Employers in Portland, Maine received long-awaited clarity Tuesday regarding a November 2020 voter referendum raising the city’s minimum wage and instituting hazard pay during states of emergency such as the COVID-19 pandemic. On July 6, 2021, the Maine Supreme Judicial Court unanimously ruled in Portland Regional Chamber of Commerce v. City of Portland that the voter-initiated legislation establishing an emergency minimum wage was constitutional but does not take effect until January 1, 2022. The ruling means that at least until next year, employers in Maine’s largest city must abide only by the state’s current minimum wage of $12.15 per hour and do not have to pay hazard wages of 1.5 times that rate.

The dispute over Portland’s hazard pay ordinance started following the November 3, 2020 election in which more than 62 percent of voters supported amending Portland’s minimum wage ordinance to incrementally increase the regular minimum wage annually until hitting $15.00 per hour in 2024. Also included in the text of that ordinance was a provision calling for hazard pay of 1.5 times the regular minimum wage for “work performed during a declared emergency.”

Supporters of the referendum argued that the hazard pay provision should take effect 30 days after the final election results – December 6, 2020 – because voters intended to enact the hazard pay during the COVID-19 pandemic. The City of Portland, however, announced that it would not enforce the hazard pay provision until January 1, 2022 based on the text of the ordinance.

The Portland Chamber of Commerce and several businesses filed for declaratory relief asserting that the entire voter initiative was invalid under the Maine Constitution and the Portland City Code and that, if the initiative process was valid, the ordinance would not take effect until January 1, 2022.

Two employees of a Portland grocery store intervened and filed crossclaims seeking declaratory relief that the effective date of the emergency wage provision was December 6, 2020. They also sought injunctive relief compelling the City of Portland to enforce the emergency wage provision as of that date.

On February 1, 2021, the Maine Superior Court concluded that the emergency wage provision was valid under the state constitution and City Code. The Superior Court further found that the language of the contested provision was unambiguous and established an effective date of January 1, 2022.

Both sides appealed and, two months after oral arguments on May 4, 2021, the Maine Supreme Judicial Court affirmed the lower court’s ruling on July 6, 2021.

Justice Andrew M. Mead, who authored the opinion, explained that although the emergency wage provision did not state an effective date, the text of the ordinance as a whole was unambiguous in establishing January 1, 2022 as the operative date. Had the drafters desired otherwise, they could have stated as such. Justice Mead detailed the court’s rationale as follows:

Here, the language of the emergency provision is unambiguous on its face and therefore we need not go beyond the text. . . The emergency provision in Portland City Code § 33.7(g) provides the timing of the minimum wage increases by cross-reference to subsection b: “the effective Minimum Wage rate established by this ordinance shall be calculated as 1.5 times the regular minimum wage rate under subsection (b) above.” Subsection b is further divided into four subsections, the first of which states, “Beginning on January 1, 2022, the regular Minimum Wage for all Employees . . . shall be raised to $13.00 per hour.” Id. § 33.7(b)(i). Each subsequent subsection begins with the following year and raises the regular minimum wage by $1.00 per hour, with an increase based on the cost of living after a $15.00 minimum wage is reached. Id. § 33.7(b)(ii)-(iv).

The newly passed legislation does not explicitly state an effective date for the emergency provision. See id. § 33.7. Nevertheless, the ordinary meaning of the text establishes that the new minimum wage rate comes into effect on January 1, 2022, and increases incrementally thereafter. See id. § 33.7(b).

2021 ME 34 at ¶¶ 25-26 (internal citations omitted).

As to the ordinance’s validity, the court determined that the hazard pay provision was local in nature to warrant “home rule” protection even though Maine’s largest city having a significantly higher minimum wage than the rest of the state would impact employers beyond city limits. Justice Mead explained,

The fact that an ordinance that is otherwise directed to matters within the geographical confines of the municipality may affect nonresident individuals or entities who have employment or business interests within the municipality does not mean that it loses its characterization as “local and municipal.” The key inquiry is whether the ordinance provision is fundamentally local or statewide in its scope. . . . We conclude that the initiative at issue with its emergency multiplier provision, found in Portland City Code § 33.7(g), falls into the category of local or municipal affairs and was validly enacted pursuant to the Maine Constitution.

Id. at ¶ 18 (internal citations omitted).

As a result of the court’s upholding the ordinance’s constitutionality, on January 1, 2022, Portland’s minimum wage will rise to $13.00 per hour the same date the emergency pay provision takes effect. The regular minimum wage will continue to rise $1.00 per year until reaching $15.00 per hour in 2024. Thereafter, the city’s minimum wage will increase by a cost-of-living metric.

The court’s decision ended eight months of uncertainty for both employers and employees in Maine. While some employers raised wages immediately following the election, those that did not operated under the potential of owing back pay plus additional penalties under Maine law (26 M.R.S. § 626-A) such as attorneys’ fees and liquidated damages in the amount of twice the unpaid wages owed.

Moving forward, voter initiatives to raise wages may become the norm in other Maine cities given the court’s approval of such local wage ordinances under the state constitution.

For now, employers planning to adjust wages as a result of the court’s ruling may want to consult with counsel to ensure compliance with federal, state, and local laws. Employers should also start preparing for the annual increase in the regular minimum wage that may lead to employees in Portland having a higher minimum wage than employees in other parts of the state.