Businesses in Portland suit say minimum wage will cause layoffs, closings
Courtesy / Sandi Roberts
A group of Gritty McDuff's patrons celebrates during a New England Patriots game in pre-pandemic times. The brew pub on Fore Street is one of five businesses named as plaintiff in a Portland Regional Chamber of Commerce suit asking for clarification on the city's new hazard minimum wage.
At Gritty McDuff's, the new "hazard" minimum wage means that employees will lose jobs and the brew pub would have to close several days a week.
While the days of a tightly packed bar full of people watching the Patriots on TV have been just a memory in 2020, the hazard minimum wage would bring more pain, including laying off at least seven employees, cutting wages and possibly closing several says a week, owner Richard Pfeffer said.
Pfeffer was among owners of four businesses and the director of a nonprofit that joined the Portland Regional Chamber of Commerce in a lawsuit this week asking a Cumberland County Superior Court judge to throw out the time-and-a-half hazard pay called for in the minimum wage ordinance passed by Portland voters on Nov. 3.
The other plaintiffs cite similar grim effects, ranging from cutting staff to moving out of the city, if the $18-an-hour hazard wage goes into effect Sunday. The chamber and the businesses are asking for a declaratory judgment, which means the court would decide the status of the hazard wage. The suit says the wage doesn't comply with city or state law, and is also beyond the scope of what's allowed in a citizen's initiative.
The complaint asks for an expedited decision. While plaintiffs don't expect a decision by this weekend, they do expect one soon, said Pierce Atwood attorney John Aromando, who represents the plaintiffs. He made his comments Tuesday at a news conference hosted by the chamber.
"It's just not a sustainable model," Aromando said. He said the businesses can't operate with their current staff levels and pay time and a half on the current minimum wage of $12 an hour.
The city has said it won't enforce the hazard wage until the $13 an hour minimum wage in the ordinance goes into effect in January 2022. But Aromando said that puts businesses in a tough position — they either pay the wage in the the new ordinance or face the prospect of a expensive lawsuits in the future from employees seeking back wages.
People First Portland, the organization that sponsored the citizen's initiative that led to the minimum wage referendum, which was approved by 62% of the city's voters, said the hazard wage supports low-wage workers who have no choice but to work during the pandemic. A large proportion of them are people of color and women.
"Amid the largest spike in COVID deaths in Maine, as Portland residents are forced to work in the most dangerous conditions of our lives, the Chamber of Commerce has sent in their well-heeled lawyers to undermine the will of the voters and defend low wages at companies like Whole Foods, a multinational corporation owned by the richest man in the world," the group said Tuesday in response to the lawsuit.
The emergency wage requires time and a half pay during a government-declared state of emergency. People First Portland said that means businesses in the city must start paying the hazard minimum wage beginning Sunday, 30 days after the Portland vote was certified. Some 62% of the city's voters were in favor of the higher wage. The city and state both declared a state of emergency because of the COVID-19 pandemic March 16, and those have been continually renewed since.
The suit only addresses the emergency wage, and not the new minimum wage in general, which rises to $14 an hour in 2023, $15 an hour in 2024 and then increases with the cost of living.
Grim picture for businesses
Quincy Hentzel, CEO of the chamber, said Tuesday the law is "misguided" and will hurt the people it's meant to help.
The five business plaintiffs, she said, represent a variety of different business types affected by the wage hike and represent the city's businesses overall. The plaintiffs are Alliance for Addiction & Mental Health Services, Play It Again Sports, Nosh Kitchen Bar, Slab Sicilian Street Food and Gritty McDuff’s Brew Pub.
In affidavits filed with the suit, the businesses paint a grim picture of what paying the emergency wage means.
Malory Shaughnessy, executive director of the Alliance for Addiction and Mental Health Services, said its five member organizations in Portland have wages set by the state budget. Funding largely comes through MaineCare and the date of Maine Department of Health and Human Services through contracts with the Office of Child and Family Services and the Office of Behavioral Health. That funding, which covers compensation, can only be increased by the Legislature or grant by the Department of Health and Human Services.
Shaughnessy said that Portland members will have to reduce hours and lay off employees. "Which will result in a reduction in mental health and substance use disorder services available to individuals in the city of Portland at a time of significant need," she said.
Gritty McDuff's will reduce kitchen staff from 12 employees to five, reduce hours of its lowest-wage workers, reduce wages for other employees if necessary and possibly close for several days a week, owner Pfeffer said.
"Gritty's customarily schedules its kitchen staff for overtime, but because of the requirement that it increase hourly rates of pay, Gritty's will eliminate all opportunity for overtime rather than pay $27 per hour as would be required," he said in his affidavit.
Matthew Moran, owner of restaurants Nosh and Slab, said he would each lay off seven employees at each site, eliminate indoor dining, offering only curbside and pickup, and would also eliminate kitchen staff overtime, which is normally paid regularly.
Play It Again Sports employees 13 high school and college students, all part-time "working to gain experience and obtain money to pay for their education," owner Scott Rousseau said. He said he would have to lay off seven or eight of those employees immediately once the emergency wage goes into effect.
The chamber also has a survey on its website asking city businesses what the effect of the hazard wage will be on their business.
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Not sure that this is well thought out. If I'm a contractor with an office in Portland I would have to pay the minimum wage. If I have a competitor in Yarmouth bidding on the same job in Portland, does he have to pay that as well? How would it get tracked?
When the proponents claim the new law covers mainly "people of color" are they also referring to the white color which make up the significant majority of all jobs and the population at large? When I read intention derived from this comment and the one about Whole Foods being owned by the richest man in the country, I find that divisive and not at all on point..........so lets keep to the point that the law is intended to assist all people in low paying jobs in times of emergencies.
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