McMillen v. Browne, 14 N.Y.2d 326 (1964)

A city, acting as a proprietor, has the power to set minimum wage standards for its contractors and subcontractors, provided that such standards do not conflict with existing state law and are not applied to areas pre-empted by the state.

Summary

This case addresses the legality of a New York City Administrative Code provision mandating a minimum wage for employees of city contractors and subcontractors. The plaintiff, a taxpayer, challenged the provision as conflicting with and pre-empted by state labor laws. The Court of Appeals upheld the local law, reasoning that the city, in its role as a contracting party, has the right to set wage standards for its contractors, as long as those standards do not conflict with state law or intrude on areas the state has explicitly pre-empted. The court emphasized that the city’s regulation was akin to a private entity setting terms for its contracts, not an attempt to regulate private businesses generally.

Facts

New York City enacted Section 343-9.0 of its Administrative Code in 1961, requiring city contracts to stipulate that contractors and subcontractors pay their employees a minimum of $1.50 per hour.

The Board of Estimate issued a regulation exempting employees whose minimum wage was already fixed by Section 220 of the State Labor Law (the “prevailing wage law”).

A taxpayer brought suit, claiming the Administrative Code provision was illegal because it conflicted with state law and was in an area pre-empted by the state.

Procedural History

The lower court upheld the Administrative Code provision.

The Appellate Division affirmed the lower court’s decision.

The case was appealed to the New York Court of Appeals.

Issue(s)

Whether Section 343-9.0 of the New York City Administrative Code, which mandates a minimum wage for employees of city contractors, is inconsistent with state law, particularly Section 220 of the Labor Law (the “prevailing wage law”).

Whether the State of New York has pre-empted the field of wage regulation, thereby precluding the City from enacting its own minimum wage provision for city contractors.

Holding

No, because the Board of Estimate regulations and the city’s contract terms explicitly exclude employees covered by the state’s prevailing wage law from the Administrative Code provision.

No, because the state’s laws do not demonstrate an intent to fully occupy the field of wage regulation for city contractors, and the state constitution grants cities the power to fix the wages of employees of those they contract with.

Court’s Reasoning

The court reasoned that the local law fell within the city’s constitutional and statutory authority to manage its affairs and enter into contracts. The court stated that the city, when contracting for supplies or labor, has “full power to fix the terms and conditions upon which it chooses to deal.” The minimum wage requirement was viewed as a term the city set for its contracts, similar to specifying the quality of materials.

Addressing the inconsistency argument, the court noted that the city’s own regulations and contract language explicitly excluded employees already covered by the state’s prevailing wage law (Labor Law § 220). The court refused to interpret the local law in a way that would create a conflict with state law, preferring a construction that reflected the city’s intent and avoided potential legal problems.

Regarding pre-emption, the court found no evidence that the state intended to prevent cities from setting wage standards for their contractors. The constitutional provision granting cities the power to fix wages of contractor employees indicated that the state’s existing laws (like Labor Law § 220) left room for local legislation. The court emphasized that if Section 220 had pre-empted the field, the constitutional amendment granting cities concurrent power would have been a “futile gesture.”

The court distinguished this case from Wholesale Laundry Bd. of Trade v. City of New York, stating, “Our decision in that case—holding invalid a local law requiring every employer in New York City to pay to all of his employees a higher minimum wage than that prescribed by a provision of section 652 of the State’s Labor Law—can have no application to the local legislation before us, limited as it is to a particular employer, the city.”

The court affirmed the order, holding that the city’s minimum wage requirement for contractors was a valid exercise of its power to contract and manage its affairs.