The recent action by the Louisville Metro Council (LMC) to establish a local minimum wage higher than the state level has caused grave concern for the Kentucky Retail Federation (KRF).
This action flies in the face of the state “home rule” statute which prohibits local governments from enacting laws on subjects that are addressed by state law. Home rule simply defined, means cities have the ability to pass laws in given areas for the overall welfare of their communities, but this power is not without limits.
The LMC is blatantly ignoring legal opinions stating they don’t have the authority to increase the minimum wage.
This sets a dangerous precedent where cities can just take the authority they imagine they have, even when the state legislature intentionally takes action in a given area. Even House Local Government Committee Chair Steve Riggs (D-Louisville) publicly stated that he does not think cities have the authority to increase the minimum wage.
Again, while the Kentucky General Assembly established the home rule statutes, giving cities broad autonomy, that does not equate to unlimited power.
Home rule acknowledges that there are instances where all communities in the state should operate under the same rules. This is why, in 1974, the legislature passed a law establishing the state minimum wage.
If it is determined, that cities and counties can increase minimum wage on a local level, a complicated patchwork of varying wages could exist across the Commonwealth. This puts yet another financial burden on retailers that could jeopardize their businesses altogether.
What is to stop cities from taking actions in other areas of the law where the General Assembly has already acted, such as changing overtime rules or setting their own hours for full-time employment? Retailers across the state would be stuck in a bureaucratic nightmare of regulations that could make it almost impossible them to run a successful business.
If this stands, the LMC and Mayor Fischer shouldn’t be surprised by the decisions retailers are forced into, such as cutting employee hours, eliminating positions, increasing prices or moving operations across county lines or state lines.
Consumers too have choices and they can very easily decide to shop in cities where retailers have the flexibility to offer lower prices.
KRF and its coalition partners will decide in the coming days the next steps to take, including potentially filing a lawsuit against the city for acting outside of its authority. In the meantime, businesses across the state are now holding their breath to see if other cities will also violate the state law.
Tod Griffin is president of the Kentucky Retail Federation.