May 2019

This week, the Minnesota Court of Appeals threw a wrench in our handbook policies by ruling 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. This decision, issued on April 29, 2019, upheld Minneapolis’ Sick and Safe Leave Ordinance (“Ordinance”), which will remain in effect barring any further appeals or stay of this decision.

As background, the City of Minneapolis passed the Sick and Safe Time Ordinance in 2016 that required employers to provide paid sick and safe time to all employees working 80 or more hours within the City of Minneapolis. Before the Ordinance could go into effect, business groups sued, arguing that the Ordinance is preempted by state law and impermissibly operates outside the City of Minneapolis. The district court agreed in part and issued an injunction preventing Minneapolis from enforcing its Ordinance “against any employer resident outside the geographic boundaries of the City.” Both parties appealed the decision to the Minnesota Court of Appeals.

Subsequently, the Ordinance went into effect but Minneapolis applied it only to employers with a physical presence within Minneapolis. St. Paul followed suit. In 2018, Minneapolis amended its Ordinance to address the district court’s concerns about the Ordinance’s geographic reach. As amended, sick and safe time only accrues for hours employees work within Minneapolis and can only be used when the employee is scheduled to work in Minneapolis.

The Court of Appeals has now weighed in and ruled that the amended Ordinance does not impermissibly operate extraterritorially. In other words, if the Court of Appeals ruling stands, an employer with no physical location within Minneapolis is covered by the Ordinance if an employee works more than 80 hours per year within the geographic boundaries of the City. That employee would be entitled to earn sick and safe time of up to 48 hours per year. However, the employee can only earn and use those hours when he or she is working in Minneapolis.

RLG Takeaway

Based on the Court of Appeals 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. Minneapolis has not, however, updated their enforcement procedures – possibly because it anticipates an appeal and stay of the ruling. We will continue to monitor the Minneapolis Department of Civil Rights for announcements on when enforcement rules will apply to non-resident employers. Employers with workers in St. Paul should also take note, as this ruling is likely to affect St. Paul’s ordinance enforcement as well.