We’ve all heard about the Metro Louisville Council’s proposed ordinance to raise the minimum wage to over $10 an hour. Aside from the relative merits of that proposal, can the Metro Council legally do that?

Jefferson County Attorney Mike O’Connell thinks it can, concluding that “a local government can pass an ordinance that would establish a minimum wage for employers and employees within the boundaries of that local jurisdiction, even if they are in the private sector.” The County Attorney cites the absence of court authority finding that KRS Chapter 337 (the Kentucky Wages and Hours Act) preempts local legislation enacting a higher minimum wage to help support his conclusion that a local minimum wage ordinance would not be in conflict with KRS Chapter 337.

Is it really that simple? Given that no Kentucky city has previously attempted to establish its own minimum wage scale, it should come as no surprise that Kentucky courts have yet to weigh in on the issue. After all, courts aren’t in the business of giving advice absent a dispute. But what would a court do if confronted with the issue?

Kentucky’s Home Rule Statute

The starting point in this analysis is Kentucky’s Home Rule Statute, KRS 82.082, which says that a “city may exercise any power and perform any function within its boundaries … that is in furtherance of a public purpose of the city and not in conflict with a constitutional provision or statute.” Even assuming that a local minimum wage ordinance is deemed to further a local public purpose, it cannot survive if it conflicts with a statute, i.e., “if it is expressly prohibited by a statute or there is a comprehensive scheme of legislation on the same general subject matter in the Kentucky Revised Statutes… ” Had the legislature expressly prohibited local governments from enacting their own minimum wage standards there would be nothing to discuss. However, because the legislature has not spoken so clearly, the central issue becomes whether KRS Chapter 337 is a “comprehensive scheme of legislation on the same general subject.”

What is a “comprehensive scheme” of legislation?

Conceding that “this area of the law is relatively unsettled,” the County Attorney nonetheless concludes that because “no comprehensive scheme of legislation regulating minimum wage at a local government level exists in Kentucky,” the Metro Council has the authority to adopt a local minimum wage ordinance. Whether this is a fair reading of the governing statutes depends on how one frames the debate, and the County Attorney has done so by characterizing the “comprehensive scheme” question in terms of legislative silence on local government regulation of minimum wage matters. But the Home Rule Statute does not appear to demand such a restrictive conflict analysis, merely requiring a “comprehensive scheme of legislation on the same general subject matter.”

What is legislation on the “same general subject matter”?

Is it, as the County Attorney concludes, local government regulation of minimum wages, or is it the statewide regulation of wage and hour matters, including minimum wages, expressed in KRS Chapter 337? Although our courts have not addressed that precise issue in the context of Home Rule powers and KRS Chapter 337, our Supreme Court has concluded that a predecessor statute – the Women and Minors’ Employment Act – constituted a “comprehensive statutory scheme establishing procedures to ensure that women and minors were neither overworked nor underpaid.” Parts Depot, Inc. v. Beiswenger, 170 S.W.3d 354, 359 (Ky. 2005). And that scheme was subsequently codified within the Wages and Hours Act, which was extended in 1966 to cover “any employee.” In 1974, the legislature again amended the Wages and Hours Act by, among other things, “adopting the minimum wage mandated by the federal Fair Labor Standards Act.” Through all of these amendments, the “statutory scheme” has continued to comprehensively address the general subject matter of wages and hours, including minimum wages to be paid by employers throughout the Commonwealth.

The County Attorney has cited authority permitting local health departments to adopt local smoking bans as justification for local minimum wage standards, but unlike the statewide minimum wage standards found in KRS Chapter 337, there were no statewide standards addressing public smoking, and thus no conflict. On the other hand, in a case arising out of Jefferson County, our Supreme Court invalidated the Metro Council’s adoption of an ordinance at odds with the legislature’s comprehensive scheme of legislation dealing with the manufacture, sale and distribution of alcoholic beverages. Ky. Licensed Beverage Ass’n v. Louisville-Jefferson Cty. Metro Gov’t, 127 S.W.3d 647 (Ky. 2004).

Although this ultimately becomes somewhat of an eye of the beholder inquiry, a fair reading of the Kentucky Wages and Hours Act – governing wages and hours statewide – suggests that it is exactly the kind of “comprehensive scheme of legislation on the same general subject matter” that would preclude local ordinances attempting to adopt different local standards.

Still Other Challenges are Possible

Nor is the conflict between state and local standards, as a matter of statutory interpretation, the only basis for a challenge. Just as Seattle’s adoption of a $15 per hour minimum wage has been met with an equal protection challenge, our Supreme Court decided just last week to invalidate – as unconstitutional local or special legislation – a state statute regulating placement of liquor stores in Jefferson County at odds with their placement elsewhere in the state. Louisville/Jefferson County Metro Government v. O’Shea’s-Baxter, LLC, 2013-SC-85 (Ky. 8/21/2014). If a state statute could not pass constitutional muster on this basis, Jefferson County may be hard-pressed to defend the proposed ordinance’s creation of different wage and hour standards in Jefferson County than those in the rest of the Commonwealth.

Adoption of a local minimum wage ordinance won’t end the debate

Whatever the Metro Council decides to do, this debate won’t end. Not only is the Metro Council’s authority to enact differential minimum wage standards suspect under state law, constitutional questions likewise exist with the proposed ordinance.

By Brent R. Baughman of Bingham Greenebaum Doll