Settling years of contentious litigation that followed Minneapolis’ adoption of a sick and safe time ordinance, the Minnesota Supreme Court ruled in June 2020 that the city’s ordinance (i) was not preempted by state law, and (ii) did not violate the extraterritoriality doctrine. The decision means that not only are Minneapolis-based employers responsible for tracking hours worked for employees in Minneapolis, but employers with headquarters located outside of the city are as well.
The case of Minneapolis Chamber of Commerce, et al. vs. City of Minneapolis originated with a 2016 ordinance passed by the Minneapolis City Council. The Minneapolis Sick and Safe Time Ordinance (the “Ordinance“) requires employers to provide sick and safe time to employees who work within the city.
The sick and safe time requirement is limited to employees who work at least 80 hours in a year in the city. Whether or not the sick and safe time leave is paid depends on the employer’s number of employees.
The case arrived on the steps of the Minnesota Supreme Court after the Minnesota Court of Appeals upheld a lower court decision that the Ordinance was not preempted by state law, and further, did not violate the doctrine of extraterritoriality.
“Preemption” is a legal doctrine that the law of one level of government preempts, or takes precedence over, the law of another level of government. Plaintiff Minneapolis Chamber of Commerce (the “Chamber”) argued that various existing State of Minnesota statutes in the employment law area already “occupied the space” that the Ordinance sought to regulate. The Minnesota Supreme Court rejected the Chamber’s arguments for two reasons.
First, the court found there was no irreconcilable conflict between the Ordinance and state law that enumerated how sick time benefits could be used by employees if an employer provided such benefits. Stated differently, the state statutes cited by the Chamber did not expressly permit what the Ordinance forbid.
Second, the court concluded that Minnesota state law did not occupy the field of employer-provided safe time. The court applied a field preemption test to determine whether Minnesota’s legislature had impliedly preempted the Ordinance. That test considered:
- What is the ‘subject matter’ which is to be regulated?
- Has the subject matter been so fully covered by Minnesota law as to have become solely a matter of state concern?
- Has the legislature in partially regulating the subject matter indicated that it is a matter solely of state concern?
- Is the subject matter itself of such a nature that local regulation would have unreasonably adverse effects upon the general populace of the state?
Mangold Midwest Co. v. Village of Richfield, 143 N.W.2d 813, 820 (Minn. 1966).
In sum, the court found that (i) the subject matter regulated was employer-provided sick and safe time (rejecting the Chamber’s effort to expand the subject matter); (ii) the subject matter was not so fully regulated by state laws as to make it a matter of only state concern; (iii) nothing in the statute showed that the legislature’s partial regulation of employer-provided sick and safe time leave was an area of only state concern; and (iv) the Ordinance would not have an unreasonably adverse effect on the general population of the state.
After reaffirming the lower courts’ finding of no preemption, the court turned to the question of whether the city, in adopting the ordinance, had impermissibly extended its jurisdiction to employers whose principal place of business was outside of the Minneapolis city limits.
The existing case law in Minnesota was sparse: Only two cases, both over 100 years old, had addressed the extraterritoriality doctrine.
The first case, an 1896 matter involving the city of Minneapolis seeking to regulate any party wishing to sell milk in the city, upheld a local ordinance as it applied to “milk of diseased cows being sold within the city.” State v. Nelson, 68 N.W. 1066, 1068 (Minn. 1896).
The second case, City of Duluth v. Orr, 132 N.W. 265 (Minn. 1911), found a violation of the extraterritoriality doctrine where the Duluth city charter prohibited the storage of explosives within one mile of the city limits without a city permit. Id.
The court concluded that the primary effect of the Ordinance is to regulate activity (employment) within the geographic limits of the city of Minneapolis, notwithstanding that in some cases an employer would be located outside the city. Because the city has regulatory power to subject all within the city to regulations, a Minneapolis office location was not required to regulate employment within the city. Additionally, the city did not need express or implied authorization from the legislature to regulate activity within its municipal limits.
Tips for Employers
Employers both within and outside the municipal limits of Minneapolis with employees in the city must comply with the Ordinance. For those who do not have a sick and safe time programs, you must take steps to ensure compliance with the Ordinance. The director of the Minneapolis Department of Civil Rights has authority to investigate violations of the Ordinance. Being proactive is nearly always a better way of addressing regulations than fixing a violation after the fact.
All employers should bear in mind that even if an employer already offers sick and safe time (even generously), there are posting, employee handbook notices, and employee record requirements that are part of the Ordinance. Understanding these additional Ordinance requirements is important.
If you have any questions about doing business in the city of Minneapolis, the Twin Cities area, or elsewhere in Minnesota, please contact the business and employment law attorneys at Trepanier MacGillis Battina P.A.
About the Author:
Minnesota business and employment law attorney James C. MacGillis advises clients on business and employment issues in the Twin Cities, Minnesota and beyond. Jim may be reached at 612.455.0503 or by e-mail at firstname.lastname@example.org. Trepanier MacGillis Battina P.A. is a Minnesota business and employment law firm located in Minneapolis, Minnesota.