Maine’s highest court ruled Tuesday that Portland’s voter-approved hazard wage mandate is constitutional, but the provision that boosts pay during emergencies such as the pandemic does not take effect until next year.

The Maine Supreme Judicial Court’s ruling upholds a lower court decision, which was appealed by the Portland Community Regional Chamber of Commerce and several local businesses.

It could have an immediate impact on the wages of workers who have been receiving hazard pay since the ordinance was adopted by voters last year in the midst of the pandemic. The provision applies to workers who report to a Portland workplace during an emergency declared by the state, county or municipality.

While the ruling frees businesses of the hazard wage mandate for now, it comes as many businesses are struggling to find workers and are increasing pay to lure people back into the workforce.

One local employer who increased pay in response to the ordinance said Tuesday that he will continue to pay the higher wage and continue to pass on the cost to consumers. But another employer said he was alerting restaurant workers Tuesday afternoon that hourly wages – and menu prices – would be reduced to the pre-pandemic levels.

Until Tuesday, local businesses have lacked clarity about whether they were legally required to provide hazard pay, which is 50 percent higher than the regular minimum wage, during the state of emergency triggered by the coronavirus pandemic. The state’s civil emergency ended June 30. Portland’s emergency declaration remains in place, although the City Council could end it on July 19.

Advocates, including the Maine Democratic Socialist’s People First Portland campaign, have contended that businesses needed to pay hazard wages as of December, when the ordinance took effect. But the city’s attorney ruled that the hazard pay provision did not take effect until January 2022 because of the way the ordinance was written.

As a result, some businesses have been voluntarily paying a minimum wage of more than $18 an hour, which is 50 percent higher the statewide minimum wage of $12.15 an hour, to comply with the intent of the drafters and to limit their legal liability. Some feared they might have to pay double back wages and legal costs should the courts say the requirement did in fact take effect in December. Other businesses have opted to not pay the hazard wage while waiting for the outcome of the lawsuit.

The ordinance approved by voters in November gradually raises the city’s minimum wage to $15 an hour by 2025. But it also enacted a hazard pay requirement for employees who report to Portland businesses during an emergency, such as the ongoing public health emergency stemming from the pandemic. That increases the minimum wage by 50 percent.

The Portland Community Regional Chamber of Commerce, along with several local businesses, sued the city in an effort to block the ordinance from taking effect. The chamber argued that the ordinance was unconstitutional and that the hazard pay provision, if upheld, would not be effective until January 2022. That is when the ordinance says the city’s minimum wage begins increasing above the state’s minimum wage.

Two Whole Foods workers intervened in the case in an effort to preserve the hazard pay requirement, arguing that it took effect in December, 30 days after approved by voters. Those workers also filed their own appeal of the lower court’s decision that the provision does not take effect until next year.

The court heard oral arguments on Feb. 1 and issued its ruling on Tuesday.

The court ruled that while city voters have the constitutional right to adopt a local minimum wage ordinance, the hazard pay provision would not take effect until Jan. 1, 2022, which is the first scheduled increase in the city’s minimum wage. Because of the way the ordinance is written, the authors eliminated wording from the city’s older minimum wage ordinance and set 2022 as the trigger for the new ordinance. And there was no effective date set for the hazard pay provision, the court ruled.

The court declined to take into account the wording of the ballot, which referenced an $18-an-hour minimum wage, if approved.

“Notwithstanding Intervenors’ insistence that we consider the ballot question in interpreting the ordinance, we do not examine any extrinsic evidence in the absence of textual ambiguity, and there is no such ambiguity here,” the court ruled.

A City Hall spokesperson said the city was pleased its reading of the ordinance was upheld.

“Without commenting on the direct issue which this ordinance seeks to address, we’re pleased the court agreed that our legal interpretation of the ordinance was correct as we strive to fulfill our obligation of implementing voter-approved ordinances,” Communications Director Jessica Grondin said.

Quincy Hentzel, CEO of the Portland Regional Chamber of Commerce, offered a mixed reaction to the verdict.

“While we did not prevail in our position that allowing municipal voters, as opposed to the elected City Council, to set a sharply escalated emergency minimum wage is unconstitutional, we are glad that businesses in Portland finally have some certainty regarding this new ordinance,” Hentzel said.

Shelby Leighton, who represented the Whole Foods workers, celebrated the portion of the ruling that deemed the ordinance, and its hazard pay provision, to be constitutional as “a victory for direct democracy.” But she lamented the portion that ruled the hazard pay requirement would not kick in until 2022.

“That ruling was based on the technical language of the initiative and did not take into account the clear intent behind the law, which was to provide a raise to workers during the pandemic emergency,” Leighton said. “Although this decision was not what we hoped, it is now clear that workers will be able to receive hazard pay during future declared emergencies after January 2022. And we are glad that more Portland businesses discovered during the pandemic that paying workers a fair wage is not only the right thing to do – it is good for business.”

Jay Villani, who co-owns Local 188, Salvage BBQ and Black Cow Burger, has been paying the hazard wage to the restaurants’ employees while awaiting a court ruling. He said the ruling will not impact his starting pay of more than $18 an hour – a pay rate that he says is still too low for job seekers in the current market.

“Once you let that genie out of the bottle how do you go back?” Villani said. “Moving forward, that’s what our starting rate is. There’s nothing I can do about it. I’m for people making more money.”

Villani originally paid for the additional wages by adding a 5 percent surcharge to bills, which prompted some complaints from customers. He will now increase regular menu prices to fund the higher wages moving forward.

“If I could make it work during the pandemic how can I not make it work going forward?” said Villani, adding he also provides benefits like health, dental and a 401k. “You have to pass the cost on – the cost of business is going up. It is what it is at this point.”

OTTO Pizza, meanwhile, plans to scale back wages as a result of the court decision. Eric Shepherd, the company’s marketing and communications manager, said menu prices, which increased 10 percent to pay for the enhanced wages, also would return to normal.

“OTTO had been waiting for the Supreme Court’s decision, or the city emergency to end, before making any changes to our Portland pay rates,” Shepherd said. “Since the court announced their decision today, our Portland employees will see their current rates adjusted to their pre-hazard rates this week. We are in the process of alerting the staff in our Portland shops.”

Hannaford supermarkets also paid the hazard wage at its two Portland locations while the case was pending in the courts. A spokesperson declined to way how the ruling would impact pay.

“We don’t have any announcements around this,” Eric Blom said.

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