Living Wage Ordinance – Sante Fe

In February 2003, Santa Fe, New Mexico enacted a minimum wage ordinance. Beginning January 1, 2004, the ordinance will require an $8.50 per hour minimum wage for all businesses and nonprofit organizations with 25 or more employees. The wage will rise to $9.50 per hour in 2006 and $10.50 per hour in 2008. Tips earned by employees can be counted towards the minimum.

The ordinance notes that average earnings per job in Santa Fe County are 23 percent below the national average, while the cost of living is 18 percent higher than the national average. The current federal minimum wage is $5.15 per hour.

Several business owners and the Santa Fe Chamber of Commerce have filed a lawsuit to overturn the new law. The suit challenges the ordinance on multiple grounds, including that it violates Constitutional guarantees of equal protection by exempting certain kinds of businesses (i.e., those with fewer than 25 employees) and that cities do not have the authority under New Mexico state law to interfere in employee-employer relationships. Earlier this year, the Santa Fe City Attorney said he believed the ordinance had about a 50-50 chance of surviving legal challenge.

Santa Fe is the third city in the country to adopt a minimum wage law. (Living wage laws enacted in other cities apply only to city employees, city contractors, and companies receiving city grants and subsidies). In 2002, New Orleans adopted a minimum wage of $6.15 per hour, but the law was struck down by the state Supreme Court, which ruled that state law preempted the authority of cities to set wage levels. Santa Monica, California, also enacted a minimum wage of $12.25 per hour ($10.50 with health benefits) for businesses in its coastal tourism zone. The Santa Monica ordinance was subsequently withdrawn in a referendum vote that narrowly defeated it in November 2002.

In June 2004, Santa Fe’s minimum wage law was upheld by a state court. It was challenged on the grounds that cities cannot interfere with the employee-employer relationship, but the judge ruled that regulating such civil relationships was a power granted to cities by state law. He also said that the ordinance did not represent an illegal “taking” of private property by government, and that applying it only to businesses with more than 25 employees was rational and did not violate the equal protection clause.

An appeal of the judicial opinion was filed and a request to stay the living wage law until after the appeals process was also requested. On July 19, 2004, Judge Daniel Sanchez rejected the request of the Santa Fe Chamber of Commerce and other business plaintiffs to stay the living wage until after their appeal – a process that could take more than a year. The Chamber argued that they would win on appeal and that some individual businesses would be forced out of business. The Judge rejected their arguments and left the law in effect.

Quoted in local press coverage of the decision: “Today’s ruling confirms that cities have broad powers to protect low-wage workers in their communities,” said Paul Sonn, an attorney for New York University’s Brennan Center for Justice, who worked pro bono for the city on the case. “I think we’ll see more cities following Santa Fe’s lead.”

A handful of cities, including Madison, WI, and Washington, DC, have enacted similar minimum wage laws. About 100 cities have living wage laws that apply only to companies with city contracts.