In a surprise development, on February 28, 2017, the Missouri Supreme Court upheld a minimum wage hike by the City of St. Louis.  Cooperative Home Care, Inc., et al. v. City of St. Louis, Missouri.  On August 28, 2015, St. Louis enacted a local ordinance providing for a four-tiered increase in the minimum wage for employees working within the boundaries of St. Louis.  Under the ordinance, the hourly minimum wage rate was to increase to $8.25 on October 15, 2015; to $9 on January 1, 2016; to $10 on January 1, 2017; and to $11 on January 1, 2018.

Shortly after the city passed the ordinance, however, a lower court invalidated it, finding it was impermissible for the citywide local minimum wage to require a higher minimum wage than the state requires by statute.  The Missouri Supreme Court reversed, noting the state statute’s purpose, protecting employees, “is served by setting a floor for minimum wages; nothing in the law suggests the state also wanted to protect employers by setting a maximum minimum wage."

Uncertainties Remain

While a $10 minimum wage now applies in the City of St. Louis, the effective date when the city will start enforcing the change is unclear.  St. Louis Mayor Slay issued a press release indicating: "[i]t is fair to give businesses a reasonable grace period to adjust to the new minimum wage rate.  We will spend the coming week talking to local business leaders to prepare to implement the increase."

The ordinance applies to employees who work 20 hours or more in a “brick and mortar” facility within the borders of St. Louis.  Thorny questions, however, exist concerning employees who are primarily based outside the city, but come into St. Louis to provide services or sell goods.  For example, are food truck employees covered by the ordinance and, if so, for what portion of their work day?

The St. Louis ordinance contains limited exclusions for small businesses (less than $500,000 in annual revenue) and certain other specified entities.  Not-for-profits are generally covered, but sheltered workshops are excluded.

Businesses need to be aware that the ordinance contains enforcement “teeth,” including monetary fines, potential jail time, and possible business license revocation for repeat violators.

Complicating matters further for employers in Missouri is a pending Kansas City ballot initiative that would put raising the minimum wage up to voters at the next election.  The impact of the Missouri Supreme Court’s opinion in Cooperative Home Care, Inc. on the Kansas City ballot initiative is uncertain.

Takeaways

Now it is time for impacted employers to comply with an ordinance that is riddled with ambiguity.  As the effective date for enforcement of the ordinance is being sorted out, affected businesses should immediately:

• Brace for payment of $10 per hour, which will increase to $11 in 2018;
• Comply with the ordinance's “Notice” requirements, which must be sent with the employee’s first paycheck calculated at the new rate;
• Comply with posting and distributing Poster Notices, as required by the ordinance.

We will continue to monitor this issue and report on any major developments.