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), http://equitablegrowth.org/research-analysis/bolstering-bottom-indexing-minimum-wage-median-wage/.
[17] Minimum
Wage, Mo. Dep’t Lab. & Indus. Rel., https://labor.mo.gov/DLS/MinimumWage
(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), http://www.bizjournals.com/stlouis/news/2017/03/09/missouri-house-passes-measure-blocking-st-louis.html.
[40] HB
1194, Mo. House Representatives,
http://www.house.mo.gov/Bill.aspx?bill=HB1194&year=2017&code=R (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),
http://www.nelp.org/content/uploads/NELP-Testimony-Missouri-Senate-HB1193-HB1194-3-13-17.pdf.
[42] Id.
[43] Id.
