After veto, sick leave fight lands in court

The political fight over a controversial Minneapolis ordinance that requires most employers in the city to provide paid sick leave to employees ended in May when Gov. Mark Dayton vetoed Republican-backed legislation that would have expressly barred municipalities from imposing such mandates.

But the legal fight is just heating up.

On Tuesday — just 10 days after the city’s new sick and safe leave ordinance went into effect — a Minnesota Court of Appeals panel heard oral arguments in a challenge brought by the Minnesota Chamber of Commerce, the Minnesota Recruiting and Staffing Association, the National Federation of Independent Business, the TwinWest Chamber of Commerce, Graco Inc. and Otogawa-Anschel General Contractors and Consultants.

Earlier this year, Hennepin County District Court Judge Mel Dickstein mostly denied the groups’ request for a temporary injunction to block the new rules from going into effect while the issues are litigated. The one exception: The judge limited the ordinance’s reach to businesses that are physically located in the city.

Christopher Larus, the attorney for the plaintiffs, said Dickstein got that right.

But Larus, urged the appeals court to reverse the rest of the judge’s ruling and decried the ordinance as “an unprecedented attempt by the city of Minneapolis to expand its regulatory authority.”

That latter assertion may be a bit of a stretch.

As the city noted in its brief, at least 30 municipalities across that country have enacted sick leave ordinances in recent years — a cohort that includes San Francisco, Washington, D.C., Seattle, New York City, Oakland, Tacoma, Philadelphia, Los Angeles and, just across the river from Minneapolis, St. Paul.

In Minnesota, as elsewhere, those initiatives have been greeted with resistance from the business interests, who say that a patchwork of local employment regulations will create administrative headaches.

In a challenge to the city of Pittsburgh’s new sick time ordinance, an appellate court in Pennsylvania ruled in May that the mandate, while “laudable” in intention, belonged in the purview of state legislators, not municipal leaders.

Larus echoed those sentiments on Tuesday.

At the outset of his argument, Larus acknowledged that nothing in state law explicitly forbids home rule cities like Minneapolis from regulating employer sick leave policies.

But citing a preemption test established by the Minnesota Supreme Court in a 1966 decision, Mangold Midwest v. Village of Richfield, Larus said that the Minneapolis ordinance conflicts with a state law — Minn. Stat. sec. 181.9413 — which says businesses must allow employees to use accrued sick leave to care for family members.

Judge Tracy Smith asked how that creates a conflict with the Minneapolis ordinance.

Larus’s answer: While the state law applies to businesses that voluntarily provide sick leave, the Minneapolis ordinance mandates that employers provide sick leave and, if they have more than six employees, that the sick leave be paid.

“It is possible for my clients to comply with the express language of the statutes that govern employee-mandated leave and nevertheless run afoul of the city ordinance,” said Larus.

In contrast to state law, which applies only to businesses with at least 21 employees, the Minneapolis ordinance is far more sweeping in reach, applying to virtually every business in the city.

Minneapolis City Attorney Susan Segal said it is the chamber and fellow plaintiffs who are overreaching.

“If you follow appellants’ argument to its logical conclusion, municipalities would need an express grant of permission from the state Legislature in order to enact any ordinances,” Segal said.

She was equally dismissive of the notion that the city should be barred from enacting rules on employee leave on grounds of field preemption, which applies when the Legislature has “fully covered the field” of the subject matter or in cases where the local regulation has unreasonably adverse effects on the general populace.

Segal said the employee leave laws covered by Chapter 181 are “scattershot.”

“This is in no way a comprehensive scheme that shows the intent of the Legislature to preempt local legislation,” she said.

Segal urged the court to overturn Dickstein’s decision to temporarily block the application of the ordinance to companies not physically located within the city. Under the ordinance, businesses not located in Minneapolis would nonetheless be required to provide sick leave benefits to any employees who work in the city for at least 80 hours per year.

She said the judge should have focused on the locale of the employee, not the employer.

Following the arguments, Cam Winton, the director of energy and labor policy at the Minnesota Chamber of Commerce, said he is “cautiously optimistic” that the court will strike down the ordinance — or, at a minimum, grant a temporary injunction until the issues can be more fully litigated.

Although the Court of Appeals is expected to issue a decision within 90 days, Winton, who is an attorney, expects that the losing party will seek further review from the Minnesota Supreme Court.

The fight over Minneapolis sick leave ordinance could well presage a challenge to the city’s recently implemented minimum wage.

Winton said the two ordinances raise the same basic legal issues on the questions of preemption.

Asked whether the Chamber intends to sue over the minimum wage ordinance, Winton said that remains an open question.

“From a policy lens, they are both well-intentioned but terrible policies,” he opined.