Kentucky Restaurant Ass'n v. Louisville/Jefferson County Metro Government

OPINION OF THE COURT BY JUSTICE CUNNINGHAM Perhaps no state in the Union holds a stronger affection for local government than does the Commonwealth of Kentucky. While we rank 26th in population in.the United States, we have the third highest number of counties. Throughout our long history, any sentiment to reduce the number of counties has been met with immediate and resounding rejection. Writer Robert M. Ireland has summed it up best. “Although not alone in their refusal to tamper with their counties, Kentuckians arguably attach more significance to these constitutional creatures than . any other Americans. In Kentucky, for better or worse, counties are truly little kingdoms.”1 It is with great deference to this historical notion that we address the challenging issue in this case. The case before us provides a historic clash between the competing authority of the Louisville-Jefferson County government and the Kentucky General Assembly. The specific issue is whether Louisville has the authority to enact an ordinance requiring a higher wage than the statutory minimum. Minimum Wage Laws Australia and New Zealand were the first of the developed countries to impose minimum pay for employees back in 1894. — 427 — It wasn’t long from that time when the voice of organized labor began to be heard and such laws spread to other countries. The United Kingdom passed its own minimum wage laws in 1909. The United States was a relatively, latecomer to the threshold wage requirement. Only after the Great Depression and the passing of the Federal Fair Labor Standards Act in 1938 did wage control come upon the American scene. That law included youth employment standards, overtime pay, recordkeeping and other prescriptions for government employees at the local and state levels. It is nostalgia of a different time to learn that the first Federal minimum wage set was 25 cents an hour. Kentucky’s first minimum wage laws were enacted in 1938 and only applied to women and children. The act also established - an administrative compensation board which reviewed wages of certain industries and required minimum pay for that business. In 1966, the statutes were updated to include all employees of any particular industry. It wasn’t until 1974 that Kentucky created a minimum wage for all workers that was. set by statute at $ 1.30. The current minimum wage is $7.25. Factual and Procedural Background In early 2015, The Louisville/Jefferson County Metro Government (“Louisville Metro”) enacted its own minimum wage ordinance for all employers within the Louisville Metro boundary, tó be effective July 1, of that year.'Louisville Metro Ordinance No. 216, Series 2014 (the “Ordinance”). The wage schedule provided for incremental increases for subsequent years, adjusted in part -to reflect the consumer price index. The minimum wage set by the ordinances were higher than the $7.25 minimum wage presented , in KRS 337.275. Appellants in this case are the Kentucky Restaurant Association, Inc. (“KRA”), Kentucky Retail Federation, Inc., (“KRF”), and Packaging Unlimited, LLC (“Packaging Unlimited”). On February 13, 2015, the Appellants filed an action in the Jefferson Circuit Court against Louisville Metro, attempting to void the ordinance as being outside the authority of Louisville Metro to enact. An injunction barring the enforcement of the Ordinance was also sought. A judgment on the pleadings was requested by both sides. On June 29, 2015, the Jefferson Circuit Court entered a ruling in Louisville Metro’s behalf and denied the relief sought. The Court of Appeals denied a request for Emergency Relief pursuant to CR 76.33 and CR 65.08(7). This Court: accepted transfer of this case in September of 2015. For the reasons stated herein, we reverse the Circuit Court and remand. Analysis Section 156b is the enabling constitutional permission for the General Assembly to afford cities the power to pass laws which are “in furtherance of a public purpose.” The restrictive language in that provision, however, proscribes any local ordinances being passed which are “in conflict with a constitutional provision or statute.” Of course this case turns upon the last sentence. Therefore, , we must turn to what statutes are controlling. Local governments in Kentucky are vested with broad authority. See KRS 82.082; and KRS Chapter 83. This is commonly known as “Home Rule.” In addition, Louisville Metro is categorized by statute as a first class city and, in the year 2000, was afforded by statute a special privilege of consolidating its government with that of the county to form one body for governing the entire county. KRS 67C. 101. The — 428 — General Assembly determined that Louisville Metro is “sufficiently ■ different from those found in other cities to necessitate this grant of authority and complete home rule.” KRS 83.410(4) (emphasis added). Therefore, Louisville Metro possesses enhanced authority that is distinct from other municipalities. Yet, the sovereignty of the state still rules supreme. Conflict The law on this issue is clear. A local government’s “power or function is in conflict with a statute if it is expressly prohibited by a statute or there is a comprehensive scheme of legislation on the same general subject embodied in the Kentucky Revised Statutes .... KRS 82.082(2) (emphasis added). In that same vein, “[a]n ordinance ... cannot forbid what a statute expressly permits. ...” City of Harlan v. Scott, 290 Ky. 585, 162 S.W.2d 8, 9 (1942). Neither Home Rule nor Louisville Metro’s first class distinction alter this rudimentary principle. The Ordinance at issue, here requires businesses to pay workers a higher wage than the statutory minimum. KRS 337.275(1). In other words, what the statute makes legal, the Ordinance makes illegal and, thus, prohibits what the statute expressly permits. This is precisely the type of “conflict” that is forbidden under Section 156b of our Constitution and KRS 82.082(2). Accord Wholesale Laundry Bd. of Trade, Inc. v. City of New York, 17 A.D.2d 327, 234 N.Y.S.2d 862 (N.Y. App. Div. 1962) (invalidating a local ordinance that “forbids a hiring at a wage which the state law permits and so prohibits what the state law allows. Semantic exercises in .this connection cannot change the concept.”), aff'd without opinion, 12 N.Y.2d 998, 239 N.Y.S.2d 128, 189 N.E.2d 623 (1963). Therefore, the Ordinance is invalid unless additional statutory authority permits municipalities to raise the minimum wage. Louisville Metro cites KRS 337.395 as one such provision: Any standards relating to minimum wages, maximum hours, overtime compensation, or other working conditions, in effect under any other law of this state which are more favorable to employees than standards applicable hereunder shall not be deemed to be amended, rescinded or otherwise affected by KRS 337.275 to 337.325, 337.345, and 337.385 to 337.405 but shall continue in full force and effect until they are specifically superseded by standards more favorable to such employees by operation of or in accordance with KRS 337.275 to 337.325, 337.345, and 337.385 to 337.405 or regulations issued thereunder. Contrary to Louisville Metro’s argument, this so called “saving provision” merely protects certain state laws that pre-date statutory laws on the same subject. Therefore, this provision is inapplicable to the present issue. Although we could conclude our analysis here, our determination is fortified by further examination of the statutory scheme at issue. A Comprehensive Statutory Scheme A cursory glance at the numerous provisions contained in Chapter 337 demonstrates that it was intended to be a detailed and thorough regulation of wages. In fact, there are over 25 sections in this chapter, including penalty provisions. Some of the sections are quite lengthy. The chapter comprises over 50 pages in Michie’s Kentucky Revised Statutes. The entire volume deals with employment related statutes, including, Child Labor, Unemployment Compensation, Occupational Safety and Health .of Employees, and Workmen’s Compensation. — 429 — Furthermore, the minimum wage statute itself contains no room for local legislation. KRS 387.275(1) states the following: Except as may-otherwise be provided by this chapter, every employer shall pay to each of his employees wages at a rate of not less than five dollars and eighty-five cents ($5.85) an hour beginning on June 26, 2007, not less than six dollars and fifty-five cents ($6.55) an hour beginning July 1, 2008, and not less than seven dollars and twenty-five cents ($7.25) an hour beginning July 1, 2009. If the federal minimum hourly wage as prescribed by 29 U.S.C. sec. 206(a)(1) is increased in excess of the minimum hourly wage in effect under this subsection, the minimum hourly wage under this subsection shall be increased to the same amount, effective on the same date as the federal minimum hourly wage rate. If the state minimum hourly wage is increased to the federal minimum hourly wage, it shall include only the federal minimum hourly rate prescribed in 29 U.S.C. sec. 206(a)(1) and shall not include other wage rates or conditions, exclusions, or exceptions to the federal minimum hourly wage rate. In addition, the increase to the federal minimum hourly wage rate does not extend or modify the scope or coverage of the minimum wage rate required under this chapter. Based on the contents of Chapter 337 and KRS 337.275(1) in particular, it defies credulity to assert that the Commonwealth has failed to enact a “comprehensive scheme of legislation on the same general subject” of wages, and the minimum wage in particular. KRS 82.082(2). Case law also proves instructive. For example, Louisville Metro cites Lexington Fayette County Food & Beverage Ass’n v. Lexington-Fayette Urban County Gov’t, 131 S.W.3d 745 (Ky. 2004). That case involved an indoor smoking ban that was enacted by the local government in Fayette County. In addressing a statutory issue similar to the present case, we observed that “[t]he mere presence of the state in a particular. area of the law or regulation will not automatically eliminate local authority to enact appropriate regulations.” Id. at 750. We ultimately determined that the state’s “presence” was minimal and constituted a.non-comprehensive “collection of various- statutes that mention smoking in a specific context.” Id. at 751. Therefore, we upheld that Fayette County smoking ban as valid. In contrast Kentucky Licensed Beverage Ass’n v. Louisville-Jefferson Cnty. Metro Gov’t, provides an example where the Court has invalidated a local ordinance. Therein, we held: Because the General Assembly has previously enacted a comprehensive scheme of legislation dealing with the regulation of alcoholic beverages, codified at KRS Chapter 241 through Chapter 244, which prescribes no means whereby the local ABC Administrator can levy civil fines upon a non-licensee, we find that the Metro Government has impermissibly granted authority to the local ABC Administrator, which is not provided for by any state statute. 127 S.W.3d 647, 648 (Ky. 2004). Unlike the smoking ban case previously discussed, the state’s “presence” in the fields governed by Chapter 337 (Wages and Hour) and Chapters 241-244 (Alcoholic Beverages), is extensive. Also contrary to the smoking ban case where the General Assembly had not legislated on the issue of indoor smoking, the General Assembly has enacted specific legislation on the issue of wages, including the minimum wage. Cf. City of Harlan, 162 S.W.2d at 9-11 (invalidating local ordinance prohibiting Sunday operation of a movie theater because it conflicted with a — 430 — state statute). In contrast, to the above cited case law, the authority cited by Louisville Metro is unpersuasive. See, e.g., Dannheiser v. City of Henderson, 4 S.W.3d 542 (Ky. 1999). The issue in’ Dannheiser was whether local ordinances promoting economic development violated Kentucky’s Local Industrial Development Authority Act. We observed that “[i]n order to rise to the level of a comprehensive system or scheme, the General Assembly must establish a definite system that explicitly directs the actions of a city.” Id. at 548 (citation omitted). The Court held that the Economic Development Act was not a comprehensive statutory scheme based on the following analysis: An examination of Kentucky law indicates that- there are other possible approaches to economic development. KRS 154.12, et seq.; KRS 42.4588 and KRS 154.20 each allow a city another possible method of developing property and establishing economic growth. The act is not the sole method available to a city. The method chosen by the City is not in conflict with the provisions of the Act. Id. at 549. ■ Dannheiser is readily distinguishable from the present ease. Unlike the Development Act, Chapter 337 (Wages and Hour), clearly constitutes a. “definite system.” Furthermore, the General Assembly has not provided municipalities with “other possible approaches” to wage legislation such as those development initiatives discussed in Dannheiser. And although the. minimum wage statute explicitly directs the actions of employers, not municipalities, such a distinction is immaterial here. Louisville Metro has made illegal and forbidden what the statute expressly permits. Louisville Metro also argues that the Ordinance is valid because the General Assembly did not expressly preempt local minimum wage legislation by clear and unmistakable language. Se KRS 65.870 (expressly forbidding local governments from regulating firearms); and Dannheiser, 4 S.W.3d at 549 (“[t]he legislature certainly knows the scope of its power to provide mandatory, as distinguished from permissive, legislation.”). Contrary to Louisville Metro’s argument, however, express preemption is not required when the General Assembly has enacted a comprehensive statutory scheme. See Kentucky Licensed Beverage Ass’n, 127 S.W.3d at 648. If it were otherwise, the comprehensive scheme doctrine would be pointless. In summary, Chapter 337 provides a comprehensive statutory scheme on the issue of wages. Because the Ordinance conflicts with this scheme, and KRS 337.275(1) in particular, the Ordinance is invalid. As such, it is unnecessary to address Appellants’ other argument concerning Louisville Metro’s authority to create a private cause of action to enforce the Ordinance. That issue js now moot. However, it is necessary to address relevant federal law. Federal Law Chapter 29 of the United States Code, subsection 218(a) concerns the federal minimum wage and is titled “Relation to Other Laws.” It provides: , . No provision of this chapter or of any order thereunder shall excuse noncompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this chapter [[Image here]] A facial reading of this statute indicates Congress’ intent to preclude federal preemption of local laws establishing a-higher minimum wage. However, this statute does not discuss the issue of state preemption, — 431 — ■which is squarely a matter of state law. As previously discussed, the Ordinance is invalid under Kentucky law. Many have scoffed at our state motto “United We Stand, Divided We Fall.” And it is true that we have for our entire history been a state deeply divided over major—sometimes cataclysmic—issues. On the question before us, however, we must be united. At least until our General Assembly, a representative body of legislators from Hickman to Pikeville, directs otherwise. Conclusion We hold that Louisville Metro exceeded its authority by enacting Ordinance No. 216, Series 2014 (0-470-14). That Ordinance is therefore invalid and unenforceable. For the foregoing reasons, we reverse the decision of the Jefferson Circuit Court and remand for entry of an order consistent with our decision. All sitting. Minton, C.J.; Keller, Noble, and Venters, JJ,, concur. Hughes, J., concurs in result only by separate opinion. Wright, J., dissents by separate opinion.