The Minnesota Supreme Court, the state’s highest court, decided to uphold the minimum wage ordinance which was enacted by the City of Minneapolis back in 2017 and which will eventually require Minneapolis employers to pay workers $15.00 per hour.  Those Minneapolis-based employers which were holding out hope that the Minneapolis ordinance would ultimately not be enforced must comply with its minimum wage requirements.  The name of the decision is Graco, Inc. v. City of Minneapolis.

Minneapolis Ordinance Background

As most Minneapolis-based employers know, in June of 2017, the Minneapolis City Council voted to enact an ordinance which sets certain minimum wage rates for hours worked by employees within the geographic boundaries of the City of Minneapolis.  As of January 1, 2020, the effective minimum wage for large employers (with more than 100 employees) is $12.25 per hour, and the minimum wage for small employers (with 100 or fewer employees) is $11.00 per hour.  These rates are higher than those required under state law (the Minnesota Fair Labor Standards Act, or MFLSA) which are $10.00 per hour for large employers (with an annual revenue of $500,000 or more) and $8.15 per hour for small employers (with an annual revenue of less than $500,000).

Graco’s Lawsuit

Later in 2017, Graco, Inc. sued the City of Minneapolis, along with others, and argued that the ordinance was preempted by the MFLSA and should be permanently enjoined.  The district court denied the injunction and ruled that the Minneapolis ordinance was not preempted by the MFLSA as the MFLSA sets a floor, not a ceiling, for minimum-wage rates, which leaves the door open for municipalities to establish higher minimum wage rates.  The Court of Appeals agreed, setting the stage for a decision by the state’s highest court.

In upholding the Minneapolis ordinance, the Supreme Court emphasized that the specific language of the MFLSA requires only that employers pay “at least” the minimum wage required under that law, meaning that the legislature set a floor, not a ceiling, on the hourly rate that employers can pay.  The Supreme Court further noted that employers can simultaneously comply with both laws, meaning there is no conflict between them.

Finally, and importantly, the Supreme Court rejected the contention that the MFLSA impliedly preempts the Minneapolis Ordinance by occupying the entire field of minimum wage regulation in Minnesota.  Although time will tell, this reasoning by the Supreme Court sets the stage for other cities to enact ordinances with minimum wage rates that are higher, and more restrictive, than those required by state law.  St. Paul has already passed its own minimum wage ordinance, set to take effect in stages in 2020 and the following years, and Minnesota employers could soon be forced to navigate multiple cities with varying minimum wage rates.