Court delivers mixed ruling on Minnesota Chamber lawsuit challenging Minneapolis paid leave mandate

Court delivers mixed ruling on Minnesota Chamber lawsuit challenging Minneapolis paid leave mandate

The Minnesota Chamber will appeal the ruling to the Minnesota Supreme Court. Doug Loon, Minnesota Chamber president, expressed a mixed reaction.

“We’re pleased that the court prevented Minneapolis from imposing its ordinance on businesses that don’t even have any physical presence in the city,” he said. “At the same time, we’re disappointed that the Court of Appeals allowed the underlying Minneapolis ordinance to stand. We respectfully believe that the court misapplied the law regarding the city’s authority.

“Minnesota law prohibits cities from enacting ordinances that conflict with existing state law and that tread on topics already covered by the State Legislature – but that’s exactly what Minneapolis has done with its paid leave mandate. The Minneapolis ordinance creates an unworkable patchwork of laws that’s harmful to employees and employers alike.”

Minneapolis passed its ordinance in May, 2016 to take effect July 1, 2017. The Minnesota Chamber brought its lawsuit in October 2016. Today’s ruling from the Court of Appeals affirmed the Hennepin County District Court’s decision from January 2017.

The ordinance is the first time that a Minnesota city has intruded into the private employer-employee relationship by mandating terms of employment beyond those required by state law. The ordinance requires companies with six or more employees to provide paid sick and safe time to all employees who work within the city limits at least 80 hours within a year. Under the text of the ordinance, companies must comply with the ordinance even if they do not have a location in the city.

In addition to noting the legal flaws in the ordinance, Loon said the ordinance is particularly troublesome in a variety of practical ways:

  • Its one-size-fits-all mandate stifles the flexibility and creativity of businesses to best meet the needs of employers and employee alike.
  • The ordinance imposes significant administrative burdens on companies by requiring them to track exactly how many hours their employees work within the city limits and to pay lawyers to interpret the ordinance.
  • The ordinance extends far beyond the boundaries of Minneapolis. Companies who deliver goods and services into Minneapolis, have employees who telecommute from Minneapolis, or otherwise have employees who attend meetings and events in Minneapolis, will find themselves subject to the ordinance – perhaps unwittingly.

Joining the Minnesota Chamber as co-plaintiffs were Graco Inc., the Minnesota Recruiting and Staffing Association, Otogawa-Anschel General Contractors and Consultants LLC, the National Federation of Independent Business, and the TwinWest Chamber of Commerce. The wide range of plaintiffs demonstrates just how broadly the negative impacts of the ordinance fall, Loon noted.

The lawsuit parallels the Minnesota Chamber’s efforts at the Legislature to strive for uniform state labor standards and to make explicit the fact that state law preempts municipal regulation of wages and benefits. The House and Senate passed an explicit preemption measure this year, but Gov. Mark Dayton vetoed the bill. The issue will be back on the Minnesota Chamber’s legislative agenda for 2018.

“We need consistent, statewide workplace regulations,” Loon said “However, mandates on everyday business operations are not appropriate coming from any level of government. Businesses across the state already are adopting paid leave policies designed to meet the particular needs of their enterprise and their employees. State and local policymakers should be encouraging this trend and not imposing a straightjacket with mandates.”