Today the Kentucky Supreme Court issued a much awaited opinion in the minimum wage battle between Louisville and business groups, siding with the business groups and invalidating the ordinance. In Kentucky Restaurant Association et. al v. Louisville/Jefferson County Metro Gov’t, 2015 –SC-000371-TG (October 20, 2016), the Kentucky Supreme Court invalidated Louisville’s minimum wage ordinance that raised the minimum wage above the state minimum. Louisville’s ordinance raised the minimum wage gradually to $9.00 over the next several years. Lexington passed a similar ordinance in November of 2015 that raised the minimum wage gradually to $10.10 over the next three years. At the time of the decision, Lexington’s minimum wage had increased to $8.20 and Louisville’s was $8.25.
In February of 2015, the Kentucky Restaurant Association, Kentucky Retail Federation and Packaging Unlimited, LLC filed a lawsuit in Jefferson Circuit Court arguing that local governments do not have the authority to raise the minimum wage. While several states have raised the minimum wage, Kentucky’s is the same as the federal minimum of $7.25 per hour.
The Jefferson Circuit disagreed with the business groups and held that local governments had the authority to pass a minimum wage ordinance. The business groups appealed the decision and the Kentucky Supreme Court granted transfer of the case due to the importance of the issue.
The Court held that local governments have broad power to enact ordinances, so long as the local ordinance does not conflict with a state statute. An ordinance conflicts with a state statute when the conduct at issue is expressly prohibited by statute or there is a “comprehensive scheme of legislation on the same general subject embodied” in a statute. See id. at 5. The Court held that “Chapter 337 provides a comprehensive statutory scheme on the issue of wages. Because the Ordinance conflicts with this scheme, and KRS 337.275(1) in particular, the Ordinance is invalid.” Id. at 10.
Although Kentucky Restaurant Association et. al v. Louisville/Jefferson County Metro Gov’t did not involve the Lexington ordinance, the holding that a local government does not have authority to raise the minimum wage is broad enough to invalidate Lexington’s ordinance, as well.
Multiple cities and counties across the country have enacted similar ordinances that are also being challenged. Although the opinion rendered today is only precedent in Kentucky, it will no doubt be cited as persuasive authority by businesses and employers in other states that are challenging local ordinances raising the minimum wage.