The Minnesota Court of Appeals has ruled that the City of Minneapolis may enforce sick and safe leave requirements against employers located outside of Minneapolis that have employees working within city limits. The key decision on April 29, 2019, upheld Minneapolis’ Sick and Safe Leave Ordinance (Ordinance), which will remain in effect.

History of the Ordinance

The City of Minneapolis enacted the Ordinance on May 31, 2016, with an effective date of July 1, 2017. The original Ordinance defined “employer” as a person or entity that employs one or more employees, which would broadly include employers located outside of the City of Minneapolis.

In October 2016, a collection of business associations and individual employers challenged the Minneapolis Ordinance on the grounds it is preempted by Minnesota state law and sought a temporary injunction to prohibit the City from enforcing the Ordinance. On January 19, 2017, a Hennepin County District Court judge partially granted the plaintiffs’ motion and issued a temporary injunction prohibiting the City from enforcing the Ordinance against any employer located outside the city’s geographic boundaries. After the case was litigated, the District Court held the Ordinance was not preempted under state law, but affirmed that the City could not enforce Ordinance against employers located outside the city boundaries. The Court permanently enjoined Minneapolis’ enforcement of the Ordinance against those employers. The parties then appealed the District Court’s decision.

While the case was pending in 2018, the City of Minneapolis amended the Ordinance such that employees were only entitled to accrue and use sick-and-safe leave under the Ordinance for hours an employee works or is scheduled to work within the City of Minneapolis.

Court of Appeals Decision

The Court of Appeals affirmed the District Court’s determination that state law does not preempt the Ordinance, and reversed in part the District Court’s determination that the Ordinance operates exterritorialy, while lifting the injunction issued by the District Court.

Although Minnesota has a state statute addressing sick leave, the Court of Appeals held that the state law does not preempt the Ordinance because the Ordinance does not directly conflict with the state law and does not regulate a matter solely of state concern. The state law outlines when employees are entitled to use sick leave, to the extent an employer provides it. However, the Court of Appeals found that the Ordinance does not change or conflict with the requirements of state law. Rather, the Court asserted that the Ordinance merely adds more specific requirements for how sick-and-safe leave must be provided. The Court further held that the landscape of Minnesota state leave laws does not create a comprehensive scheme sufficient to determine that paid leave by employers is a matter solely of state concern.

The Court of Appeals also held that the Ordinance does not have an improper extraterritorial impact because the Ordinance was amended to apply only to employees only when working within the geographic boundaries of Minneapolis. In relying on other similar cases, the Court of Appeals held that the City of Minneapolis had a substantial interest in enforcing laws that have an impact within the city, even if in doing so the City reaches outside of the geographic boundaries of Minneapolis.

Next Steps

Based on the Court of Appeals decision and barring any further appeals or a stay of this decision, employers with employees working at least 80 hours per year within the City of Minneapolis, and particularly those employers not located within the city limits, should (1) ensure those employees are accruing and are entitled to use sick-and-safe time as required by the Ordinance and (2) review and revise policies, procedures and agreements which address paid time off to comply with the Ordinance.