The Minnesota Supreme Court has affirmed decisions by two lower courts that a minimum wage ordinance passed by City of Minneapolis on January 1, 2018, Minneapolis Code of Ordinances (“MCO”) Section 40.390 (2019), was not preempted by the Minnesota Fair Labor Standards Act (“MFLSA”), Minn. Stat. Section 177.24, which also sets a minimum wage for employers in the state. The legal challenge was filed by Graco, Inc., a manufacturer based in Minneapolis.
After a trial, the district court determined that the MFLSA did not preempt the city ordinance because the MFLSA sets a floor, not a ceiling. The Minnesota Court of Appeals agreed and the Supreme Court then took the matter under review.
Graco, Inc. v. City of Minneapolis
In Graco, Inc. v. City of Minneapolis, No A18-0593 (Minn. Jan. 22, 2020), the Minnesota Supreme Court once again affirmed, holding that the ordinance was not preempted. The Court noted that there are three types of state preemption of municipal legislative authority: express preemption, conflict preemption, and field preemption. Graco argued only the second two types of preemption.
The Court’s reasoning that the state law and city ordinance were not inconsistent was based in part by the language of the MFLSA which provides that employers must pay “at least” the minimum hourly rate provided by the statute, which the court said clearly contemplated the possibility of higher hourly rates. The fact that the city and the state had different ways of defining “large” and “small” employers did not dissuade the court from its conclusion. The Court also held that the Minnesota Legislature had not clearly indicated its intent to “occupy the field” of wage and hour regulation.
The Big Picture
Local ordinances by cities and counties regulating employment law topics like minimum wage, paid sick leave, fair scheduling, background checks, as well as other topics like the use of plastic bags or the minimum age to purchase tobacco have have become a significant trend across the county in recent years. Employers in these cities complain such regulation is burdensome and may actually lead to fewer jobs as businesses move out of the cities. Minnesota is no exception as Minneapolis has enacted regulations regarding paid sick leave and wage theft notification requirements in addition to minimum wage. The state’s other largest cities like St. Paul and Duluth have also passed or are considering similar ordinances. The trend seems unabated, although some states have passed laws prohibiting city regulation in certain areas. The Supreme Court in Graco recognized that possibility in Minnesota when it noted that “if the Legislature determines that municipal regulation is creating economic confusion, the problem can be corrected by a clear expression of the legislative will.” Business interests are already preparing to push for legislation barring municipal employment ordinances in the 2020 session of the Minnesota legislature. The battle in the courts, however, appears to be over, at least for minimum wage.
Minneapolis Minimum Wage and Minnesota Minimum Wage
As of this posting, the minimum wage for large employers in Minneapolis is $12.25 per hour and for small employers (defined as fewer than 100 employees) it is $11 per hour. NOTE: These rates increase to $13.25 and $11.75 respectively effective July 1, 2020. The state minimum wage effective January 1, 2020 for large employers in Minneapolis is $10 per hour and for small employers (defined as having less than $500,000 in annual gross revenue) it is $8.15 per hour. The federal minimum wage is $7.25 per hour.
If you have questions about how to comply with local, state, or federal employment law, contact the employment law attorneys at Trepanier MacGillis Battina P.A.
V. John Ella is a Minnesota employment law attorney. He has written about municipal employment ordinances for the Wall Street Journal and the Star Tribune. He also has experience challenging local ordinances in court on the basis of preemption. He can be reached at 612.455.6237 or at firstname.lastname@example.org.