Minimum wage ordinances were all the rage in the 2010s. With the federal minimum wage increasing at a snail’s pace, and state minimums not growing any faster, municipalities began taking the law into their own hands, and adopting minimum wage ordinances that reflected what those cities believed to be “living wages.” In Minnesota, both Minneapolis and St. Paul adopted $15 minimum wage rates for businesses within their borders, with certain exemptions. Business owners who were subject to the new minimums did not rejoice in the same way many low wage earners did with the law change, to say the least.
The minimum wage laws have been challenged multiple times in different venues by employers, and the Minnesota Supreme Court recently ruled on manufacturer Graco’s challenge to the City of Minneapolis’s $15 minimum wage. In Graco, Inc. v. City of Minneapolis, the employer challenged the terms of the ordinance, stating that the $15 minimum wage was in conflict with the Minnesota FLSA, in that the MNFLSA provides for a $9.86 minimum wage for large employers, and a $8.04 minimum wage for small employers.
Graco sued the City, seeking a declaratory judgment that state law preempts the minimum wage ordinance and a permanent injunction against its enforcement. Following a court trial, the district court determined that state law does not preempt the ordinance. The court reasoned that the MFLSA sets a floor, not a ceiling, for minimum-wage rates and therefore the MFLSA is not in conflict with the ordinance.
State precedent recognizes three types of state preemption of municipal legislative authority: express preemption, conflict preemption, and field preemption. Graco argued that the City’s minimum wage ordinance both conflicted with the State’s minimum wage and that the State’s law occupied the field of wage regulation, leaving no room for municipal ordinances.
In addressing the conflict claim, the Supreme Court stated that in order for the ordinance to be invalid, the MNFLSA and the ordinance had to be irreconcilable with each other. Rejecting this argument, the Supreme Court found that the legislature made it clear in the MNFLSA that employers must pay “at least” the minimums established under the statute. As such, the Court found the ordinance complemented, rather than conflicted with, the statute.
Graco also argued that because the minimum wage ordinance drew different distinctions between “large” and “small” employers, it conflicted with the MNFLSA, but the Court found that because all employers were required to follow the MNFLSA, the difference in definitions was inconsequential.
In addressing whether the legislature meant to occupy the field in the creation of MNFLSA, the goal was to create a floor for employers, but left “room for municipalities to regulate above,” and was not the exclusive minimum wage rate to by used by all cities in the state. The Court also found that while the Commissioner of the Department of Labor has the authority to halt minimum wage hikes in the economic downturn, that power is permissive, and not required.
Finally, the Court found no language in the statute from the legislature that it intended for the MNFLSA to be the only minimum wage law across the state.
With that, the challenge from Graco was turned away, and the power of municipalities across the state to establish a minimum wage rate for employees was solidified. Cities have the power to make change where federal and state legislatures normally grind to a halt. Because of this, you can expect many cities to continue passing more progressive ordinances allowing for more benefits for their citizens. If you need help understanding your obligations under the new ordinances being introduced across the state, contact the Wiley Law Office, for employment law advice that works.