Ruling: Minneapolis cannot enforce sick leave rules for employers outside city

A Hennepin County district judge this week upheld the Minneapolis sick leave ordinance but ruled that it cannot be enforced against employers based outside city limits.

The ordinance, passed by the City Council in 2016, requires that companies track employees who work in the city and allow them to accrue sick leave if they meet a threshold of 80 hours of work per year — 90 minutes per week — in Minneapolis.

The Minnesota Chamber of Commerce, the state's largest business association, sued the city in October 2016, aiming to halt the ordinance that was a signature accomplishment for former Mayor Betsy Hodges and the last term's City Council.

Judge Mel I. Dickstein ruled that the benefit of the rule for employees based outside the city — a little over two hours of sick leave per year for a non-Minneapolis worker who meets the 80-hour minimum — "pales when weighed against the imposition of record keeping and administrative obligations incurred by companies located outside the city."

The ordinance "casts its net too far," Dickstein wrote, barring the city from enforcing it against any company or other employer based outside Minneapolis.

City Attorney Susan Segal said she plans to appeal that part of the ruling.

"We're pleased that the district court once again recognized the city's authority to enact this ordinance," Segal said. "We believe that the focus of the ordinance is on work performed within the city of Minneapolis and it was well within our authority to pass and enforce. We respectfully and strongly disagree with the court's decision in that regard."

The city has no estimate of the number of workers in Minneapolis whose employers are based outside of the city. In a court filing, Segal's office said that of 2,000 janitors who are members of the Service Employees International Union and work in downtown buildings, 1,700 are employed by companies based outside the city. They would be exempt from the sick leave ordinance under Dickstein's ruling.

Dickstein upheld the ordinance for employers based within city limits, rejecting a claim from the chamber that local labor rules are pre-empted by state law.

"The state legislature has not evinced an intention to occupy the field of employer-provided sick and safe leave," Dickstein wrote. "In addition, the ordinance does not create an irreconcilable conflict with any state law."

Christopher Larus, a partner with Robins Kaplan LLP and lawyer for the chamber and the other plaintiffs in the sick leave case, including Graco Inc., said he is disappointed that Dickstein upheld the ordinance, but was pleased that he recognized its "clear government overreach."

"I view this as an important victory for employers located outside the city of Minneapolis across the state and across the country," Larus said.

Larus said he does not know yet whether the chamber will appeal the part of the ruling that upholds the ordinance.

Courtney Blanchard, a lawyer at Nilan Johnson Lewis who advises multistate clients on local wage and hour issues, said cities handle "extraterritoriality" in their sick leave ordinances in different ways. In Seattle, for instance, workers employed by companies based outside the city must work a minimum of 240 hours before they can accrue city-mandated sick leave.

Even if Minneapolis is unsuccessful in its appeal, the City Council could rework the ordinance, Blanchard said.

"The city may try to revise the ordinance and find a way to apply it to those employees in a way that passes muster with the judge's ruling," she said. "So we may not see an end to this issue."

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