This post was authored by Lisa S. Charbonneau.
On February 25, 2019, the California Second Appellate District Court of Appeal issued a decision in the case Marquez, et al. v. City of Long Beach, holding that the state minimum wage applies to charter cities because minimum wages are a matter of statewide concern. The holding should be construed to apply to all counties (charter and general law) as well.
What does this mean for charter cities and counties (charter and general law)? The practical effect of Marquez is that charter cities and all counties must ensure that their non-exempt employees are paid no less than the state minimum wage for all hours worked. An agency that pays any non-exempt employee less than the state minimum wage should take immediate steps to increase those wages right away. We recommend consulting with legal counsel on how to take those steps.
Currently, the state minimum wage is $12.00 per hour for any employer with more than twenty-five employees and $11.00 per hour for employers with 25 employees or less. The state minimum wage is statutorily set to increase yearly until it reaches $15.00 for all employees in 2023 (2022 for employers with more than 25 employees). Click here for a chart on the state minimum wage phase-in.
Note that Marquez decision does not affect general law cities, which are subject to the state minimum wage.
Beyond the impact on day-to-day wage rates, the Marquez decision is notable for its discussion of why the state minimum wage applies to charter cities and counties. A bit of background will be helpful here. Under the California Constitution at Article XI, Sections 4 and 5, charter cities and counties (charter and general law) have exclusive authority to regulate and determine their own municipal affairs. These provisions have given rise to what is known as the home rule or municipal affairs doctrine. Under the doctrine, charter cities and counties (charter and general law) have plenary power over their own municipal affairs exclusive of state interference. In contrast, the state legislature has the power to regulate matters of statewide concern. Click here to read more about the home rule doctrine.
Over the years, courts have been asked to determine what is a municipal affair, what is a matter of statewide concern, and in what cases may the state legislate municipal affairs. In the context of employee compensation, courts have ruled, for example, that the state’s workers’ compensation law is a matter of statewide concern, as is the statewide rights of public employees to join a union, thus the constitution permits those laws to apply to charter cities and counties despite conflicting local laws. In contrast, courts have found that setting the wages of charter city employees, capping those wages, and outsourcing the determination of such wages to a third party were all municipal affairs not subject to state interference. (Marquez, *18.)
In the Marquez case, the court was tasked with evaluating whether the state’s minimum wage law is a matter of statewide concern applicable to charter cities (like workers’ compensation or the right to join a union) or unconstitutionally interfered with purely municipal affairs of those entities.
The State Minimum Wage Is a Matter of Statewide Concern
In applying the state minimum wage law to charter cities (and all counties), the Marquez court analyzed the purpose of the law itself, holding that the law and its legislative history evidences the Legislature’s intent to broadly apply the state minimum wage to all employees throughout the state in every industry – private and public. Moreover, the state minimum wage law protects Californians by keeping California “families above the poverty line.” (Marquez, *28.) That is, like workers’ compensation law, the statewide minimum wage serves the “fundamental purpose of protecting health and welfare of workers,” which is a matter of statewide concern. (Id.) The court also noted the state is more likely to provide state-funded public assistance to employees receiving wages below the statutory minimum. (Marquez, *25.) For all these reasons, the court concluded that the state minimum wage law is a matter of public concern and may be applied to charter cities (and all counties).
The Marquez court was careful to distinguish minimum wage laws from prevailing wage laws, which have been struck down by the California Supreme Court as unconstitutional numerous times, most recently in State Building & Construction Trades Council v. City of Vista. According to the Marquez court, the Supreme Court struck down prevailing wage laws because they effectively set wages and salaries at the prevailing rate, which has a greater impact on local control than minimum wage laws, which only set “as a floor the lowest permissible hourly rate of compensation.” (Marquez, *29.)
Charter Cities and Counties Retain Authority to Provide Wages Above the Minimum
Importantly, the Marquez court wrote, “the minimum wage law does not deprive the City completely of its authority to determine wages. The law sets a floor based on the Legislature’s judgment as to the minimum income necessary for a living wage in this state. The City retains authority to provide wages for its employees above that minimum as it sees fit.” (Marquez, *32.) Thus, charter cities and counties should not rely on Marquez to follow wage and hour laws that are not the state minimum wage. Agencies are cautioned to consult legal counsel to evaluate whether California wage and hour laws apply.
What Should You Do Right Now?
You should ensure that if you are a charter city or a county (general or charter) that all of your employees (including part-time and unrepresented employees) are paid at least the current state minimum wage.
It is not known whether the City will appeal the decision to the California Supreme Court. Regardless, LCW is following this case and will provide updates on any new developments.