Inflated Local Minimum Wage Laws Intend to Make Having a Union the Low Cost Way of Running a Business

Local minimum wage ordinances containing exemptions for workers covered by a collective bargaining agreement are popping up across the United States. These laws pressure employers into recognizing unions and boost union organizing, since unions will become the “low cost” way of doing business. Local wage ordinances frequently state that they “do not apply to employees covered by a bona fide collective bargaining agreement, to the extent that such requirements are expressly waived in the collective bargaining agreement in clear and unambiguous terms.” As an example, if the state’s minimum wage is $9 per hour, but a collective bargaining agreement sets wages at $8 per hour, then that employer may lawfully pay $8 per hour to its employees. Non-union employers, however, must pay $9 per hour pursuant to the local wage ordinance.

These minimum wage laws can also be industry specific. In Los Angeles, the City Council drafted an ordinance applying only to hotels in the vicinity of LAX Airport. Los Angeles’ UNITE HERE Local 11 “saw its membership and revenues jump after the city included a union escape clause in a minimum wage hike on hotels.” A similar ordinance was passed in Long Beach, California, where an increased minimum wage was only applicable to hotels with at least 100 rooms. UNITE HERE was, again, the beneficiary of that law as some hotels voluntarily struck organizing deals with the union. Other hotels, though, began remodeling and closing off entire floors in order to bring themselves below the 100-room threshold.

In Washington D.C., the Large Retailer Accountability Act would have required all retailers in D.C. with at least 75,000 square feet of store space and $1 billion in revenue to pay employees at least $12.50 per hour. This measure was aimed at organizing a single big-box store and included the familiar union escape clause. That store threatened to withdraw plans to build if the law passed; D.C. Mayor Vincent Gray vetoed the measure, City Council failed to override the veto, and the store was built.

These laws have crept into the Midwest, as well. The Milwaukee County Board of Supervisors passed its “living wage” ordinance that basically forced county contractors to unionize their workforce or face inflated labor costs. That ordinance raised the minimum wage for employees of the county and its contractors to $11.32 an hour, though conveniently exempting contractors that are unionized from paying the “living wage.”

Matt Austin is a lawyer based in the Columbus, Ohio office of Roetzel & Andress, LPA who limits his practice to representing employers dealing with labor, employment, and OSHA matters. You can call Matt at (614) 723-2010 or email him at maustin@ralaw.com.

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