Paid leave ruling gives Minneapolis a win — and raises a lot of questions

MinnPost photo by Peter Callaghan
After passage of the sick leave ordinance last May, members of the Minneapolis City Council and the Workplace Partnership Group posed for a photo.

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.”

Judge Mel Dickstein

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.

Ron Harris, Jim Rowader
MinnPost photo by Peter Callaghan
Ron Harris, left, with group vice chair Jim Rowader, spent much of last winter serving on the Minneapolis Workplace Partnership Group, which crafted much of the city’s ordinance.

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.

Comments (9)

  1. Submitted by Kenneth Kjer on 01/27/2017 - 12:08 pm.

    Paid leave

    Most large employers have some sort of paid leave, but I wonder if this will be the start of many small businesses leaving Minneapolis. There are many small businesses that operate on a small margin and can’t afford this, also how do startups fund this with limited cash. It all sounds good on paper and I am sure most workers will love it. But, and there is a big but, will it drive business out of Minneapolis?

  2. Submitted by Joel Stegner on 01/27/2017 - 12:46 pm.

    Paid sick leave

    Obviously, those who work closely with customers, such as healthcare and food service employees, should not be exposing their patients and customers to communicable disease. And beyond that, forcing employees to work sick creates an unsafe work environment for other employees and their families. While most healthcare companies likely understand this, it is not apparent that owners of food establishments do.

    Let’s say there is suburban ownership of a Minneapolis retail fast food restaurant that is unwilling to establish paid sick leave. If this is established, pull their operating license in much the same way as would happen if a liquor store intentionally sold alcohol to minors. If owners are so misguided to ignore a very reasonable expectation, use the hammer to bring them around.

    Do people really want to patronize and work at places that makes people sick to boost profits?

  3. Submitted by Michael Hess on 01/27/2017 - 12:53 pm.

    Confusing Comments from City Attorney Segal

    the comments by the City Attorney in this article and others seem at odds with the law that was written and passed.

    For example, the law says any employee who works within the city boundaries for 80 hours over the course of a year is covered. That’s about an hour and half a week. So a delivery driver based in the suburbs who delivers into Minneapolis once or twice a week out of their 40 hour workweek could easily trip that threshold.

    The judge has ruled this worker would not be covered. The law was written that they would be covered, and the attorney is quoted as saying “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”.

    What does Rational enforcement mean? Is this an admission by the city attorney that they recognize the ordinance as passed was unnecessarily broad so they didn’t plan to enforce the whole thing? There are a series of other quotes in the Star Tribune from the court proceedings which cite a similar discrepancy between the law as written, and the cities suggestions about how the attorney may enforce it – appearing to agree with the judge that 1.5 hours week wasn’t a sufficient nexus for enforcement but also acknowledging the City Council drew the line there.

    Regardless of if you are in favor of or opposed to this ordinance, the disconnect between how it was written and the narrative on what the city claims they planned to do on enforcement don’t match and that’s a problem.

  4. Submitted by Kim Couch on 01/28/2017 - 12:21 pm.

    80 hours worked in a year!

    Having just spent 25 years in finance management for various non-profits in Minneapolis, this
    proposed ordinance would have been a nightmare for the payroll and human resources people.
    I am all for better benefits and higher pay for employees ……… but this is crazy. I think an
    employee should have to work 20 hours a week to accrue benefits….not the 1.5 hours per week called for in this ordinance. Get real Minneapolis City Council.

    • Submitted by Paul Udstrand on 01/30/2017 - 09:45 am.

      Get real?

      In your scenario employers would just schedule 19 or less hour work weeks to get around the requirement. Paid sick time isn’t a “nightmare”, it’s a reality many employers already provide.

  5. Submitted by joe smith on 01/28/2017 - 12:47 pm.

    Please read George McGovern’s book he wrote

    after he became a business owner of a small hotel. He was a senator from S. Dakota who never had a private sector job until he bought his hotel in late 1980’s. McGovern was in academia and an elected official only, prior to leaving public service. To make a long story short he said most of the rules and regulations he backed caused his business to fail once he was out in the real world.

    The reason I bring this up is new business laws are being introduced by politicians (to gin up support) and argued by lawyers and judges… Sounds a lot like George McGovern passing laws/regulations that end up hurting businesses.

  6. Submitted by howard miller on 01/29/2017 - 01:33 pm.

    Karma

    Once upon a time industry-specific unions developed when employees felt exploited and unprotected. As the protection of unions faded (for whatever reason) employees have had to avail themselves of other means to protect themselves.

    These alternatives are often hopelessly out of proportion because like minimum wage, overtime and sick-time it’s impossible, even at city-level, to develop one-size protections that fit all. How much simpler it would have been if employers had responded to market and social pressures before the fact and waylaid the need for such actions.

    Failing that, what goes around must ultimately come around.

  7. Submitted by Connie Sullivan on 01/29/2017 - 04:31 pm.

    It always amazes me that business owners just don’t improve the lousy working conditions and benefits for their employees, rather than complain that no one can keep track of where somebody is physically located during work hours (DUH!) and provide a few paid sick hours to them in a year if they’re in Minneapolis or St. Paul for 80-plus hours.

    If all your workers accumulate paid sick days–and you pay everyone a decent wage, and don’t steal their legal wages, and don’t abuse them and their families by obscenely cruel scheduling tactics–then there’s no problem. Right?

    The problem is that there are too many business owners who don’t care a fig for their workers. And if your Human Resources Department (you’re big enough to have one, yet can’t pay good minimum wage to those at the bottom?) has people who tell you they can’t figure it out, fire them! It’s not rocket science.

  8. Submitted by Paul Udstrand on 01/30/2017 - 10:01 am.

    The ordinance reads like it does for a reason

    Many business owners in their almost instinctive reaction against higher wages or benefits will deploy any workaround they can come up with, and you have to anticipate that. If you set the hourly floor at 20 hours per week, they’ll schedule 19 or less hours of work. If you limit the requirement to businesses owned or headquartered in MPLS they move the office to Minnetonka or St. Louis Park. Or they’ll outsource to someone who’s headquartered outside the city, etc. etc.

    It’s not about working 80 hours a year, it’s about employers maneuvering to defeat the requirement.

Leave a Reply