What’s happening: In a lawsuit brought by CHA, a federal judge for the Central District of California has ruled that portions of a City of Inglewood minimum wage ordinance that prohibits health care employers from managing increased labor costs through compensation and staffing decisions are unenforceable because they’re preempted by the National Labor Relations Act (NLRA).
What else to know: The ordinance, passed in 2022, increases the minimum wage for health care workers at hospitals and many other health care facilities, and banned (“handcuffed”) employers from adjusting to the resulting cost increase through layoffs, changes in premium pay rates or shift differentials, reducing hours of work or non-wage benefits, and other operational decisions (Section 8-152(c) of the ordinance). CHA’s lawsuit did not challenge the increased minimum wage; instead challenging the “handcuffs” and other provisions of the ordinance that could be used to enforce those limitations.
Inglewood’s “Healthcare Workers Minimum Wage Ordinance” was the result of a 2022 initiative sponsored by Service Employees International Union-United Healthcare Workers West (SEIU-UHW).
In July 2023, CHA filed a lawsuit arguing that the NLRA preempts state action that interferes with the free play of economic forces in collective bargaining over matters such as those addressed by the handcuffs (compensation and benefits, the ability to lay off employees, among others). CHA argued that the NLRA effectively prohibits state and local enactments that — by design or consequence — regulate or interfere with the bargaining process. SEIU-UHW intervened in the lawsuit to defend the ordinance.
Because the issue of whether the NLRA preempts the challenged provisions was purely legal, the judge decided the case based on legal briefs submitted by the parties and without a trial.
On March 11, the judge ruled in favor of CHA that the ordinance’s handcuff provisions are preempted under the NLRA. As the judge explained, “[Section 8-152(c)] potentially forecloses almost all obvious responses by an employer to rising compensation costs and effectively establishes a regime where almost no reductions in the employment package for any healthcare employees can be negotiated through the bargaining process at all. This is far too restrictive…”
According to the judge, the ordinance’s anti-retaliation and private right of action provisions — which CHA had also challenged as means to enforce the handcuff provisions — “are unlikely to be problematic,” once the handcuff provisions are invalidated. As a result, the judge declined to invalidate the additional provisions.
At CHA’s request, the judge ruled on April 4 that another provision of the ordinance is also preempted — the section that declared that an employer violates the handcuff provisions if the minimum wage requirements are a “motivating factor” in the employer’s decision to take any of the actions prohibited by Section 8-152(c) — because that section is entirely dependent on the existence of Section 8-152(c).
