Minimum Wage

Portland’s delay on minimum wage ordinance provides no legal cover to local businesses

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Portland residents approved on November 3 an ordinance that increases the city’s minimum wage from $12 an hour to $15 an hour, including a provision that will require employers to pay their employees time-and-a-half during a municipal or state-declared emergency. 

The “hazard-pay” provision will increase the city’s minimum wage to $18 per hour under the emergency declared by Governor Mills due to the coronavirus, and if employers do not pay the rate as early as next month, they may be subject to substantial financial penalties under Maine’s “treble damages” law.

In legal cases concerning employees who are not compensated at the rate to which they are legally required to be paid, treble damages permit the courts to triple the amount of damages awarded to the employee in wage theft suits.

Maine law states, “[a]ny employer is liable to the employee or employees for the amount of unpaid wages and health benefits. Upon a judgment being rendered in favor of any employee or employees, in any action brought to recover unpaid wages or health benefits under this subchapter, such judgment includes, in addition to the unpaid wages or health benefits adjudged to be due, a reasonable rate of interest, costs of suit including a reasonable attorney’s fee, and an additional amount equal to twice the amount of unpaid wages as liquidated damages.”

Under the ordinance, declared emergencies can be not only public health concerns such as the current COVID-19 pandemic, but may also include storms, power outages and extreme weather or temperatures. 

Portland city officials announced they will not enforce the requirements of the ordinance until 2022. However, this provides no legal cover for businesses who choose to pay their employees the standard minimum wage rather than time-and-a-half during the pandemic. 

Thus, Portland employers now find themselves in a precarious position: should they pay the standard minimum wage and risk being subject to substantial financial penalties, or pay the inflated pandemic wage at risk of losing their business? How long, if at all, can employers in the city afford to pay this wage before they cut back hours and staff, or relocate to another jurisdiction?

Unfortunately, hundreds of businesses could end up paying tens of thousands of dollars or more in damages (during a pandemic, when many are already struggling to stay afloat) due to the ambiguity of this initiative and the city’s enforcement of it. 

Lori Moses, the director of child care at Catherine Morrill Day Nursery in Portland, shared with Maine Public the implications the hazard pay provision imposes on small businesses. She estimates the ordinance will cost the organization an extra $2,500 a week. 

“We have no choice but to pass this burden on to families. And some families won’t be able to afford it, and then they won’t be working. So we are the workforce behind the workforce. If child care closes its doors then that will have a ripple effect on employees who won’t be able to work,” she said.

The Portland Community Chamber of Commerce is encouraging businesses affected by the ordinance to seek legal advice before making a decision on what to pay their employees next month. 

In an email on Wednesday, the chamber informed their members, “The City’s interpretation may not govern private lawsuits brought by employees claiming that the emergency wage provision should start on December 5, 2020. For this reason, we urge all employers who may be governed by this ordinance to consult legal counsel and to share their concerns about the ordinance with their elected officials.”

About Melissa Baker

Melissa Baker serves as an intern at Maine Policy Institute. She currently attends the University of Southern Maine and will graduate this spring with an undergraduate degree in communications.

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