Can Grocery Stores succeed in fighting the $4 “hero pay” wage hikes?

Can Corporations claim a violation of the Equal Protection Clause?

Over the last week, several cities passed laws granting $4 pay raises affecting grocery store employees. The pay raises (classified as “hazard pay” or “hero pay”) were not instituted in other industries and did not affect grocery stores that were smaller in size. California grocery stores in Long Beach closed affected locations.1See news story from KLTA news. Grocery stores in Seattle, Washington, filed suit seeking protection under the equal protection clause of the US Constitution, because the Seattle regulation that “picks winners and losers” by “singling out large corporations.”2See article in the Seattle Times.

The equal protection clause is found in section 1 of the Fourteenth Amendment. It reads:

All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

The first part of this clause refers to persons “born or naturalized,” which caused me to wonder if equal protection was available to legal persons (like corporations) rather than just natural persons.

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An incorporated nightclub in Pennsylvania was allowed to try an equal protection clause claim when it was harassed by local law enforcement

In 2012, the Pennsylvania Middle District federal court reviewed an Equal Protection Clause claim by a corporation.

The Mines, Inc., sued the City of Wilkes-Barre, Pennsylvania after a systematic and coordinated period of harassment by local officials, police, and a school that led to damaged reputation and lost profits.3Rittenhouse Entm’t, Inc. v. City of Wilkes-Barre (M.D.Pa. 2012) 861 F.Supp.2d 470, 481. The complaint stated that the City of Wilkes-Barre targeted the nightclub, because it had clientele that was majority hispanic and black.4Rittenhouse Entm’t, Inc. v. City of Wilkes-Barre, supra, 861 F.Supp.2d 470, 481.

Prior to the beginning of the harassment, the nightclub had no violations with the local police or the liquor control board.5Rittenhouse Entm’t, Inc. v. City of Wilkes-Barre, supra, 861 F.Supp.2d 470, 481. However, all-white nightclubs with long histories of liquor control violations and violent outbursts by nightclub patrons were treated differently and permitted to continue operations.6Rittenhouse Entm’t, Inc. v. City of Wilkes-Barre, supra, 861 F.Supp.2d 470, 481.

“The County Defendants argue that The Mines cannot claim an equal protection violation because it is a corporation without a racial identity, and thus it does not belong to a class protected by the Equal Protection Clause.” 7Rittenhouse Entm’t, Inc. v. City of Wilkes-Barre, supra, 861 F.Supp.2d 470, 481, emphasis added. “The Supreme Court has determined, however, that plaintiffs may proceed with equal protection claims under a ‘class of one’ theory, where the  plaintiff alleges that she has been intentionally treated differently from others similarly situated and there is no rational basis for the difference in treatment.”8Rittenhouse Entm’t, Inc. v. City of Wilkes-Barre, supra, 861 F.Supp.2d 470, 481, internal quotations removed, see also Willowbrook v. Olech (2000) 528 U.S. 562, 564 [120 S.Ct. 1073, 1074, 145 L.Ed.2d 1060, 1063]. “[T]he purpose of the equal protection clause of the Fourteenth Amendment is to secure every person within the State’s jurisdiction against intentional and arbitrary discrimination, whether occasioned by express terms of a statute or by its improper execution through duly constituted agents.”9Willowbrook v. Olech, supra, 528 U.S. 562, 564 [120 S.Ct. 1073, 1074-1075, 145 L.Ed.2d 1060, 1063], internal quotations removed.

The court determined that The Mines successfully established allegations of fact that they had been treated differently from other nightclubs, and they would be permitted to sue under a “class of one” theory.10Rittenhouse Entm’t, Inc. v. City of Wilkes-Barre, supra, 861 F.Supp.2d 470, 481. That The Mines, Inc., was a corporation did not deny it the ability to continue with the suit as a “person” protected by the equal protection clause and the Fourteenth Amendment.

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Foreign corporations in Alabama were allowed to try an equal protection claim for a tax provision that treated in-state corporations differently than foreign corporations.

When foreign corporations became incensed about a large tax penalty placed upon them for being foreign corporations, they took the fight to the Supreme Court to have the matter decided. The Supreme Court noted:

[T]he Equal Protection Clause imposes limits upon a State’s power to condition the right of a foreign corporation to do business within its borders. [Citation] We held that “[we] consider it now established that, whatever the extent of a State’s authority to exclude foreign corporations from doing business within its boundaries, that authority does not justify imposition of more onerous taxes or other burdens on foreign corporations than those imposed on domestic corporations, unless the discrimination between foreign and domestic corporations bears a rational relation to a legitimate state purpose.”11Metro. Life Ins. Co. v. Ward (1985) 470 U.S. 869, 875 [105 S.Ct. 1676, 1680, 84 L.Ed.2d 751, 757], dicta, internal quotes removed.

The foreign corporations were permitted to bring suit.

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Corporate status does not deny standing for an equal protections claim.

As we see in the cases referenced above, the courts have not turned away plaintiffs based on their status as a corporation rather than a natural person.

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How likely is a corporation to succeed on an equal protections claim based on mandatory wage provisions?

The court will apply the rational basis test.

“The Equal Protection Clause provides, ‘nor [shall any State] deny to any person within its jurisdiction the equal protection of the laws.’ [Citation] Where an alleged equal protection violation does not implicate a suspect class or abridge a fundamental right, the rational basis test is used.” 12Joseph v. S.C. Dep’t of Labor, Licensing & Regulation (2016) 417 S.C. 436, 451 [790 S.E.2d 763, 771]. Here, the classification separates large employers from small employers. The size of a business enterprise is not a suspect class, so the court will apply the rational basis test.

Laws are seldom struck down under the rational basis test.

“[T]o survive an equal protection challenge, the classifications drawn in the statute must bear a rational relationship to a legitimate end of government not prohibited by the Constitution.”13Barzey v. City of Cuthbert (2014) 295 Ga. 641, 645 [763 S.E.2d 447, 451], internal quotations removed. The rational basis test is an “undemanding level of judicial review.”14People v Superintendent, Adirondack Corr. Facility (2020) 2020 NY Slip Op 06934, ¶ 6. Under this level of review, the court does “not evaluate whether the government purpose is a vital or compelling one.”15People v Superintendent, Adirondack Corr. Facility, supra, 2020 NY Slip Op 06934, ¶ 6. “Under the rational-basis test, legislation is presumed constitutional and rationally related to achieving any legitimate governmental objective under any reasonably conceivable fact situation. [Citation] This presumption places the burden of proof on the party challenging the legislation to prove its unconstitutionality.”16Whorton v. Dixon (2005) 363 Ark. 330, 336 [214 S.W.3d 225, 230].

The burden of proof is on the grocery store owners to show that there is absolutely no rational basis connecting the law to the a conceivable lawful purpose. The chances of success are low, especially in a pandemic, when the State can claim that the wage stimulates the economy by injecting cash into lower-income level social circles at the expense of larger corporations. The State can also claim that the law promotes health and welfare by encouraging grocery chains to reduce hours and encourage employees to stay at home.

The plaintiff may have success in focusing on the issue of “under-inclusiveness.” The legislation only affects grocery stores, so whatever purpose the State proposes would likely be better served by a law that affects larger segments of industry. However, because “any” rational relation between the purpose and the law will allow the regulation to survive scrutiny, under-inclusiveness is not an overly compelling argument.

What next?

Want to read more about how the news and the law intersect? Try reading a recent review of Grindr’s liability in sexual assault crimes.