Minneapolis Paid Sick Leave Rules Apply to Non-Minneapolis Employers
On April 29, 2019, the Minnesota Court of Appeals ruled that employers must comply with the Minneapolis Sick and Safe Time Ordinance, even if the employer is not physically based in Minneapolis. The decision vacated a permanent injunction issued by the Hennepin County District Court in May 2018.
The City of Minneapolis enacted the ordinance in May 2016. Details about the substance of the ordinance can be found here, but at a high level, the ordinance requires covered employers to allow employees to accrue one hour of time for every 30 hours worked, which can be used for sick and/or safety leave. As originally drafted, the ordinance defined a covered "employee" very broadly, including anyone who performed work within the City of Minneapolis for at least 80 hours in a given year.
In October 2016, the Minnesota Chamber of Commerce sued for a temporary injunction preventing the city from enforcing the ordinance on grounds that the ordinance was preempted by state law and that the ordinance impermissibly imposed obligations on employers who were not located within the city. The Hennepin County District Court issued a temporary injunction, and after appeals from both sides, the Court of Appeals upheld the temporary injunction due to the extraterritorial reach of the ordinance in November 2017.
In 2018, the city amended the ordinance to say that sick and safe time only accrue for hours in which an employee works within the city, and sick and safe time can only be used when an employee is scheduled to perform work within the city. The chamber argued that even with this change, the ordinance was still preempted by state law and still had an extraterritorial reach because it would impose significant burdens on employers who are not located in the city but may have employees who work there, even irregularly. The Hennepin County District Court found that the ordinance was not preempted by state law, but agreed that the ordinance, even as amended, had an impermissible extraterritorial reach and issued a permanent injunction barring the city from enforcing the ordinance against employers located outside the city.
In the April 29 decision, the Minnesota Court of Appeals found that the ordinance was both not preempted by state law and did not have an impermissible extraterritorial effect, making the ordinance once again enforceable against employers located outside Minneapolis. The Court of Appeals reasoned that, with the 2018 amendments, the ordinance had no impermissible extra-jurisdictional effects "[b]ecause leave accrues under the ordinance only while an employee works in the city, and an employer must permit use of accrued benefits only on scheduled work days in the city . . . . We are not persuaded that requiring employers to track the hours its employees work in Minneapolis significantly increases its record-keeping burden."
What Does This Mean?
The chamber could appeal the decision to the Minnesota Supreme Court to try to get the injunction reinstated. In the meantime, however, the Court of Appeals' decision effectively reinstates paid sick and safe leave requirements for all employers who have employees working in Minneapolis—even if the employer's physical location is not in Minneapolis. Previously, employers whose places of business were outside city limits could rely on the permanent injunction to not provide paid sick and safe time for employees, even if those employees did periodically perform work in Minneapolis. Non-Minneapolis employers who are not currently tracking hours worked by their employees within the city should immediately begin doing so to ensure that paid sick and safe time is properly provided and that other requirements of the ordinance (such as record-keeping) are being met.