Tuesday, August 23, 2016
The Ninth Circuit ruled in American Hotel and Lodging Association v. City of Los Angeles that federal labor law did not preempt LA's ordinance requiring a minimum wage for certain hotel workers in the city.
The ruling is a win for the city and for covered hotel workers. It denies the plaintiffs' motion for a preliminary injunction, but in terms that, as a practical matter, put an end to these claims. (The court ruled that federal law did not preempt, not only that that it likely did not preempt (the usual preliminary injunction standard). So the ruling tees up a city motion to dismiss these claims on the merits. And unless the plaintiffs have other claims, this ruling tees up a city motion to dismiss the entire case.)
The case arose when LA enacted an ordinance that required large hotels in the city, and smaller hotels near LAX, to pay workers $15.37 an hour (and provide other minimum benefits), unless they were covered by a collective bargaining agreement (the "collective-bargaining exemption"), and unless this wage would drive an employer into bankruptcy (the "hardship waiver"). American Hotel and Lodging Association and the Asian American Hotel Owners Association sued, arguing that the entire wage ordinance and the collective-bargaining exemption were preempted by the National Labor Relations Act, because they interfered with labor-management relations. The plaintiffs pointed to Machinists preemption (named for Int'l Ass'n of Machinists v. Wis. Emp't Relations Comm'n) which says that the NLRA implicitly preempts state restrictions on "self-help," like a strike or lock-out--things that "regulate the mechanics of labor dispute resolution." The plaintiffs moved for a preliminary injunction on this theory.
The Ninth Circuit flatly rejected the claim. The Ninth Circuit said that "[m]inimum labor standards, such as minimum wages, are not subject to Machinists preemption":
Such minimum labor standards affect union and nonunion employees equally, neither encouraging nor discouraging the collective bargaining processes covered by the NLRA. Minimum labor standards do technically interfere with labor-management relations and may impact labor or management unequally, much in the same way that California's at-will employment may favor employers over employees. Nevertheless, these standards are not preempted, because they do not "regulate the mechanics of labor dispute resolution."
The court said that minimum standards are merely background conditions of collective bargaining, not interferences with collective bargaining.
As to the collective-bargaining exemption, the court was even more direct, merely citing Lividas v. Bradshaw and its language that says that "familiar and narrowly drawn opt-out provisions" for collective bargaining agreements are valid, because they do not impact rights to collective bargaining.