Minimum-wage hike may have legal impacts

The San Diego City Council's attempt at hiking the minimum wage to $13.09 could make way for some uphill legal battles, warns a June 6 memo from the city attorney's office.

The Committee on Economic Development and Intergovernmental Relations is set to hear the proposal (championed by council president Todd Gloria), which, if passed, would bump up the minimum wage for all workers over a three-year period. But the plan is not without some legal flaws.

In the memo, deputy city attorney George Halsey identifies "three significant legal issues" that could impact the enforceability of the ordinance, if approved by the council. Those legal issues surround nonresident employers who hire temporary or permanent workers in San Diego.

"As drafted, the ordinance would apply to a nonresident employer who sends an employee to the City for a business meeting, convention, or any other temporary work assignment. The ordinance would also protect those employees who work full time in the City as a telecommuter for a nonresident employer," writes Halsey.

The issue is whether requiring outside employers to pay higher wages to local workers could impact the Commerce Clause.

"The more the burden on interstate commerce outweighs the putative local benefits, the more likely a court would find that the local law violates the dormant Commerce Clause. Thus, any adjustments that lessen the burden on interstate commerce increase the likelihood of the ordinance surviving a constitutional challenge."

In addition, forcing outside employers to pay extra for workers here could create problems at home such as in the case of labor negotiations or other employment conditions. If that's the case, does San Diego have the authority to do so?

Lastly, surmises Halsey, is that the ordinance could be open for interpretation by a judge, During such a case, he or she would be forced to decide on which agency's labor laws — laws where the company is headquartered or the ordinance — would be at most risk if a legal challenge occurred.

"Case law suggests that the longer an out-of-state worker works in the City, the greater the interest the City has in applying its local labor laws."

In summary, "[T]here are three significant legal issues that could impact the ability of the City to enforce the ordinance on nonresident employers whose employees work within the City’s limits. These include: the dormant Commerce Clause, the prohibition against extraterritoriality, and the conflict of laws analysis.

“The legal analysis associated with each of these legal challenges is very fact intensive, and the outcome may vary on a case by case basis. Nevertheless, generally, the stronger the City’s legitimate reasons for enforcing the ordinance and the less this ordinance burdens interstate commerce, the more likely a court will permit the City to enforce this ordinance on nonresident employers whose employees temporarily or permanently work within the City’s geographical boundaries."

The committee hearing was set to take place at 9 a.m. on June 10 on the 12th floor at city hall.