Court Upholds Minneapolis $15 Minimum Wage Ordinance

In response to the Hennepin County District Court decision[1] finding that the Minneapolis $15 minimum wage ordinance is a valid exercise of the city’s powers and not in conflict with state law, Laura Huizar, staff attorney with the National Employment Law Project, issued the following statement:

“The court’s decision upholding the Minneapolis $15 minimum wage ordinance marks another important victory for workers in the Fight for $15. This is a big win for Minneapolis’s working families. It means the city remains on track to raise wages for one in five Minneapolis workers.

“Business groups unsuccessfully tried to pass preemption legislation in the state last year to stop Minneapolis from adopting a local minimum wage, and then they sued the city to try to invalidate the ordinance. While these corporate groups will likely appeal, we’re confident that their desperate attempts to suppress wages and thwart local democracy will continue to be rejected.”

Background: A Raise for 71,000 Working People in Minneapolis

The Minneapolis minimum wage ordinance passed by the city council on July 1, 2017 will gradually raise the minimum wage to $15 an hour by 2022 for employees of large businesses (more than 100 employees), and by 2024 for employees of small businesses (100 or fewer employees).[2] About 71,000 Minneapolis workers, or about 23 percent of workers in the city, will see their wages increase under the new law.[3]

The City of Minneapolis, like many cities around the country, has the right to exercise broad “home rule” powers over public health, safety, and general welfare of its residents. In Minnesota, cities have used their broad powers to enact laws pertaining to liquor licensing and regulation,[4] the production of milk and milk standards,[5] the manufacture, possession, sale, and use of explosives,[6] bicycle registration and operation,[7] animal control,[8] housing conditions,[9] food safety and selling,[10] movie theater operation,[11] and much more.

Addressing the consequences of low wages through local minimum wage laws is not new for cities. The City of Baltimore was one of the first cities in the country to adopt a local minimum wage in 1964.[12]

Since the Fight for $15 began in November 2012, more than 40 cities and counties,[13] and more than 20 states have adopted minimum wage increases. These cities and counties include places like Santa Fe, NM; Washington, D.C.; Chicago, IL; Portland, ME; and Flagstaff, AZ.[14] Almost 20 cities or counties have adopted a $15 minimum wage. SeaTac, WA, was the first city to adopt a $15 minimum wage in 2013. San Francisco voters approved a $15 law in 2014, and the Los Angeles City Council approved a $15 minimum wage in 2015.

Local Authority on Wages Empowers Communities

Local power to raise the minimum wage is important for communities that face higher housing and living costs. In 2011, urban households spent 18 percent more than rural households.[15]

The Economic Policy Institute’s Family Budget Calculator estimates that a single worker with no children who works full-time needed $13.10 per hour in 2014 to make ends meet in the Minneapolis/St. Paul/Bloomington metro area, and a single worker with one child working full-time needed about $26 per hour in 2014 to afford the basics. The cost of living in the city is among the highest in the state.[16]

Local power to adopt a minimum wage has also become especially crucial when political gridlock prevents state legislatures from acting—for example, when the governor blocks action to raise wages, or when one or both houses of the legislature refuse to act.

Arguments Against Local Minimum Wage Laws Don’t Hold Water

Proponents of minimum wage preemption claim they are concerned about creating a “patchwork” of local employment regulations. However, backers of preemption laws also generally oppose minimum wage policies at the state level, too.

The experiences of cities and counties that have adopted minimum wage laws also show that businesses can adapt without significant negative consequences. Businesses already deal with varying local, licensing, tax, and other regulatory policies.

Economic research shows that cities and counties can adopt a higher local minimum wage without becoming less competitive with surrounding areas. One of the most sophisticated studies of minimum wages looked at the impact of minimum wage rates in more than 250 pairs of neighboring counties in the U.S. that had different minimum wage rates. The study found no difference in job growth rates.[17]

A recent study of the impact of Chicago’s minimum wage, which will increase to $13 per hour by 2019, as well as cities like Seattle, San Francisco, and Oakland, California, found that “higher minimum wages boosted worker pay without leading to any discernible loss of jobs or slowing of job growth to date.”[18]

Corporate Interests Have Already Tried and Failed to Block Minimum Wage, Earned Sick Time

Last spring, Republican legislators introduced several preemption bills that would strip cities in Minnesota of their right to enact a local minimum wage, as well as any earned sick time protections.[19]

The bills were a direct response to the earned sick time legislation passed in both Minneapolis and St. Paul and plans by the Minneapolis City Council to adopt a higher minimum wage this year.

Governor Dayton responded to a public outcry and vetoed the legislation.[20]

The preemption effort forms part of a corporate-backed agenda nationwide that opposes any improvement to workplace standards. The American Legislative Exchange Council (ALEC), a corporate-backed group with extensive lobbying resources and influence in state legislatures around the country, has drafted “model” preemption bills to prohibit local minimum wage laws since at least 2002.[21]

Twenty-five states have passed laws that block cities from enacting local minimum wage laws,[22] and at least 20 have banned local earned sick time laws.[23] In most of these cases, the state preemption laws were a direct response to successful local campaigns to raise the minimum wage or enact paid sick leave legislation.

Most Courts Have Rejected Business Groups’ Preemption Arguments

Having failed to preempt local minimum wages in the state legislature, business groups are now arguing that the state minimum wage law already preempts local wage hikes.

These groups’ strategy of using both the legislature and the courts to try and invalidate a local minimum wage law is nothing new. In Missouri, for example, the City of St. Louis enacted its own minimum wage law. Business groups first sued the city, arguing that the state’s minimum wage law preempted the local law. After more than a year of litigation, the Missouri Supreme Court issued a decision upholding the St. Louis law, finding that state law did not, in fact, preempt the local law. Business groups then rushed to the legislature. They succeeded in passing a preemption law invalidating the St. Louis minimum wage and any future local minimum wage laws within three months of the court’s decision.[24]

Almost all state courts that have considered whether a state minimum wage law preempts a local minimum wage law have not found preemption. These states include Missouri, New Mexico, Maryland, and Wisconsin. They all concluded that the state minimum wage laws in those states established a floor, not a ceiling, and all upheld the local minimum wage laws at issue. See Cooperative Home Care, Inc. v. City of St. Louis, 514 S.W.3d 571, 578 (Mo. 2017); New Mexicans for Free Enterprise v. City of Santa Fe, 126 P.3d 1149 (N.Mex.Ct.App. 2005); City Council of Baltimore v. Sitnick, 225 A.2d 376 (Md.Ct.App. 1969); Main Street Coalition for Economic Growth v. City of Madison, No. 04-CV-3853, slip op. (Dane County Cir. Ct., Branch 2, Apr. 21, 2005). Only the Kentucky Supreme Court has arrived at a different conclusion in Kentucky Restaurant Association v. Louisville/Jefferson County Metro Government, 501 S.W.3d 425, 426 (Ky. 2016).[25]

Endnotes

[1] Business groups, including the Minnesota Chamber of Commerce, filed suit on Nov. 10, 2017 in Hennepin County District Court to challenge the validity of the Minneapolis $15 law. On Dec. 10, the Hennepin County District Court denied the business groups’ request to delay the implementation of the City’s minimum wage ordinance pending litigation. The ordinance therefore went into effect on Jan. 1, 2018, raising the local minimum wage to $10.00 per hour for large businesses with more than 100 employees. On Jan. 3, the court dismissed the claims from all but one of the business group plaintiffs: Graco, Inc. The parties agreed that all claims that were or could have been asserted by the Minnesota Chamber of Commerce, Twin West Chamber of Commerce, and Minnesota Recruiting & Staffing Association were to be voluntarily dismissed.

[2] Minneapolis, Minn., Code § 40.320 et seq.

[3] Minneapolis.gov, City Council passes municipal minimum wage ordinance, http://news.minneapolismn.gov/2017/06/30/city-council-passes-municipal-minimum-wage-ordinance/ (last viewed Nov. 15, 2017).

[4] See, e.g., Minneapolis, Minn., Charter art. IV, § 4.1(f); Minneapolis, Minn., Code § 267.1380; Minneapolis, Minn., Code tit. 14; St. Paul, Minn., Code tit. XXIV; Duluth, Minn., Code ch. 8.

[5] Rochester, Minn., Code ch. 142

[6] St. Cloud, Minn., Code ch. IV, § 433.

[7] See, e.g., Brooklyn Park, MN tit. VIII, ch. 73; Duluth, Minn., Code ch. 9.

[8] See, e.g., Minneapolis, Minn., Code tit. 4; St. Cloud, Minn., Code ch. X, § 1040; Brooklyn Park, Minn., Code tit. IX, ch. 92; St. Paul, Minn., Code tit. XX.

[9] See, e.g., Minneapolis, Minn. Code, tit. 12; St. Paul, Minn., Code tit. VI; Duluth, Minn., Code ch. 29A.

[10] See, e.g., Minneapolis, Minn. Code tit. 10; St. Paul, Minn., Code tit. XXI, ch. 208; Brooklyn Park, Minn., Code, tit. XI, ch. 114; St. Cloud, Minn. Code, ch. IV, § 440.

[11] See, e.g., Rochester, Minn. Code, ch. 110; Brooklyn Park, Minn., Code ch. 113.

[12] City Council of Baltimore v. Sitnick, 225 A.2d 376 (Md.Ct.App. 1969).

[13] Several of these local minimum wage laws were subsequently invalidated by preemption legislation adopted by the state legislature. These include: Birmingham, Alabama (preempted by Ala. Code § 25-7-41; St. Louis, Missouri (preempted by Mo. H.B. 1193, 1194 (Mar. 2017)); Linn County, Iowa, Polk County, Iowa, and Wapello County, Iowa (preempted by Ia. H.F. 295 (Mar. 2017)). Of the more than 40 local minimum wage laws enacted recently, only the ordinances passed in Louisville and Lexington, Kentucky, were found preempted by a court. Kentucky Restaurant Association v. Louisville/Jefferson County Metro Government, 501 S.W.3d 425, 426 (Ky., 2016).

[14] Raisetheminimumwage.com, Minimum Wage by State, http://raisetheminimumwage.com/minimum-wage-state/ (last viewed Nov. 15, 2017).

[15] William Hawk, U.S. Bureau of Labor Statistics, Beyond the Numbers, Expenditures of urban and rural households in 2011 (Feb. 2013), available at https://www.bls.gov/opub/btn/volume-2/pdf/expenditures-of-urban-and-rural-households-in-2011.pdf.

[16] National Employment Law Project, Minneapolis Passes $15 Minimum Wage (June 30, 2017), available at http://www.nelp.org/news-releases/minneapolis-passes-15-minimum-wage/.

[17] Arindrajit Dube et al., The Review of Economics and Statistics, Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties (Nov. 2010) at 92(4):945-964.

[18] Michael Reich, “Research Shows Higher Minimum Wages Have Not Cost Chicago or Illinois Jobs,” HuffPost, May 18, 2017, available at https://www.huffingtonpost.com/entry/research-shows-higher-minimum-wages-have-not-cost-chicago-or-illinois-jobs_us_591e178be4b094cdba52a276.

[19] H.F. 600, 90th Leg. (Mn. 2017); H.F. 180, 90th Leg. (Mn. 2017); S.F. 580 90th Leg. (Mn. 2017).

[20] Rachel E. Stassen-Berger, “Mark Dayton vetoes bill curtailing cities’ paid-time off, minimum wage rules,” Pioneer Press TwinCities.com, May 30, 2017, available at http://www.twincities.com/2017/05/30/mark-dayton-vetoes-bill-curtailing-cities-paid-time-off-minimum-wage-rules/.

[21] National Employment Law Project, Fighting Preemption: The Movement for Higher Wages Must Oppose State Efforts to Block Local Minimum Wage Laws (July 6, 2017), available at http://www.nelp.org/publication/fighting-preemption-local-minimum-wage-laws/.

[22] National Employment Law Project, Fighting Preemption: The Movement for Higher Wages Must Oppose State Efforts to Block Local Minimum Wage Laws (July 6, 2017), available at http://www.nelp.org/publication/fighting-preemption-local-minimum-wage-laws/.

[23] Marni von Wilpert, Economic Policy Institute, City governments are raising standards for working people—and state legislators are lowering them back down (Aug. 26, 2017) at 9, available at http://www.epi.org/files/pdf/133463.pdf.

[24] Mitchell Hirsch, National Employment Law Project, Blog, Missouri Lawmakers to Lowest-Paid Workers in St. Louis: We’re Taking Back Your Raises (May 19, 2017), available at http://www.nelp.org/blog/missouri-lawmakers-to-lowest-paid-workers-in-st-louis-were-taking-back-your-raises/.

[25] A New York appellate court found that state law preempted a New York City minimum wage law in 1963, but the case is distinguishable—it involved a state statute expressly prohibiting any law that supersedes a provision of the state’s labor law. See Wholesale Laundry Board of Trade v. City of New York, 12 N.Y.2d 998 (1963), aff’g, 17 A.D.2d 327 (1962).

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