prohibited Agreements; Definitions The statute treats public works wages as a matter of “statewide concern,” which blocks any local government from writing its own prevailing wage ordinance. Federal rules are a different story: when federal money funds a project in Arizona, the Davis-Bacon Act still applies.
What the State Ban Covers
ARS § 34-321 does more than eliminate mandated wage floors. It prohibits state and local governments from requiring any of the following as a condition of bidding on, being awarded, or performing a public works contract:1Arizona Legislature. Arizona Code 34-321 – Public Policy; Prevailing Wage Contract; Prohibited Agreements; Definitions
- Payment of prevailing or minimum wage rates set by government determination.
- Project labor agreements. The statute defines these broadly to reach any pre-hire, collective bargaining, model construction, or similar agreement setting employment terms on a project.
- Neutrality agreements, meaning promises to stay neutral during union organizing, to share employee information beyond what federal law already requires, or to recognize a union without a secret-ballot election.
- Participation in or contributions to apprenticeship programs registered with the U.S. Department of Labor.
Contractors bidding on Arizona public projects set wages and labor terms based on market conditions. There is no state-mandated wage schedule to consult, no PLA to sign, and no apprenticeship program the government can force a bidder to join.
Which Government Entities Are Covered
The prohibition reaches almost every level of government that funds construction in Arizona. Section 34-321(E) defines “political subdivision” to include cities, charter cities, towns, counties, school districts, community college districts, multi-county water conservation districts, industrial development authorities, and special taxing districts primarily supported by taxes.1Arizona Legislature. Arizona Code 34-321 – Public Policy; Prevailing Wage Contract; Prohibited Agreements; Definitions A “public works contract” is any contract involving laborers or mechanics engaged in constructing, altering, or repairing public buildings or improvements where the state or one of these subdivisions is a party.
If your project is funded by any of these entities and no federal money is involved, ARS § 34-321 controls, and no prevailing wage requirement applies.
What Private Parties Can Still Do
The law restricts government mandates, not private choices. Section 34-321(D) preserves two things:1Arizona Legislature. Arizona Code 34-321 – Public Policy; Prevailing Wage Contract; Prohibited Agreements; Definitions
A contractor working on an Arizona public project can still enter into collective bargaining with its own workforce. If a unionized contractor wins a public bid, its existing labor agreement remains in force. The statute only prevents the government from making that agreement a condition of the contract.
Rights protected under the National Labor Relations Act are also untouched. Workers on Arizona public projects keep their federal rights to organize, form unions, and bargain collectively. What the state law does is narrow: it stops government agencies from writing labor mandates into contract specifications.
Federal Davis-Bacon Still Applies to Federally Funded Projects
This is the part contractors most often miss. Arizona’s prohibition covers state and local contracts. It has no effect on federal law. When a construction project in Arizona receives federal funding or is contracted directly by the federal government, the Davis-Bacon Act applies and requires prevailing wages regardless of what state law says.
Under 40 U.S.C. § 3142, every federal construction contract exceeding $2,000 must include a provision requiring that mechanics and laborers be paid at least the prevailing wage determined by the U.S. Department of Labor for similar work in the area. Contractors must pay these wages unconditionally, at least once per week, and post the applicable wage scale at the job site.2GovInfo. 40 USC 3142 – Rate of Wages for Laborers and Mechanics
Many Arizona projects blend state and federal dollars. Highway work funded partly through the Federal Highway Administration, public buildings receiving federal grants, and construction on or near federal installations all commonly trigger Davis-Bacon. Before finalizing a bid on what looks like a state or local project, verify every funding source. Federal money in the project means federal wage rules apply, and ARS § 34-321 offers no protection against a Davis-Bacon violation.
How Arizona Ended Its Prevailing Wage Requirement
Arizona once had its own version of the federal Davis-Bacon Act, sometimes called the “Little Davis-Bacon Act,” which required contractors on state-funded projects to pay locally prevailing wages. A 1979 legal challenge struck down part of the method used to calculate those rates, and the legislature referred the question to voters. In 1984, Arizona voters approved a referendum repealing the state prevailing wage requirement. The repeal took effect on November 30, 1984, and the prohibition has been codified at ARS § 34-321 ever since.3Arizona Attorney General. Municipal and County Authority to Enact an Ordinance Requiring Prevailing Wages
The “statewide concern” language in the statute is what prevents cities like Phoenix or Tucson from enacting local prevailing wage ordinances of their own. Even where a municipality has the political appetite, it lacks the legal authority.1Arizona Legislature. Arizona Code 34-321 – Public Policy; Prevailing Wage Contract; Prohibited Agreements; Definitions
What This Means in Practice
Arizona’s framework produces a market-driven environment for public construction. Contractors price bids based on what the local labor market will bear rather than a government-determined rate. Workers on state and local public projects have no guaranteed wage floor beyond ordinary federal and state minimum wage laws.
For non-union contractors, the absence of mandatory project labor agreements removes a common barrier to bidding on public work. Unionized contractors can still bid and win, but they compete on cost against firms not bound by collective bargaining agreements. The government is barred from tilting the process either way.
Arizona is one of roughly 24 states without a state-level prevailing wage law, though the breadth of its ban on project labor agreements and neutrality agreements goes further than some peer states.4U.S. Department of Labor. Dollar Threshold Amount for Contract Coverage
The practical rule for anyone working in Arizona public construction is straightforward. State and local projects carry no prevailing wage obligation. Federal funding changes the picture entirely. Check every project’s funding sources before you finalize a bid or set worker pay.