On April 29, 2019, the Minnesota Court of Appeals overturned a state district court ruling and found that the Minneapolis Sick and Safe Time Ordinance (SST Ordinance) applies to employers outside the City limits. Previously, an injunction prohibited Minneapolis from enforcing the SST Ordinance against employers that did not have facilities within the City. Unless this decision is appealed to the Minnesota Supreme Court within 30 days—which is likely—the injunction will be dissolved and all employers will have to provide protected sick and safe time to employees who work at least 80 hours a year in the City, regardless of where the employer has facilities.

The Court of Appeals also upheld the lower court ruling that held the SST Ordinance was not preempted by state law. This is the second recent appeals court decision to hold that a local ordinance was not preempted by state law.

History of the SST Ordinance and the Litigation

In May 2016, Minneapolis enacted the first sick and safe time ordinance in Minnesota. It defines employee as “any individual employed by an employer . . . who perform[s] work within the geographic boundaries of the City for at least eighty (80) hours in a year.”1 The SST Ordinance provides for protected sick and safe time (SST) for covered employees, requires employers to track the accrual and use of leave time, and, for employers of six or more employees, mandates that SST be paid.

The Minnesota Chamber of Commerce brought a lawsuit seeking a court declaration that the SST Ordinance is preempted by state law and that it impermissibly operates outside “the geographic borders of the City” (the “extraterritorial mandate”). The district court found against the Chamber on the preemption argument but issued an injunction on the extraterritorial mandate, prohibiting enforcement of the SST Ordinance “against any employer resident outside the geographic boundaries of the City.” The Court of Appeals upheld the injunction in November 2017 and the City amended the SST Ordinance to clarify that SST only accrues when the employee works “within the geographic boundaries of the City” and may only be used “when the employee is scheduled to perform work within the geographic boundaries of the City.”2 The district court found that the amended language did not cure the extraterritorial problem, and the City appealed.

The Court’s Analysis

The Court of Appeals first addressed the Chamber’s argument that the SST Ordinance was expressly or impliedly preempted by state law. The court found that no Minnesota statute expressly addressed the paid sick leave issue. For example, per the court, a state “kin care” law that requires employers to allow employees to use their personal sick leave benefits when various family members are ill, injured, or a victim of sexual assault, domestic abuse, or stalking “is silent as to whether such leave must be paid, or even provided to employees in the first place.”3

The court next turned to the question of the extraterritorial mandate. Relying on the fact that the SST Ordinance only applies when an employee performs work within the geographic boundaries of the City, the court held that the SST Ordinance does not have an extraterritorial effect. It found requiring employers to provide leave to workers they place in the City furthers the City’s legitimate interests.4 It also held that because the SST Ordinance only applies on work days in the City, there was no impermissible extraterritorial operation.

Finally, the Chamber challenged the 80-hour threshold for application of the SST Ordinance as not reasonably related to the City’s expressed desire to preserve the health of workers. The court held that it could not examine the City’s legislative policy determination for the enactment in its analysis.

Judge Connolly’s four-page concurrence provided additional insight. He agreed with the result but wrote separately to express his “concern that the ordinance’s 80-hour threshold is not reasonably related to its purpose.” He explained that an employee who works the two-week minimum threshold in Minneapolis would accrue a mere three hours of leave, and there was no evidence this small benefit would prohibit an employee from working in Minneapolis while sick. He cited testimony from the city clerk who could not explain any rationale behind the 80-hour threshold, and he noted the 80-hour threshold was significantly lower than that imposed by other cities with similar ordinances. Judge Connolly also claims the SST Ordinance imposes extremely burdensome tracking, posting, and record-keeping requirements on employers.

This concurrence appears to be a direct appeal to the Minnesota Supreme Court to review the SST Ordinance and clarify the state of the law as to what extent the courts can consider the policy determination and purpose behind an ordinance when determining the validity of the extraterritorial mandate.

Takeaways for Employers

For now, the injunction limiting the SST Ordinance to employers that have facilities in Minneapolis remains in place. But it could be dissolved in as little as 30 days. If that happens, or if the Minnesota Supreme Court accepts the appeal and agrees that the SST Ordinance applies to employers that have employees but no facilities in the City, such employers will need to quickly come into compliance.5 Some employers may favor a “wait and see” approach instead of expending time and resources developing policies and procedures for a law that may never apply to them. If such an approach is adopted, however, it would be prudent to set recurring check-in dates to ensure that, should the law go forward, sufficient time exists to consult with counsel, weigh policy options, and roll out an appropriate leave program.

Employers should also be aware of bills currently under consideration in the state legislature that would expressly preempt local employment ordinances such as the minimum wage and SST Ordinances. While it does not appear these bills will gain enough traction to pass in this session, they remain a strong potential tool to address the patchwork nature of these local mandate. Littler will continue to provide insights into local and state sick SST leave developments in this fast-evolving area.