Minnesota Supreme Court should find state law preempts Minneapolis minimum wage proposal

Update: The Minnesota Supreme Court blocked the ballot proposal from being placed on the ballot because the present city charter does not provide for submitting ordinances by a citizen petition.  The question remains open on whether state law preempts Minneapolis from adopting a minimum wage as I argue below.

Today the Minnesota Supreme Court will hear arguments over whether a Minneapolis charter amendment to raise the minimum wage in the city to $15/hr should be placed on the ballot in November.  The arguments will also address the appropriateness of another proposed charter amendment to require Minneapolis police officers to carry liability insurance.

The city of Minneapolis has taken the position that neither question is appropriate to put on the ballot, but for different reasons.  They argue requiring police liability insurance is in conflict with, or preempted by state laws that already require cities to indemnify police officers.

On the minimum wage, the city argues it is inappropriate because the “Minneapolis City Charter does not provide for voter initiatives for the passage of ordinances by a ballot referendum.”  According to the city, amendments to city charters, without specific language allowing voter initiatives, are limited to provisions related to the establishment, administration or regulation of city of government, not general policy initiatives.

The fact that the city charter does not provide for voter initiatives is not the only reason the minimum wage should not be on the ballot.  Like police liability insurance, a minimum wage is preempted by state law that already sets a statewide minimum wage.

The city didn’t make this argument because it would undermine their power to raise the minimum wage in the future through an ordinance and it would undermine the recent ordinance they passed to require employers to provide paid sick leave.

I outlined the argument for why the city’s paid sick leave requirements are preempted in a column for the Star Tribune and the same argument applies to the minimum wage.  Here’s my argument.

Minneapolis is a home rule charter city, which many people assume grants the city broad power to pass any law it wants. The Minnesota Supreme Court has explained that “in matters of municipal concern, home rule cities have all the legislative power possessed by the Legislature of the state.” That seems like pretty broad power, but the breadth applies only to matters of “municipal concern.”

“If a matter presents a statewide problem,” according to the court, “the implied necessary powers of a municipality to regulate are narrowly construed unless the Legislature has expressly provided otherwise.”

Paid sick leave is clearly a matter of statewide concern and, therefore, should not be subject to local regulation. This question was settled in a case where St. Paul tried to force contractors to use Ramsey County residents for any city work. In striking down the regulation, the state Supreme Court concluded that “under the St. Paul charter it would seem that the activity of laborers is a statewide matter and not one for local regulation so long as the activity is not inherently dangerous to the health, welfare, safety or morals of the people of the city.”

It’s easy to see why the state limits a city’s power to matters of local concern.

In another case, the court rejected an attempt by Brooklyn Center to license boats after concluding that the lake-studded geography of Minnesota made licensing an issue of statewide concern. Imagine if everyone who owned a boat needed a different license to launch from city to city. Likewise, imagine if Minnesota’s 107 home rule charter cities each passed its own version of paid sick leave. As the court explained in the boat-licensing case, the burden resulting from such multiplicity of rules would be “both unreasonable and absurd.”

To avoid these absurdities, a city can pass a law on issues of statewide concern only when it is given explicit authority from the state.

Like paid sick leave, setting a minimum wage regulates the activity of laborers and, as the Court has ruled, the activity of laborers is a matter of statewide concern and not an appropriate subject for city ordinances.  Under the minimum wage proposal, a delivery service based in St. Cloud would need to pay their drivers the Minneapolis minimum wage for the time they spend dropping off a package within the city’s borders.  Any business operating both inside and outside the city would be similarly impacted.  Clearly, the ordinance impacts businesses located across the region.

Moreover, a specific type of preemption, called field preemption, restricts cities from passing laws in areas where the state has already taken over the field of regulation.   The state has already set a minimum wage and, therefore, taken over this area of wage regulation.

The city didn’t argue a minimum wage should be preempted by state law, but that should not stop the Minnesota Supreme Court from addressing the argument.  By taking a position on the issue now, the Court will help avoid costly and time-consuming litigation in the future.

Whichever way the Court rules, this minimum wage issue is not going away.  American Experiment will be hosting a dialogue on the minimum wage over lunch with three speakers from different perspectives, including state senator John Marty, economist Mark Perry and Dan McElroy, the president and CEO of Hospitality Minnesota.  The lunch will be held at 12:00pm, September 20 at the Hilton in downtown Minneapolis.  Please sign up here to attend.