On one level, last week’s court order by Hennepin County District Court Judge Mel Dickstein was a victory for the City of Minneapolis.
Dickstein rejected the argument made by lawyers for the Minnesota Chamber of Commerce and other business interests that the city lacked the authority to require private employers to provide paid sick leave. Dickstein found that the city’s ordinance was not preempted by state law nor in conflict with it.
That is a significant finding. While there is no specific law in Minnesota that gives exclusive power to the Legislature when it comes to issues such as employee benefits, business groups have pointed to a series of previous state court rulings that could have been used by Dickstein to find an implied preemption.
Still, another part of the order should temper any celebration on the city’s part. Dickstein seemed unconvinced that cities in Minnesota can enforce requirements such as paid leave on employers who are not physically located in the city, even if their workers perform some or all of their duties there.
Christopher Larus, the lead attorney for the plaintiffs, said he was disappointed that the judge did not decide that the entire ordinance should be blocked. But Larus added that “we’re pleased that he recognized that the ordinance, as written, would have a substantial impact on employers outside of the city of Minneapolis.”
On Thursday, Larus filed an appeal of Dickstein’s decision not to enjoin the entire ordinance. Such an appeal will run concurrently with ongoing proceedings before Dickstein, which are still seeking to answer questions about what his ruling means, including how the phrase “companies resident within its borders” should be interpreted. That is, which employers are in and which are out?
A split decision?
Dickstein’s first finding is no small victory for the city, which had initially wondered whether it could do what the council ended up doing. “We’ve won,” said Minneapolis City Attorney Susan Segal. “This is just a question of how broadly we can exercise our jurisdiction. The ordinance is clearly enforceable and has a broad scope of enforcement and is in line for what the city always intended for rational enforcement activity.”
On the matter of preemption, Dickstein wrote that the chamber and the other plaintiffs “fail to direct the Court to any state law that expressly authorizes employers to structure their sick leave policies as they deem fit, or conversely, to any state law that specifically limits municipal regulation of sick leave. To the contrary, to the extent that Minnesota law specifically addresses employer provided sick and safe leave, the Minneapolis ordinance is compatible, not irreconcilable, with state law.”
But on the issue of enforcement, Dickstein was not as accepting of the city’s position. “In evaluating the merits of this issue, the Court concludes that the Ordinance runs afoul of the City’s territorial reach,” he wrote.
Three cases were cited that involved enforcement of a city law outside the city. In one, the state Court of Appeals found the Plymouth’s anti-harassment ordinance applied when a letter was sent to a resident from someone outside the city limits. In another, the state Supreme Court said it was okay for Minneapolis to inspect dairies outside the city to ensure the safety of milk sold within the city. In a third, the Supreme Court said Duluth could regulate the storage of gunpowder within the city but not within one mile outside of the city.
Finding that the sick leave ordinance was unlike the anti-harassment and milk safety law and more like the gunpowder law, Dickstein wrote: “The Ordinance does not create a sufficient nexus between its reach beyond the City’s borders and the harm it is intending to prevent — employees who, for lack of available leave time feel compelled to go to work within the City of Minneapolis even when ill.” And that the law “does not attempt to regulate only those companies whose employees work in Minneapolis full time, or substantially full-time, or two-thirds time, or half time, or even on a regular part-time basis.”
Dickstein’s skepticism of the city’s claim that it could legally enforce the law outside its limits — a legal claim described as “extraterritoriality” — could result in large gaps in how many workers are covered under the city’s ordinance, though no one is sure how many.
That he wants a trial on that issue still offers some chance that he could ultimately rule that the city needs to be able to protect those workers, or that he could find that the threshold for determining which workers are covered — currently those who work just 80 hours a year inside the borders — might be legal if it took more hours to qualify.
But the wording in his memorandum strongly suggests that he has not seen anything that has convinced him to allow the city to extend its enforcement beyond the city’s limits.
Larus said the number of questions still before the court show how far-reaching and unprecedented the city’s ordinance is. “It is going into entirely new regulatory territory,” he said. “One of the points we made at the hearing is prior to Minneapolis passing this ordinance, municipalities had not been involved in regulating employee-employer relationships.”
Who’s in? Who’s out?
City officials may well have to confront a final decision that is less than a complete victory — that they are free to require paid leave for some employees in the city but not all, based on where the business is physically located. For example, a company that supplied janitors or home care workers to locations in the city but has offices outside the city might not have to provide the benefit.
Minneapolis Council Vice President Elizabeth Glidden, one of the council leaders on the issue, said she doesn’t want to predict where Dickstein might end up on the issue. As a onetime employment lawyer, Glidden said the city will respond to the judge’s request to hold further hearings on the issue and assume he is open to a broader interpretation of the law. “Clearly he feels there are unanswered questions, he has asked for more information and we’ll see what happens after he gets that information,” she said.
Yet Glidden said she thinks Minneapolis would still have a substantive ordinance even if Dickstein says the city can’t enforce it against businesses that aren’t located in the city. “We passed what we thought was the best and the most fair policy,” she said. “I still think if something is removed we would still have a good policy. But I think it is more fair if it covers employers whose workers work within the city of Minneapolis.”
St. Paul is also watching the case closely. Shortly after the Minneapolis’ adoption, it passed its own very similar leave law, and Council President Russ Stark said he thinks the city would still have an ordinance regardless of Dickstein’s decision on the extraterritoriality issue. “I think there’s still meat on an ordinance regardless of that aspect, but I think there’s still some clarifying and defining that will have to happen,” Stark said.
One example is how a business qualifies as being location in the city. Would it be the business’ headquarters or just a physical presence or address? If it is the latter, “it would be around the margins as to who would be covered and who would not,” Stark said. “A big proportion of the folks who don’t have the benefit work in the service economy.” And most of them work for businesses that are located in the city, Stark said, and would still get the paid leave benefit.
Ron Harris spent much of last winter serving on the Minneapolis Workplace Partnership Group, which crafted much of the city’s ordinance after holding a series of listening sessions and looking at similar ordinances in other cities. Harris said the 80-hour rule was adopted from other cities that have mandatory leave laws and was meant to exempt workers who spend relatively little time in the city. Their employers would not have to gather the payroll and hours worked or be susceptible to city enforcement.
That issue was not debated at great length, he recalls. He also agrees with Glidden and Stark that most workers intended to be covered would remain covered, though he added another group of workers whose status would be in question — those who work at ballparks and stadium for vending companies located elsewhere.
“But the biggest hurdle is out the way,” said Harris, who is now a council aide to Lisa Bender. “It’s legal. We’re not preempted. People will be covered. It’s still worthwhile.
“The question becomes, how many people will slip through the cracks with this 80-hour threshold piece,” Harris said.