Courtroom battle begins over Minneapolis' sick leave ordinance

The legal battle over Minneapolis' paid sick leave ordinance began Thursday in a Hennepin County courtroom, with a judge pressing the city attorney over whether the requirement ensnares companies well beyond the city limits.

Judge Mel I. Dickstein did not rule on the Minnesota Chamber of Commerce's request for an injunction to halt the ordinance, but questioned the scope of the Minneapolis rules. He ordered lawyers for the city and the Chamber by Christmas to hone their arguments about the rule's effects on companies based outside Minneapolis.

The ordinance, passed in May, requires that companies with employees who spend at least 80 hours a year working in Minneapolis are subject to the law, regardless of where they are based.

In a probing series of questions directed at City Attorney Susan Segal, Dickstein asked about firms who regularly visit Minneapolis from other states and countries to do business.

"Are they subject to Minneapolis's requirement because at least an hour-and-a-half a week they come into the city of Minneapolis, and how could that be?" Dickstein asked. "And how could the reach of the Minneapolis ordinance be so far? I don't understand that."

The Minnesota Chamber of Commerce, the state's largest business association, sued the city in October, aiming to halt the ordinance that is the signature accomplishment of Mayor Betsy Hodges' first term.

The rule is now in the cross hairs for Republicans who control the Legislature and have signaled a desire to pass a law that forbids cities and counties from making local ordinances that regulate labor law, including sick leave and the minimum wage.

The case in front of Dickstein is focused on whether state law already pre-empts a municipal sick and safe leave ordinance, and whether businesses would suffer irreparable harm if the judge does not halt its enforcement well before it goes into effect July 2017.

But Dickstein was interested in the reach of the law beyond Minneapolis, and told the lawyers he wanted briefs on the subject from each of them — no longer than 10 pages — in the next two weeks.

Segal told Dickstein concerns about out-of-state companies having to follow the law based on one or two employees are premature, since the city's Civil Rights Department has not yet issued its rules for enforcing the ordinance.

"I have every confidence that they will be reasonable rules and they will be focusing on employers whose employees have a significant enough nexus with the city of Minneapolis in order to make it enforceable," Segal said.

But Dickstein persisted, pointing out that the ordinance is clear in its threshold of 80 hours per year, or about 1.5 hours per week, and that the rule affects any company that has an employee who meets that threshold.

"That's where the City Council chose to draw that line," Segal replied.

"Well, that's the question, whether it was done so properly," Dickstein said.

The Minnesota Chamber and the lawsuit's other plaintiffs — Graco Inc., the National Federation of Independent Businesses, the TwinWest Chamber of Commerce and Otogawa-Anschel General Contractors & Consultants — argue it was not done properly, since there is already a state law regulating sick leave.

Christopher Larus, partner at Robins Kaplan LLP and the Chamber's lawyer, argued Thursday that several cases in Minnesota demonstrate state law pre-empts a municipal ordinance on sick leave. "This is an incredible expansion of municipal authority that flies in the face of a sense that this is a matter of unique local concern," Larus said.

Segal argued that all the rules about leave in the state law were "ad hoc provisions added at different times by different legislatures," and don't constitute a body of law that "inhabits the field" of sick leave and thus pre-empts local ordinances.

"Why does the legislature feel that's necessary if they've already occupied the field?" Segal asked.

Dickstein said he will work through both sides' arguments over the holidays, and admitted that the pre-emption question is difficult.

"In a way, beauty is in the eye of the beholder here," he said, looking at Larus. "You see this as comprehensive, the city sees it as scattershot, ad hoc, coming in response to individual issues as they arise over a lengthy period of time, and I'll have to wrestle with that."

Adam Belz • 612-673-4405 Twitter: @adambelz