Minn. Chamber Commerce v. City of Minneapolis, A18-0771

Citation944 N.W.2d 441
Decision Date10 June 2020
Docket NumberA18-0771
Parties MINNESOTA CHAMBER OF COMMERCE, et al., Appellants, v. CITY OF MINNEAPOLIS, Respondent.
CourtSupreme Court of Minnesota (US)
OPINION

HUDSON, Justice.

The Minneapolis Sick and Safe Time Ordinance (the Ordinance) requires employers to provide sick and safe time to employees who work within the city. This appeal asks us to decide two issues. The first issue is whether state law preempts the Ordinance. Both the district court and the court of appeals held that state law does not conflict with the Ordinance or occupy the field of employer-provided sick and safe time.

The second issue is whether the Ordinance violates the extraterritoriality doctrine. The district court enjoined the City of Minneapolis (the City) from enforcing the Ordinance against employers resident outside Minneapolis because the court concluded that the Ordinance violated the extraterritoriality doctrine. The court of appeals concluded that the primary purpose and effect of the Ordinance is to regulate activity within the geographic boundaries of Minneapolis, reversed the district court's decision that the Ordinance violated the extraterritoriality doctrine, and vacated the permanent injunction. We affirm the court of appeals on both issues.

FACTS

In May 2016, the Minneapolis City Council passed the Sick and Safe Time Ordinance, which is codified in Chapter 40 of the Minneapolis Code of Ordinances. Minneapolis, Minn., Code of Ordinances (MCO) §§ 40.10–40.310 (2019). Under the Ordinance, employees who work in the City for at least 80 hours a year accrue at least one hour of sick and safe time for every 30 hours worked in a calendar year, up to a maximum of 48 hours. MCO § 40.210. Employers must allow employees to carry over unused sick and safe time into the next year, but the total amount of accrued sick and safe time may not exceed 80 hours. Id. § 40.210(c).

Employees can use sick and safe time for their own mental or physical illness, for the care of a sick family member, for an absence due to domestic violence or sexual assault, or for workplace or school closures due to emergencies. MCO § 40.220(b). The Ordinance allows employers to require advance notice of up to seven days’ time to use accrued leave, but only if the need to use leave is foreseeable. Id. § 40.220(c). For employers with six or more employees, the leave is paid; otherwise, the employer must provide unpaid leave. Id. § 40.220(g)(h). The Ordinance defines "employee" as "any individual employed by an employer ... who perform work within the geographic boundaries of the city for at least eighty (80) hours in a year for that employer." MCO § 40.40.

Employers must post a notice of employee rights under Chapter 40 in the workplace. MCO § 40.250(b). A business owner must also keep records of the amount of sick and safe time accrued by each employee and make that information available to employees upon request. MCO § 40.270. The City's Department of Civil Rights implements and enforces the Ordinance. MCO §§ 40.40, 40.100–40.120. Employers who violate the Ordinance are subject to administrative fines, enforcement actions, and civil penalties. MCO §§ 40.120, 40.140.

The Minnesota Chamber of Commerce (the Chamber) first sued the City in October of 2016, seeking (1) a declaratory judgment that the Ordinance is invalid; (2) a temporary injunction to stop the City from enforcing the Ordinance during the pendency of the lawsuit; and (3) a permanent injunction. The complaint focused primarily on the Chamber's contention that state law preempts the Ordinance, but it also included a paragraph on the alleged extraterritorial effect of the Ordinance. The district court ordered additional briefing on the question of the Ordinance's extraterritorial effect.

In ruling on the Chamber's request for a temporary injunction, the district court held that the Chamber did not show a likelihood of success on the merits of its preemption arguments. The district court did, however, temporarily enjoin the City from enforcing the Ordinance against any employer "resident outside the geographic boundaries of the City of Minneapolis" because the court concluded that the Ordinance had an impermissible extraterritorial effect.

Both the Chamber and the City appealed the district court's decision on the temporary injunction. The Chamber argued that the court erred in denying the temporary injunction with respect to its preemption claims. The City argued that the district court erred in temporarily enjoining enforcement against employers resident outside of Minneapolis. The court of appeals affirmed the district court's ruling on both issues. Minn. Chamber of Commerce v. City of Minneapolis , No. A17-0131, 2017 WL 4105201 (Minn. App. Sept. 18, 2017), rev. denied (Minn. Nov. 28, 2017).

The parties then returned to district court and filed cross-motions for summary judgment. The Chamber sought a permanent injunction, again raising both the preemption and extraterritoriality challenges to the Ordinance. The City asked the district court to grant judgment as a matter of law because state law does not preempt the Ordinance and the Ordinance does not have an impermissible extraterritorial effect. Concerning the alleged extraterritorial impact of the Ordinance, the City asserted that a March 2018, amendment to the Ordinance clarified that the required sick and safe time accrues only for hours worked within the geographic boundaries of the City and that the use of leave could be restricted to hours the employee is scheduled to work within the geographic boundaries of the City.

The district court granted the City's summary judgment motion on the Chamber's preemption claim and granted the Chamber summary judgment on its extraterritoriality claim. In doing so, the district court upheld the validity of the Ordinance as applied to employers within Minneapolis, but permanently enjoined the City from enforcing the Ordinance against any employer resident outside of Minneapolis. Both parties appealed. The court of appeals affirmed the district court's ruling on the Chamber's preemption claim, but reversed the district court's ruling on extraterritoriality. Minn. Chamber of Commerce v. City of Minneapolis , 928 N.W.2d 757 (Minn. App. 2019). We granted the Chamber's petition for review.

ANALYSIS

This appeal presents two challenges to the validity of the Ordinance. The Chamber first argues that state law preempts the Ordinance, either because state law conflicts with the Ordinance or because state law has occupied the field of employer-provided sick and safe time. Whether state law preempts a local ordinance is a question of law that we review de novo. Bicking v. City of Minneapolis , 891 N.W.2d 304, 312 (Minn. 2017) ; State v. Kuhlman , 729 N.W.2d 577, 580 (Minn. 2007).

Second, the Chamber asserts that the Ordinance violates the extraterritoriality doctrine by regulating employers outside of Minneapolis. We apply a de novo standard of review to this issue, because the facts are undisputed and only a question of law remains for us to consider. See Melrose Gates, LLC v. Chor Moua , 875 N.W.2d 814, 820 n.2 (Minn. 2016) (explaining that we apply a de novo standard of review when there are "cross-motions for summary judgment, based on undisputed facts, [and] equitable relief [is] sought.").

I.

We first consider whether state law preempts the Ordinance. There are "three types of state preemption of municipal legislative authority: express preemption, conflict preemption, and field preemption." Jennissen v. City of Bloomington , 913 N.W.2d 456, 459 (Minn. 2018). Only conflict preemption and field preemption are at issue in this case.

A.

We begin with conflict preemption and Mangold Midwest Co. v. Village of Richfield , 274 Minn. 347, 143 N.W.2d 813 (1966). Our decision in Mangold states a general principle for conflict preemption: "conflicts which would render an ordinance invalid exist only when both the ordinance and the statute contain express or implied terms that are irreconcilable with each other." Id. at 816. We provided three standards to illustrate when an irreconcilable conflict between a municipal regulation and state law exists. Id. at 816-17. First, a "conflict exists where the ordinance permits what the statute forbids." Id. Second, "a conflict exists where the ordinance forbids what the statute expressly permits." Id. Third, "no conflict exists where the ordinance, though different, is merely additional and complementary to or in aid and furtherance of the statute." Id.

Minnesota Statutes § 181.9413 (2018) governs employer-provided sick and safe time. If an employer provides sick time benefits to employees, the statute requires an employer to allow employees to use those benefits to care for enumerated sick relatives. Minn. Stat. § 181.9413(a). The statute also requires employers to allow employees to use sick time benefits to assist enumerated family members, or to receive assistance themselves, in response to domestic abuse, sexual assault, or stalking. Minn. Stat. § 181.9413(b).

The Chamber contends that the Ordinance conflicts with Minn. Stat. § 181.9413 because by requiring employers to provide paid sick and safe time, the Ordinance is irreconcilable with the permissive form of the statute. In essence, the Chamber argues that the lack of a prohibition in the state statute against paid employer-provided leave is express permission from the Legislature to refuse to provide paid leave. The Chamber also argues that features of the Ordinance, such as time accrual and use standards, conflict with the statute because the Ordinance forbids the form of accrual and use that the statute expressly permits. Finally, the Chamber asserts that by defining small employers differently from the state law, the Ordinance adds regulations and requirements that are not imposed by that statute. The Chamber argues that the definition of "employer" in Minn. Stat. § 181.940, subd. 3 (2018), as "a person or entity which employs...

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