Fayette County

State Supreme Court strikes down Louisville, Lexington minimum wage increases

Supreme Court chambers at the Capitol in Frankfort.
Supreme Court chambers at the Capitol in Frankfort. File Photo.

Lexington’s minimum wage will roll back to $7.25 an hour after the state Supreme Court ruled Thursday that Kentucky cities do not have the authority to raise the minimum wage.

The decision means a November 2015 ordinance passed by Lexington’s Urban County Council that increased the minimum wage to $10.10 an hour over three years is no longer valid. The first Lexington wage increase took effect July 1, raising the minimum wage from the federal level of $7.25 an hour to $8.20 an hour.

“This opinion effectively prevents cities, including Lexington, from increasing the minimum wage,” said Susan Straub, a spokeswoman for the city of Lexington. “Lexington’s local minimum wage ordinance has been invalidated.”

In its 6-1 decision, the court said Louisville’s minimum wage ordinance is “invalid and unenforceable” because Louisville did not have the legal authority to set wage floors.

Louisville was the first Kentucky city to raise its minimum wage in late 2014. Business groups — including the Kentucky Restaurant Association, Kentucky Retail Federation and Packaging Unlimited — challenged the ordinance, arguing the state, not local governments, had the sole authority to raise minimum wages. A Jefferson Circuit Court judge sided with the Louisville metro government. The case was eventually appealed to the state Supreme Court.

Lexington Mayor Jim Gray supported Lexington’s minimum wage increase. Gray, who faces Republican U.S. Sen. Rand Paul in the Nov. 8 general election, called on the federal government to raise the minimum wage in light of Thursday’s ruling.

“I’m for raising the federal minimum wage while Rand Paul opposes the minimum wage altogether,” Gray said. “The current position that our local communities are in is inexcusable. It’s time for Washington to act.”

Ray Sexton, executive director of the Lexington-Fayette Human Rights Commission, said the decision will likely result in some confusion for employers and employees. The commission is the body tasked with enforcing and investigating minimum wage complaints in Fayette County. Since July, the commission has investigated two complaints.

“This is uncharted territory,” Sexton said of Thursday’s decision. “I would assume that the minimum wage would now roll back.”

Brent Baughman, a Louisville lawyer who represents business groups in the Louisville legal challenge, said the city of Louisville will have 20 days to ask the state Supreme Court to re-hear the case, which is unlikely with a 6-1 decision. After the 20 days, the case will be remanded back to Jefferson Circuit Court where a final order will be entered, which is when the ordinance would be invalided.

“We will be in a legal limbo for a little while,” Baughman said.

Many said Thursday they don’t think businesses that raised wages would revert to $7.25. It’s not clear how many people in Fayette County might see a pay cut. U.S. Census data shows 31,000 people in Fayette County make less than $10.10 an hour. Accurate data on how many people were making $7.25 on July 1 was not available.

“I am hopeful that employers in Louisville and Lexington who had adjusted the hourly wage for those affected individuals will ultimately choose to not reverse the move,” said Councilwoman Jennifer Mossotti, who pushed for Lexington’s minimum wage increase. Mossotti said she was disappointed with Thursday’s decision but accepted it.

“This decision, in essence, means that many of those less fortunate workers in Louisville and in Lexington will continue to struggle to pay for basic needs such as housing, transportation, child care, food and other essentials,” Mossotti said Thursday.

Councilman Kevin Stinnett, who chairs the Urban County Council’s Budget, Finance and Economic Development Committee, said he and others on council argued Lexington should wait until the Louisville case was decided before voting on the minimum wage ordinance in November 2015. The ordinance passed 9-6. Stinnett was one of six to vote against it.

“This is what happens when you don’t wait,” Stinnett said. “We spent a lot of time on this and we had a lot of people come and testify and now it’s for nothing. The real losers are our low-wage workers. We should have spent our time on workforce training and development.”

The city recently hired a workforce development manager, who will help the city coordinate workforce training efforts including a new city-sponsored job training program.

Business groups applauded Thursday’s decision.

“Employers can rest assured knowing localities cannot devise a patchwork quilt of employment laws,” said Tod Griffin, president of the Kentucky Retail Federation.

Those who pushed for the minimum wage hike called on the Kentucky General Assembly to raise the state-wide minimum wage. Attempts to raise the minimum wage at the state level have failed in recent years.

“An increase in our minimum wage is long overdue,” said Jason Bailey, executive director of the Kentucky Center for Economic Policy, a nonprofit group that pushed for minimum wage increases in Lexington and Louisville. “It is now up to the General Assembly to take action when they next meet to correct this injustice and ensure more Kentuckians who work can meet their basic needs.”

Beth Musgrave: 859-231-3205, @HLCityhall