The Kentucky Supreme Court recently ruled that minimum wage rates are regulated at the state level and that local governments in Kentucky lack the authority to establish their own minimum wage rates. The ruling means that the Kentucky state minimum wage of $7.25 per hour now applies in Louisville and Lexington despite local ordinances which had required employers to pay a higher local minimum wage.
The Kentucky Supreme Court’s decision renders the local ordinances invalid and unenforceable. Although employers in Louisville and Lexington who had increased employee pay to comply with the local ordinances may choose to pay employees a minimum wage of $7.25 per hour on a prospective basis in light of the Kentucky Supreme Court’s ruling, consideration should be given to the effect such a decision could have on recruiting and retaining employees. Additionally, employers subject to the Affordable Care Act’s Employer Shared Responsibility Mandate should consider the effect lowering wages will have on strategies related to offering affordable health coverage.