Last November, Portland voters approved a referendum mandating “emergency pay” for workers on-site in the city. During state and city emergencies, employees are entitled to at least 1.5 times the minimum wage. Proponents assumed the referendum would become effective within 30 days of certification, establishing an $18 minimum wage during the COVID-19 pandemic. On February 2, Justice Thomas Warren from Maine’s Superior Court ruled the referendum was constitutional but that the emergency pay doesn’t take effect until January 2022.

How we got here

From the get-go, the city of Portland interpreted the emergency pay provision to become effective at the beginning of 2022, though the group that brought the issue to the ballot insisted it was intended take effect within 30 days of certification. The Portland Regional Chamber of Commerce (PRCC) and five local businesses promptly filed suit for a declaratory judgment, challenging the referendum’s validity and seeking a ruling that the measure didn’t take effect until January 1, 2022.

In finding the emergency pay provision valid under the Maine Constitution, Judge Warren ruled municipalities may enact minimum wage ordinances, and Portland’s provision doesn’t conflict with state law. He also concluded the emergency pay provision doesn’t become effective until January 1, 2022, based on the ordinance’s plain language.

Judge Warren dismissed the employees’ claims that he should look at the referendum’s legislative history, which they claimed supported the immediate application of the emergency pay. He reasoned the new ordinance’s plain language answered the question clearly.

Stakes

The lawsuit is being closely watched. Referendum backers proudly proclaimed the $18 minimum wage was the highest in the western hemisphere. For some Portland businesses already in dire straits because of the pandemic’s impact, the new wage was threatening to be a devastating blow. On the other hand, two Whole Foods employees intervened in the case and highlighted the argument for front-line employees to be compensated for the hazards they currently face.

Some high-profile Portland employers went ahead and paid the $18 rate, even though the city said the ordinance wouldn’t take effect until January 2022. Others hedged their bets and, wary of the possibility of penalties, agreed to pay the $18 rate pending Judge Warren’s ruling. Others have followed the city’s guidance and not paid the higher rate.

Where does ruling leave Portland employers?

The case will now be appealed to the Maine Law Court. Typically, it takes about six months for the court to rule on a case, but the emergency pay appeal may be expedited.

We suspect many employers will maintain the status quo and wait for the outcome. Justice Warren’s decision is well-reasoned, and he doesn’t appear to have seen the outcome as a particularly close call. While the referendum’s proponents may have intended for the emergency pay provision to take effect in 2021, that’s not how the ordinance was worded.

Hannah Wurgaft and Peter Lowe are attorneys with Brann & Isaacson in Lewiston, Maine. Wurgaft’s practice focuses on providing advice on labor and employment law, municipal law, and litigation. Lowe provides advice and counsel to clients on labor and employment law, education and municipal law, and corporate and public governance issues. You can reach them at hwurgaft@brannlaw.com and plowe@brannlaw.com.