Wednesday, March 8, 2017

Cooperative Home Care, Inc. v. City of St. Louis,

 Opinion handed down February 28, 2017

            In Cooperative Home Care, Inc. v. City of St. Louis, the Supreme Court of Missouri examined whether the Missouri state minimum wage law preempts cities and municipalities from adopting a higher local minimum wage.[1]  The court held that the Missouri state minimum wage was a floor, rather than a ceiling, which allows cities to adopt ordinances that require employers to pay a higher hourly wage than that required by state law.[2]  However, recent legislation may effectively overturn this decision, adversely affecting low-wage workers in areas with higher average costs of living, particularly those in urban areas.

I.  Facts and Holding
            On August 28, 2015, St. Louis enacted Ordinance 70078 of its revised city code, which provides for minimum wage increases for employees working within the boundaries of the city.[3]  The wage increase was set to take place over a series of steps, with the first increase occurring on October 15, 2015, at $8.25 per hour, and the final increase occurring on January 1, 2018, at $11.00 per hour.[4]  Additionally, the ordinance provides that, beginning January 1, 2021, the minimum wage rate shall be increased on a percentage basis to reflect the rate of inflation.[5]  The ordinance explicitly states that if the state or federal minimum wage rate is at any time greater than the rate established by the ordinance, then the greater wage rate shall become the wage rate under the ordinance.[6]
            In September of 2015, the plaintiffs filed a petition against the city, seeking a declaratory judgment invalidating the ordinance and injunctive relief preventing the city from enforcing the ordinance.[7]  The plaintiffs contended that: (1) the ordinance was preempted by the state minimum wage as set by section 290.502, particularly when read in conjunction with section 71.010;[8] (2) the ordinance was preempted by section 67.1571;[9] and (3) the ordinance exceeded the charter authority granted to the city.[10]
            In October of 2015, section 67.1571 was struck down by the trial court as unconstitutional due to violating the “single subject rule” of article III, section 23 of the Missouri Constitution.[11]  However, the trial court found that Ordinance 70078 was invalid because it was beyond the city’s authority, because the state minimum wage law, in conjunction with section 71.010, preempted the ordinance.[12]
            On appeal, the Supreme Court of Missouri overturned the trial court’s decision, holding that the ordinance was not preempted by the state minimum wage, as section 290.502 merely sets a floor at which employees must be paid and does not prevent cities or municipalities from requiring employers to pay above that level.[13]
II.  Legal Background
            Missouri’s minimum wage rate is established by section 290.502.1, which provides that employers must pay employees “at the rate of $6.50 per hour, or wages at the same rate or rates set under the provisions of federal law as the prevailing federal minimum wage applicable to those covered jobs in interstate commerce, whichever rate per hour is higher.”[14]  Missouri’s minimum wage law is unique as compared to other states because it provides for the minimum wage to be increased with changes in the cost of living, as measured by the Consumer Price Index for Urban Wage Earners.[15]  Missouri is one of just fifteen states that indexes minimum wage to the annual rate of inflation or cost of living increases in some way.[16]  As of January 1, 2017, Missouri’s minimum wage is $7.70 per hour.[17]
            In 1998, the Community Improvement District Act was adopted.[18]  As initially proposed, the Act addressed the establishment, governance, and operation of “community improvement districts.”[19]  The Act initially had nothing to do with the minimum wage.[20]  Another bill, House Bill 1346 (HB 1346), was proposed around the same time as the Community Improvement District Act.[21]  HB 1346 proposed preventing cities and other municipalities from establishing a minimum wage that was higher than the wage required by section 290.502.1.[22]  When HB 1346 failed to pass out of committee, a late amendment containing largely the same language was added to the Community Improvement District Act and was codified as section 67.1571.[23]
            On October 14, 2015, section 67.1671 was held unconstitutional by the trial court as violating the single subject rule as set out in article III, section 23 of the Missouri Constitution.[24]  In response, the Missouri General Assembly adopted HB 722 on September 6, 2015, overriding Governor Nixon’s veto.[25]  HB 722, now codified as section 285.055 provides that:
No political subdivision shall establish, mandate, or otherwise require an employer to provide to an employee: (1) [a] minimum wage or living wage rate; or (2) [e]mployment benefits; that exceed the requirements of federal or state laws, rules, or regulations.  The provisions of this subsection shall not preempt any state law or local minimum wage ordinance requirements in effect on August 28, 2015.[26]

III.  Instant Decision
            The plaintiffs made several arguments in an attempt to invalidate the city’s minimum wage ordinance.  First, the plaintiffs argued that the ordinance was preempted by state legislation regarding the minimum wage.[27]
            In general, cities derive their charter powers from article VI, section 19(a) of the Missouri Constitution, which provides in part that any city which adopts a charter for its own government “shall have all powers which the general assembly of the state of Missouri has authority to confer upon any city, provided such powers are consistent with the constitution . . . and are not limited . . . by the charter so adopted or by statute.”[28]
            Pursuant to the above provision, ordinances are not overturned so long as they are (1) not preempted by statute and (2) within the parameters of the authority delegated to the city in its charter.[29]
            The plaintiffs argued that Ordinance 70078 was expressly preempted by section 67.1571, by the language that prohibits municipalities from establishing a minimum wage that is higher than the state minimum wage.[30]
            Defendants did not contest that section 67.1571 would preempt the ordinance; rather, they argued that the trial court was correct in holding that section 67.1571 was unconstitutional because it violated the single subject rule of article III, section 23 of the Missouri Constitution.[31]
            The court agreed with defendants, upholding the trial court’s decision that section 67.1571 violated the single subject rule, as the rest of the Act that it was attached to had nothing to do with the minimum wage.[32]
            Additionally, the plaintiffs claimed that the ordinance was preempted by Missouri’s minimum wage law in general, as the law “sets a standard for authorized conduct” that conflicts with the ordinance, as the ordinance prohibits paying a lower wage, which the state minimum wage law permits.[33]  The court disagreed with the plaintiffs, holding that the ordinance was not preempted either by conflict preemption or field preemption.[34]  The court reasoned that the local ordinance here did not permit what a state law prohibited, but merely supplemented a state law, by prohibiting more than what the state already prohibits.[35]
            Lastly, the court held that because the ordinance was in effect when HB 722 became effective, it was not preempted, as it was expressly grandfathered in to the new wage law.[36]
            Ultimately, the plaintiffs incorrectly characterized the Missouri minimum wage statute as an affirmative authorization to pay no more than the state minimum wage, whereas the law is more accurately read as a floor below which an employee may not be paid.  Because Ordinance 70078 does not permit the payment of less than the state minimum wage, it was not preempted by the state law.[37]
IV.  Comment
In this case, given the context of state minimum wage laws, it is clear that the court is correct in holding that these laws create a floor, rather than a ceiling, which does not preempt cities and other municipalities from adopting higher minimum wages within their boundaries.  However, following this decision, HB 1193 and HB 1194 were introduced, which in part provide that:
No political subdivision shall establish, mandate, or otherwise require an employer to provide to an employee: (1) [a] minimum or living wage rate; or (2) [e]mployment benefits that exceed state laws, rules, or regulations.  Sections 290.500 to 290.530 shall preempt and nullify all political subdivision ordinances, rules, and regulations currently in effect or later enacted relating to the establishment or enforcement of a minimum or living wage or the provisions of employment benefits.[38]

The bill expressly preempts and nullifies ordinances like the one in St. Louis that require employers within city limits to pay a higher minimum wage.  The bill contains an emergency clause, which would allow the bill to go into effect immediately upon Governor Greitens’s signature.[39]  As of March 17, 2017, the bill had passed the House of Representatives and was sent to the Senate.[40]
            HBs 1193 and 1194 fundamentally change the function of Missouri’s state minimum wage, forcing it to serve as a ceiling, rather than a floor, from which cities can specifically tailor their own wage laws.  The bill ignores the reality behind ordinances like the one passed in St. Louis, which are passed in response to increases in the average cost of living, specifically for individuals who live in larger population centers and urban areas like St. Louis and Kansas City.[41]  Missouri is diverse, with large portions of its population living in both urban and rural areas, with vastly different average costs of living.  Local minimum wage ordinances are crucial for allowing cities to ensure that employees within their boundaries are able to afford the basics in areas in which the cost of living requires more than the state minimum wage of $7.70 per hour.  This is especially important in the context of the modern economy, where, particularly in urban areas, low-paying industries disproportionately fuel job growth.[42]
            Furthermore, modern research has shown that raises in the minimum wage, particularly local wage increases such as the ordinance at issue in this case, do not adversely impact employment levels, while they significantly benefit low-wage workers and their families by “reducing economic hardship, lifting workers out of poverty, and improving other life outcomes.”[43]
            Ultimately, HBs 1193 and 1194 represent a broad change to the function of the Missouri state minimum wage and will adversely affect low-wage workers in urban areas in Missouri by preventing cities and municipalities from implementing a higher minimum wage than the state minimum wage.

-       Brandon Wood

[1] Coop. Home Care, Inc. v. City of St. Louis, No. SC 95401, 2017 WL 770971, at *1 (Mo. Feb. 28, 2017).
[2] Id. at *9.
[3] Id. at *1.
[4] Id.
[5] Id.
[6] Id.
[7] Id. at *2.
[8] Section 71.010 states that:

Any municipal corporation in this state, whether under general or special charter, and having authority to pass ordinances regulating subjects, matters and things upon which there is a general law of the state, unless otherwise prescribed or authorized by some special provision of its charter, shall confine and restrict its jurisdiction and the passage of its ordinances to and in conformity with the state law upon the same subject.

Mo. Rev. Stat. § 71.010 (2000).
[9] Section 67.1571 was added as an amendment to the Community Improvement District Act, which provides that political subdivisions of the state are prohibited from establishing or requiring “a minimum wage that exceeds the state minimum wage.”  Mo. Rev. Stat. § 67.1571.
[10] Coop. Home Care, 2017 WL 770971, at *2.
[11] Id.  Article III, section 23 of the Missouri Constitution “states that ‘[n]o bill shall contain more than one subject which shall be clearly expressed in its title [except general appropriation bills].”  Id. at *4 (first alteration in original) (quoting Mo. Const. art. III, §23).
[12] Id. at *2.
[13] Id. at *12.
[14] Mo. Rev. Stat. § 290.502.1.
[15] Id. § 290.502.2.
[16] Ben Zipperer, Bolstering the Bottom by Indexing the Minimum Wage to the Median Wage, Wash. Ctr. for Equitable Growth (June 17, 2017),
[17] Minimum Wage, Mo. Dep’t Lab. & Indus. Rel., (last visited Apr. 22, 2017).
[18] Coop. Home Care, 2017 WL 770971, at *2.
[19] Id.
[20] Id.
[21] Id.
[22] Id.
[23] Id.
[24] Id.
[25] Id.
[26] Mo. Ann. Stat. § 285.055 (West 2017).
[27] Coop. Home Care, 2017 WL 770971, at *3.
[28] Id. (quoting Mo. Const. art. VI, § 19(a)).
[29] City of St. Louis v. W. Union Tel. Co., 149 U.S. 465, 468 (1893); see also Page W., Inc. v. Cmty. Fire Prot. Dist. of St. Louis Cty., 636 S.W.2d 65, 68 (Mo. 1982) (en banc).
[30] Coop. Home Care, 2017 WL 770971, at *3.
[31] Id.
[32] Id.  The plaintiffs also attempted to use collateral estoppel to prevent the defendants from arguing the constitutional validity of the statute.  Id. at *5–6.  The court held that offensive collateral estoppel is generally not favored, and that the factors were not met in this case to apply it in a way that would prevent the defendants from raising the issue of the validity of the statute.  Id.
[33] Id. at *7 (internal quotations omitted).
[34] Id.
[35] Id.
[36] Id. at *9.
[37] Id. at *8.
[38] H.R. 1194 & 1193, 99th Gen. Assemb., 1st Reg. Sess. (Mo. 2017).
[39] Jacob Kirn, Missouri House Passes Measure Blocking St. Louis’ Minimum Wage Hike, St. Louis Bus. J. (Mar. 9, 2017, 12:12 PM),
[40] HB 1194, Mo. House Representatives, (last visited Apr. 22, 2017).
[41] Laura Huizar, Missouri Should Preserve the Right of Cities and Counties, Including the City of St. Louis, to Enact Local Minimum Wage Laws: Hearing before the Committee on Local Government and Elections re: HB 1193 and HB 1194, Nat’l Emp. L. Project 1 (Mar. 14, 2017),
[42] Id.
[43] Id.