Labor & Employment Law Daily Minneapolis ordinance governing sick and safe time leave upheld against preemption, extraterritoriality arguments
Monday, June 15, 2020

Minneapolis ordinance governing sick and safe time leave upheld against preemption, extraterritoriality arguments

By Brandi O. Brown, J.D.

Minnesota Chamber of Commerce’s challenge to a city ordinance guaranteeing up to 48 hours of leave per year for qualifying employees working within Minneapolis was rejected by the state’s high court after four years of litigation and appeals.

A divided Minnesota Supreme Court ruled that an ordinance passed by the City of Minneapolis requiring employers to allow qualifying employees who work in the city to accrue sick leave neither conflicted with state law nor violated the extraterritoriality doctrine. In so doing, the high court affirmed the intermediate appellate court’s decision and brought to an end several years of litigation and appeals regarding the ordinance. Justices Anderson and Gildea dissented (Minnesota Chamber of Commerce, et al. v. City of Minneapolis, June 10, 2020, Hudson, N.).

Ordinance passed. In 2016 the Minneapolis City Council passed the Sick and Safe Time Ordinance, under which employees who work within the geographic boundaries of the city for at least 80 hours a year accrue at least one hour of sick and safe time for every 30 hours worked in a calendar year. Those employees may accrue up to 48 hours in a year and may carry over unused time, not to exceed 80 total hours. The time can be used for the employee’s own mental or physical illness, for care of a sick family member, for an absence related to domestic violence or sexual assault, or for emergency-related workplace or school closures. Employers with six or more employees must provide paid leave, otherwise the leave is unpaid.

Challenge and appeals. In the same year that the ordinance was passed, the Minnesota Chamber of Commerce sued the city seeking a declaratory judgment that the ordinance was invalid and injunctive relief. Its primary argument was that the ordinance was preempted by state law, but ultimately was expanded to include an argument regarding the ordinance’s extraterritorial effect. After a ruling on the request for a temporary injunction, both parties appealed, but the ruling was affirmed. The parties returned to the trial court and filed cross-motions for summary judgment. The trial court granted the City’s motion with regard to the preemption claim, but also granted the Chamber’s motion on the extraterritoriality claim, thus upholding its validity as applied to employers within the city, but enjoining the city from enforcing it against employers who were resident outside of the city.

Both parties appealed. The court of appeals affirmed the preemption ruling, but reversed the ruling on extraterritoriality. The Chamber petitioned the Minnesota Supreme Court for review and the petition was granted.

Not preempted. Noting that only two of the three types of state preemption were at issue, conflict and field preemption, the Minnesota high court concluded that the ordinance was not preempted under either theory. A Minnesota Supreme Court decision from 1966, Mangold Midwest Co. v. Village of Richfield, was central to the court’s analysis and conclusion. It provided the general principle applicable to conflict preemption, to whit “conflicts which would render an ordinance invalid exist only when both the ordinance and the statute contain express or implied terms that are irreconcilable with each other.” Minnesota Statutes Section 181.9413 (2018) governs employer-provided sick and safe time.

The state court was not persuaded that the state statute and ordinance conflicted. Contrary to the Chamber’s argument, there was no language in the state law expressly granting an employer the right to refuse to provide paid sick time. The ordinance imposed requirements that were stricter than the state law, but those additional requirements only furthered the policy undergirding the statute.

Paid leave. Moreover, the ordinance’s requirement of paid leave where the employer had more than six employees did not conflict with the state statute, which defined “employer” as “a person or entity that employs 21 or more employees.” Nothing in the state law forbade further regulation by local government, the court explained. Nor was it impossible to comply with both the ordinance and state law—an employer who complies with the ordinance also complies with the statute. “A rule of law that finds a conflict wherever an ordinance adds a requirement different from state law—no matter the substance of the statute or the ordinance—would preempt every local ordinance setting a standard higher than the floor set by the Legislature.”

Furthermore, under Mangold state law, as expressed in Section 181.9413, did not occupy the field of employer-provided sick and safe time such that it preempted local regulation. There was no indication of such occupation, nor was there any indication of legislative intent to preempt local action. There was also no indication that local regulation of this matter would have an unreasonably adverse effect on the population of the state at large.

No extraterritoriality. Finally, the court rejected the challenge to the ordinance under the extraterritoriality doctrine, a doctrine it had only considered on two other occasions in over 100 years’ time. Under their instruction, the court considered whether the primary purpose and effect of the ordinance was to regulate activity within the city’s geographic limits. The findings of the city council, which were incorporated in the ordinance, indicated that the purpose was to regulate employment practices within the city limits. Likewise, the primary effect of the ordinance was to regulate activity within the city’s geographic limits.

Discounting the “extreme examples” offered by the dissenting justices as “hypothetical outliers” the court also noted that municipalities have “wide discretion” to use their police power to regulate matters of public health. And, indeed, the city council had discussed the implications on public health when sick employees report for work. The court also declined to hold that the ordinance violated the doctrine by going further than was reasonably necessary to accomplish its goal, noting that such an inquiry was not the proper focus of such a challenge.

Dissent. Dissenting, Justice Anderson, joined by Chief Justice Gildea, explained that he would have found the ordinance to violate the extraterritoriality doctrine. He offered multiple hypotheticals to illustrate the “extraordinary” reach of the ordinance and all of the difficulties it would create for employers outside of the city. He accused the majority of creating a new test and then deploying it in an “alarming” way.

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