Employment & Labor
California Fast Food Industry Bills Could Make Major Changes to Franchising Industry
September 8, 2023 | Ben Fallick
The dispute between localities and state legislatures regarding the scope of local authority has been simmering over the past few years — especially concerning issues such as which wages and benefits employers must provide their employees. The debate came to a head this year in Alabama. We've previously reported on the city of Birmingham's battle with the Alabama legislature and Governor Bentley (R). The last minute race to enact legislation to block Birmingham's imminent minimum wage hike before it could go into effect made national headlines. However, as we discussed, at least 20 states have enacted the type of preemption of local wage and benefit mandates which was at issue in Alabama, and a majority of these preemption laws have been adopted since 2012. Now other cities are following in Birmingham's footsteps.
Localities Sue Arizona over Paid Sick Leave Preemption
In Arizona, more than 30 state legislators and members of several city councils across the state are challenging a 2016 state law (HB 2579) that preempts localities from enacting benefit mandates that go beyond state or federal law. This law is primarily aimed at paid sick leave ordinances several Arizona cities have debated. The plaintiffs in the lawsuits argue that the preemption law contradicts a state ballot initiative voters passed in 2006 (Proposition 202) that raised and indexed the state minimum wage while providing cities the authority to regulate their own wage and benefit laws.
Miami Beach Raises Minimum Wage Despite Statewide Preemption
In Florida, Miami Beach Mayor Philip Levine (D) announced his support to raise the city's minimum wage above the state rate of $8.05. The City Commission unanimously passed the ordinance in June, which is a direct challenge to the state's 2013 preemption law (FL HB 655). The law states that localities “may not establish, mandate, or otherwise require an employer to pay a minimum wage other than a state or federal minimum wage.” Miami Beach argues that Florida’s preemption law is unconstitutional and (similarly to the legal challenge in Arizona) points to language in a 2004 voter-approved law (Amendment 5) that raises and indexes the state's minimum wage.
Ohio's AG Says Localities Cannot Raise Minimum Wage
Advocates to raise the minimum wage in Ohio began collecting signatures this year to put the question of whether to raise a city's minimum wage on the ballot. However, in anticipation of such a move, Ohio Attorney General Mike DeWine (R) issued an advisory opinion at the end of June stating that municipalities cannot legally set their own minimum wage. This legal opinion helped slow the momentum towards a wage hike in Ohio's cities, and the City Council of Cleveland overwhelmingly rejected a proposal to immediately raise the city's minimum wage to $15 an hour. But the Attorney General's advisory opinion could still be overturned if a court interprets the state constitution differently, so advocacy groups promise to challenge DeWine's opinion.
What Are Their Chances?
State governments generally hold most of the cards in disputes with cities and counties. However, with the help of voter-approved ballot measures, the localities in Arizona, Florida, and Ohio have a fighting chance in the courts.
The Arizona lawsuit has the best chance at success. Under the Arizona Constitution, the state legislature is prohibited from amending voter-approved laws unless (1) the “amending legislation furthers the purposes” of the original voter-approved law and (2) the legislature approves the amendment with a super-majority three-fourths of the legislature (Ariz. Const. Art. 4 Pt. 1 Sec. 1(6)(C)). The 2015 preemption law failed to reach a three-fourth super-majority in either legislative chamber and it does not appear to further the purpose of the 2006 voter-approved law (requiring “payment of higher or supplemental wages or benefits”).
This wouldn't be the first time the 2006 voter-approved law thwarted the state's attempt to limit local governments' power. Last year, Attorney General Mark Brnovich (R) agreed not to enforce a 2013 law (AZ HB 2280) that attempted to preempt localities from enacting their own minimum wage laws because it conflicted with the 2006 voter-approved measure. This year, the legislature tried to circumvent the 2006 voter-approved measure by concentrating on employee benefits and by redefining such benefits as “nonwage compensation.” But will this legislative maneuver to redefine a term be enough to convince the courts?
Although Miami Beach makes a similar argument in Florida, the 2004 voter-approved minimum wage amendment to the Florida Constitution is not as clear as the one in Arizona. Miami Beach is relying on language in the constitutional amendment that states:
This amendment provides for payment of a minimum wage and shall not be construed to preempt or otherwise limit the authority of the state legislature or any other public body to adopt or enforce any other law, regulation, requirement, policy or standard that provides for payment of higher or supplemental wages or benefits.
While this language appears to provide localities (“other public body”) the opportunity to pass a minimum wage higher than the state wage, it also does not prohibit the state legislature from preempting localities from doing so. The fact that Miami Beach is the first Florida locality since the voter-approved amendment went into effect eleven years ago to pass its own minimum wage ordinance might indicate there's not strong support for the city's legal argument. Nonetheless, since Miami Beach went ahead and passed its minimum wage increase despite the statewide preemption law, the state will need to sue the city in order to have the ordinance overturned.
Finally, like Arizona and Florida, voters in Ohio approved a constitutional amendment in 2006 (Amendment 2 or the Minimum Wage Amendment) that raised and indexed the statewide minimum wage. The constitutional amendment includes language that appears to approve of municipalities raising their own minimum wage rates:
Laws may be passed to implement [this amendment's] provisions and create additional remedies, increase the minimum wage rate and extend the coverage of the section, but in no manner restricting any provision of the section or the power of municipalities under Article XVIII of this constitution with respect to the same.
Attorney General DeWine's advisory opinion relies on Article II of the Ohio Constitution and subsequent case law, giving the state legislature authority to pass laws "fixing and regulating the hours of labor, establishing a minimum wage, and providing for the comfort, health, safety and general welfare of all employees."
The Attorney General's advisory opinion also addresses the 2006 voter-approved constitutional amendment quoted above, notes that the two constitutional provisions conflict, and after a lengthy discussion, finds that the provision from the Minimum Wage Amendment “does not confer power upon municipalities. It merely indicates that the laws the General Assembly enacts pursuant to [the Minimum Wage Amendment] shall not restrict whatever power a municipality may or may not have under [the Ohio Constitution] with respect to those laws.” The advisory opinion is well researched but complicated, and a presiding judge could come to a different conclusion.
The next front in the war over local wage and benefit mandates looks destined to be the courts. If a locality succeeds at overturning a state preemption law, expect to see a flurry of cities, counties, and liberal lawmakers racing to the courthouse steps to make similar challenges in their own states.
September 8, 2023 | Ben Fallick
July 6, 2023 | Bill Kramer
June 15, 2023 | Kim Miller