The rights of workers all across Kentucky currently hang in the balance in Frankfort. The Kentucky Supreme Court will hear arguments in two important employment law cases on June 10.
The first is a challenge to Louisville’s recent minimum wage increase. In 2014, the Metro Council voted to slowly increase the minimum wage in Jefferson County to $9 per hour by July 1, 2017. The first increase, to $7.75, took effect last July, and the next increase, to $8.20, happens next month.
Kentucky state law sets a minimum wage of $7.25 per hour that, like the identical federal minimum wage, applies to most employers throughout the state (with some exceptions for tipped employees and others). After the Metro Council vote, the Kentucky Restaurant Association, the Kentucky Retail Federation, and local company Packaging Unlimited filed suit, arguing that the council exceeded its authority because state law prohibits such an increase.
Their arguments have been unsuccessful so far. Judge Judith McDonald-Burkman of the Jefferson Circuit Court ruled against them last June. Then the Kentucky Court of Appeals denied their request for emergency relief, saying the wage hike did not present the kind of irreparable injury necessary to justify such “an extraordinary remedy.” Now the case sits before the Kentucky Supreme Court, who will have the last word.
The litigants (two lobbying groups and a low-wage packaging factory) publicly opposed the wage hike when it was originally debated, arguing that raising worker pay would hurt both the economy and the workers themselves.
So far the sky has not fallen. The incremental wage increase was barely noticeable when the first step took effect. Low wage workers in Louisville only got an extra quarter per hour, which means the relatively few employers in town who still pay the minimum wage didn’t feel a lot of pressure on their bottom line.
And those employers haven’t run for the county border, either. In fact, a higher minimum wage in Louisville is already starting to lift pay in surrounding counties. For example, it gave union employees at Kroger leverage to negotiate higher pay in Oldham, Shelby and Nelson counties. Rising wages in other counties removes one of the only incentives businesses would have had to leave Jefferson (not that big employers like Kroger had really considered leaving anyway).
Nevertheless, the usual suspects now insist that while the initial increase in pay hasn’t caused any problems, future increases surely will. Both Kent Oyler of Greater Louisville Inc. and retired economist Paul Coomes are still banging the drums of pessimism, despite the long-standing evidence both here and elsewhere that paying workers more (even a lot more, like in San Francisco) has few, if any, negative effects on employers or their employees.
But the Kentucky Supreme Court won’t be concerned about whether the minimum wage hike was a good idea politically, or whether it might cause economic problems down the road. The court will only have to decide if Louisville has the authority to raise the minimum wage within its borders without stepping on the toes of the General Assembly. Unless the court rules that Kentucky’s wage and hour law is a “comprehensive scheme” that supersedes Louisville’s “home rule” powers to regulate its own local economy, the wage hike will be upheld.
Chances are good that it will be. Kentucky’s minimum wage law merely sets a floor below which cities and employers may not go. It does not set a ceiling – which might explain why we use the term “minimum” rather than “maximum.”
The other major employment case before the Supreme Court on June 10 will determine whether workers may bring class-action lawsuits for unpaid wages. Class-action suits allow one or a few people to sue on behalf of many other people who have the same legal injuries but are too numerous for the courts to handle efficiently.
Low-wage workers frequently suffer wage and hour violations. But because they make less money in general, the amount of their unpaid wages is often relatively small, which means their potential recovery is small. Individual lawsuits are very expensive, so low-wage workers are often discouraged from defending their rights against wage theft because the cost of suing may be as much or more than the damages they can recover. Class actions can spread the costs among lots of plaintiffs, enabling those with few resources to protect themselves from the disproportionate abuse they often suffer.
The ability of Kentucky workers to file class-action suits has been unquestioned for more than a century. But in two recent decisions authored by Judge James Lambert, the Kentucky Court of Appeals has now interpreted state law actually to prohibit class actions under the Kentucky Wage and Hour Act.
One of those recent opinions is now being reviewed by the Supreme Court. In 2014, Mary McCann sued Sullivan University on behalf of herself and her coworkers for wage and hour violations. Jefferson Circuit Judge Olu Stevens dismissed her claim. The Court of Appeals, led by Judge Lambert, agreed, holding that KRS 337.385(2), which states that suits for lost wages may be brought by “any one or more employees for and in behalf of himself, herself, or themselves,” actually means the opposite of what it says, prohibiting class actions entirely.
Should the Supreme Court affirm the Court of Appeals in McCann’s case, this novel reading of long-standing statutory language would prevent workers with small wage claims to effectively seek redress for their injuries. Which is good news for employers who steal their workers’ pay, but bad news for thousands of hard-working Kentuckians.
Hopefully, the Supreme Court will make the right call in both cases, upholding the Louisville Metro minimum wage hike and reaffirming the long-standing right of Kentucky workers to file class-action suits for lost wages.
Oral arguments begin at 9 a.m. on June 10 at the State Capitol in Frankfort.
Disclosures: In the minimum wage case, I filed an amicus brief on behalf of the National Employment Law Project arguing that Louisville Metro was within its power to raise the local minimum wage. In the class-action case, the plaintiff Mary McCann is represented by other attorneys at Clay Daniel Walton & Adams, the law firm with which I practice.