Living Wage Mandate Preemption Act Exposed

The Living Wage Mandate Preemption Act was adopted by ALEC's Commerce, Insurance, and Economic Development Task Force at the 2001 States and Nation Policy Summit, approved by the ALEC Board of Directors in January, 2002. According to ALEC.org, the Act was re-approved by the Board of Directors on January 28, 2013. (Accessed on 7/14/2015).

CMD's Bill Summary

This bill would allow states to prevent its cities and counties from setting minimum wages that exceed those required under state or federal law ("living wage" laws). This is similar to Wisconsin Governor Scott Walker's efforts to preempt a pro-worker sick-leave law passed by a majority of voters in Milwaukee.

ALEC appears to support local control when it applies to state's rights against the federal government, but opposes local control when it applies to cities' rights against the state. For example, see also Prohibition Against Regulation of Nutritional Information Regulation, Rent Control Preemption Act.

ALEC Bill Text

Summary

The Living Wage Mandate Preemption Act repeals any local “living wage” mandates, ordinances or laws enacted by political subdivisions of the state. It also prohibits political subdivisions from enacting laws establishing “living wage” mandates on private businesses, including those businesses that have service contracts with and/or receive financial assistance from such political subdivisions of state government.

Model Legislation

Section 1. {Short Title.}

This Act shall be known as the Living Wage Mandate Preemption Act.

Section 2. {Legislative Declarations.}

This legislature finds and declares that:

(A) Economic stability and growth are among the most important factors affecting the general welfare of the people of this state, and that economic stability and growth are therefore among the most important matters for which the Legislature is responsible;

(B) Mandated wage rates comprise a major cost component for private enterprises, and are among the chief factors affecting the economic stability and growth of this state;

(C) Local variations in mandated wage rates threaten many businesses with a loss of employees to areas which require higher mandated wage rates, threaten many other businesses with the loss of patrons to areas which allow lower mandated wage rates, and are therefore detrimental to the business environment of the state and to the citizens, businesses, and governments of the various political subdivisions as well as local labor markets;

(D) In order for businesses to remain competitive and yet attract and retain the highest possible caliber of employees, private enterprises in this state must be allowed to function in a uniform environment with respect to mandated wage rates; and

(E) Legislated wage disparity between political subdivisions of this state creates an anticompetitive marketplace that fosters job and business relocation.

Section 3. {Definitions.}

(A) For purposes of this title, “political subdivision” includes, but is not limited to, a municipality, city, county, township, village, school district, special purpose district, public service district, or any local government of this state.

(B) For purposes of this title, “living wage mandate” means any requirement enacted by a political subdivision of this state that requires an employer to pay any or all of its employees a wage rate not otherwise required under this state’s law or federal law.

(C) For purposes of this title, “employer” includes, but is not limited to, any person acting directly or indirectly in the interest of an employer in relation to an employee and includes a public agency (other than the government of the United States), as well as employers that have contracts or subcontracts with the political subdivision or that have received tax abatements, loan guarantees, or other financial assistance from the political subdivision.

(D) For purposes of this title, “employee” means any individual employed by an employer.

(E) For purposes of this title, “employ” includes to suffer or permit to work.

(F) For purposes of this title, “person” means an individual, partnership, association, corporation, business trust, legal representative, or any organized group of persons.

Section 4. {Repeal and Preemption of Local Law.}

(A) Except as provided in Section 4 (B) and Section 5, any and all living wage mandates enacted by any political subdivision of this state are repealed.

(B) Except as provided in Section 5, no political subdivision of this state may enact, maintain, or enforce by charter, ordinance, purchase agreement, contract, regulation, rule, or resolution, either directly or indirectly, a living wage mandate in an amount greater than this state’s applicable state minimum wage [or, if applicable: “in the federal Fair Labor Standards Act of 1938, as amended {29 U.S.C. Sec. 201 et seq.}”].

Section 5. {Severability Clause.}

(A) The prohibitions in Section 4 of this title shall not [choose any/all of the following]:

(1) Prohibit a political subdivision of this state from enacting, maintaining, or enforcing through a collective bargaining agreement or other means a minimum wage requirement governing compensation paid by that political subdivision to employees of that political subdivision;

(2) Apply to a collective bargaining agreement negotiated between a political subdivision and the bargaining representative of the employees of the political subdivision;

(3) Limit, restrict, or expand a prevailing wage required under existing state law [cite code/statute];

(4) Apply when applicable federal law requires the payment of a prevailing or minimum wage to persons working on projects funded in whole or in part by federal funds.

Section 6. {Repealer Clause.}

Section 7. {Effective Date.}

Adopted by the CIED Task Force at the 2001 States and Nation Policy Summit.

Approved by the ALEC Board of Directors in January, 2002.