The Kentucky Supreme Court on Thursday struck down Louisville’s minimum wage law, which could mean pay cuts for thousands of low-paid workers.
In an 11-page ruling written by Justice Bill Cunningham, the high court said the Louisville Metro Council exceeded its authority when it voted to boost hourly salaries to $9 an hour nearly two years ago. In a 6-1 decision, the justices said requiring local businesses to pay workers a higher wage conflicts with state law.
“In other words, what the statute makes legal, the ordinance makes illegal and, thus, prohibits what the statute expressly permits,” Cunningham said. “Therefore, the ordinance is invalid unless additional statutory authority permits municipalities to raise the minimum wage.”
The decision overturns an earlier ruling by Jefferson Circuit Court upholding the ordinance. Only Justice Samuel T. Wright III dissented on the high court.
Cunningham said Kentucky’s minimum wage law is part of a “comprehensive statutory scheme” on wage and hour laws established by the legislature for the entire state. The statute itself contains no room for local legislation, he said.
Wright said he saw no conflict between the city’s ordinance and existing state wage rules, however. He said the majority’s reading of the state statute “requires a view that it was passed to protect the employer” and is inconsistent with the law’s original purpose.
“The statute requires an employer to pay a wage of “not less than” the amount set by statute,” Wright said. “This statute was passed to protect workers from being paid a lesser wage. The majority’s view is that the statute expressly permitted the employer to pay the minimum.”
Louisville’s lowest-paid workers have already received two increases under the ordinance, with passed by a party line vote in December 2014. The most recent coming in July, when their pay was lifted to $8.25 an hour. They would have received a final increase to $9 next July.
The ruling is a blow to council Democrats, labor unions and others who said cities needed to take the lead in addressing the country’s widening income gap.
“What a travesty for all of the working poor across the entire city of Louisville,” Councilwoman Jessica Green said on her Facebook page.
Green, D-1st District, who is an attorney, said she had not read the ruling but said that many residents will continue to live in poverty as a result. She said “people are being forced to remain poor, with no hope on the horizon.”
Other supporters said Thursday’s ruling means tens of thousands of workers who were set to receive pay increases must pressure state lawmakers to act.
“It is now up to the General Assembly to take action when they next meet to correct this injustice and ensure more Kentuckians who work can meet their basic needs,” Jason Bailey, executive director of the Kentucky Center for Economic Policy, said in a statement.
Bailey’s group had estimated that roughly 45,000 workers citywide would have been benefited from a $9 wage hike. It is unclear if knocking down the ordinance would result in a pay cut for employees who already benefited. In some instances, Bailey said, employers may decide not adjust their payrolls back to the $7.25 state minimum wage.
A spokeswoman for Greater Louisville Inc., the city’s chamber of commerce that had opposed the wage hike, did not immediately respond to a request for comment.
Business leaders and other opponents had warned Mayor Greg Fischer that the city establishing a minimum wage would result in either job losses or lack of job growth. The latest job figures showed Jefferson County’s unemployment rate had fallen since the measure was first enacted, however.
The mayor’s office did not immediately respond to a request for comment. Initially, Fischer opposed council Democrats’ plan for a $10.10 an hour wage hike before reaching a compromise on $9 an hour.
The plaintiffs who filed suit against the city, however, bypassed those political points and pinned their legal argument on the council overstepping its authority. Among those who sued the city were the Kentucky Retail Federation, Kentucky Restaurant Association and local employer Packaging Unlimited.