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Chief Justice Lorie Gildea (Staff photo: Kevin Featherly)

Court upholds minimum wage ordinance in Minneapolis

 By: Barbara L. Jones  January 28, 2020

Minimum-wage workers in Minneapolis no doubt welcomed the Minnesota Supreme Court’s

opinion last week in Graco Inc. v. City of Minneapolis.

The unanimous court upheld the city’s ordinance setting minimum wages higher than the
rates set forth in the Minnesota Fair Labor Standards Act, Minn. Stat. § 177.24.

That makes it the third court to determine that the statute does not preempt the city
ordinance, since the unanimous Supreme Court affirmed the District Court and the Court of
Appeals.

“Because employers will comply with the MFLSA when they comply with the City’s ordinance,
and because the Legislature provided no indication that it intended to occupy the field of
minimum-wage rates, we conclude that the MFLSA does not preempt the ordinance,” wrote
Chief Justice Lorie Gildea for the court.

Wage rates
Wage rates under state law and the city ordinance vary with the size of the employer. In
2019, the state and Minneapolis hourly minimum-wage rates were $9.86 and $12.25,
respectively, for large employers, and $8.04 and $11, respectively, for small employers.
Under the statute, large employers are those with annual revenue of $500,000 or more.
Under the ordinance, large employers are those that employ more than 100 persons.

The appellant sought a declaratory judgment and permanent injunction against the
ordinance, which the District Court denied. It determined that the MFLSA sets a floor, not a
ceiling, for minimum wage rates and therefor does not conflict with the ordinance. It also
said that regulation of minimum-wage rates is not solely a matter of state concern.

A divided Court of Appeals affirmed. The majority also said that the statute sets a floor, not
a ceiling, and does not conflict with the ordinance. The majority also concluded that the
Legislature did not intend to exclusively regulate the field of minimum-wage rates and the
MFLSA accordingly does not preempt the city’s regulation of minimum-wage rates.

State preemption
State preemption of municipal authority can be in the form of express preemption, conflict
preemption, and field preemption. The parties agree that express preemption is not at issue,
but appellant asserted both conflict preemption and field preemption.

Conflict preemption occurs when the ordinance and the statute contain express or implied
terms that are irreconcilable with each other, as the Supreme Court set out in 1966 in
Mangold Midwest Co. v. Village of Richfield. That case involved an ordinance that permitted
small businesses to sell groceries on Sundays and a statute that restricted all businesses
from selling groceries on Sundays. The court said that the ordinance was a complementary
regulation to the statute.

The court said conflicts which would render an ordinance invalid exist only when both the
ordinance and statute contain express or implied terms that are irreconcilable with each
other. A conflict exists where the ordinance permits what the statute forbids or the ordinance
forbids what the statute expressly permits (emphasis by court). No conflict exists where the
ordinance, although different, is merely additional and complementary to or in aid and
furtherance of the statute.

“Graco contends that, because the MFLSA expressly permits large employers to pay at least
$9.86 per hour, which is less than $12.25 per hour, and because the City’s ordinance
prohibits large employers from paying wages less than $12.25 per hour, the ordinance
impermissibly conflicts with the MFLSA,” Gildea wrote.

The court found appellant’s argument “not without some initial appeal,” but unsuccessful. It
was the words “at least” that caused it to fail, the court said. The Legislature stated plainly
that employers “must” pay “at least” the minimum hourly rate provided by the statute. Minn.
Stat. § 177.24, subd. 1(b)(1)–(2) (emphasis added by the court). “The Legislature’s use of
the phrase, ‘at least,’ clearly contemplates the possibility of higher hourly rates. The
ordinance therefore does not forbid what the MFLSA permits but instead complements the
statute,” Gildea wote.

The court rejected the argument that the statute and ordinance were in conflict because
they have different definitions of large and small employers. “[D]ifferentiating minimum-
wage rates based on the number of employees, rather than revenues, does not conflict with
the plain language of the statute. All employers, regardless of size or revenues, must pay ‘at
least’ the minimum-wage rate set forth by the MFLSA. Therefore, no conflict exists,” the
court continued.

Occupying the field

The court then considered whether the Legislature, through MFLSA, has indicated its intent
to occupy the field of minimum-wage rates, and concluded that it did not.

The factors in an occupy-the-field analysis are whether the subject matter has been so fully
covered by state law as to have become solely a matter of state concern; whether the
Legislature in partially regulating the subject matter indicated that it is a matter solely of
state concern; and whether the subject matter itself is of such a nature that local regulation
would have unreasonably adverse effects upon the general populace of the state.

Consideration of these factors again directed the court to the “at least” language in the
statute. The FMLSA sets only a floor that allows municipalities to regulate above it, and thus
 does not so fully occupy the field of minimum-wage rates that it is solely a matter of state
concern, the court said.

It rejected the appellant’s argument that the Legislature’s frequent amendments to the
MFLSA evidenced its intent to occupy the field, because those amendments only increased
the minimum-wage floor, not its ceiling

It also rejected the argument that the authority granted to the Commissioner of Labor and
Industry to regulate wage rates is evidence of a legislative intent to occupy the field. The
statute gives the commissioner the authority to halt minimum-wage hikes if necessary for
the economy but that was not occupy-the-field evidence, the court continued. “The
Commissioner is merely permitted—not required—to halt minimum-wage hikes in the event
of an economic downturn,” Gildea wrote.

Nothing else in the statute indicates that preemption was the Legislature’s intent, the court
continued, again citing the “at least” language.

Finally, the court determined that local regulation would have unreasonably adverse effects
upon the state. “Graco contends that the ordinance will result in a patchwork of regulation
that will be detrimental to employers, who will be unfairly burdened as they attempt to
comply with different wage rates imposed by different municipalities across the state. But we
have previously held that while varied local regulation may be restrictive to businesses, it
does not arise to the level of an unreasonably adverse effect on the state,” the court said.

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