Paid Sick Leave Preemption Showdown in Minnesota

The Minnesota paid sick leave melee intensified last week when the state Senate passed the Uniform Labor Standards Act, a preemption bill barring municipalities from requiring private employees to provide paid sick leave and other employment standards. The House passed a very similar bill in March.  Once the bills are reconciled, the final version will be sent to DFL Governor Mark Dayton for his signature. The Governor has not taken a public position on the bill.

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If signed by the Governor, the bill would void the Minneapolis and St. Paul Sick and Safe Time ordinances, both scheduled to go into effect on July 1, 2017. As a practical matter, the bill would resolve the legal challenge to the Minneapolis ordinance pending in the Appellate Court and end the work of the Duluth PSL Task Force. The Minnesota melee would be over, at least for the time being.

If the Governor vetoes the bill, a two thirds vote in each chamber is needed to override that veto.  The bill did not pass either chamber by a two-thirds margin so an override is unlikely. Absent an override, the Minnesota melee will continue, with a decision by the Appellate Court likely to be the next event.

This is the second PSL showdown pending. As noted in an earlier post, the Maryland General Assembly send a PSL bill to Governor Hogan, who described it as “job-killing” and said it was “dead on arrival.” He has not yet acted on the bill. The General Assembly passed that bill with sufficient votes in both houses to override the Governor’s veto. Since the Maryland legislative session has ended, if the Governor vetoes the PSL bill, the override vote will not occur until January 2018, when the legislature reconvenes.

South Carolina Becomes a Paid Sick Leave Preemption State

Add the Palmetto State to the list of PSL preemption states. Governor Henry McMaster signed SB218 into law last week.  The law prohibits a political subdivision from establishing, mandating or otherwise requiring an “employee benefit,” defined as “anything of value that an employee receive from an employer in addition to wages.” Paid sick leave is listed as an example of an employee benefit.

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Arkansas and Iowa have already enacted PSL preemption laws this year. There are now 17 PSL preemption states.

I anticipate Georgia Governor Nathan Deal will sign HB243 soon. Georgia is already a PSL preemption state. HB243 amends the preemption law to prevent municipalities from requiring employers to provide “additional pay based on schedule changes,” a response to the growing interest in “secure scheduling” ordinances.

On the state PSL front, we continue to wait for State Number Eight. Maryland seemed to be in the forefront but if Governor Hogan vetoes the bill sent to him, as he has promised to do, the General Assembly will not have an opportunity to vote to overturn his veto until January 2018.

Of the other pending state PSL bills, those in Hawaii, Rhode Island and Nevada seem to be moving through the legislative process but it is too early to predict whether any of these will be State Number Eight.

Paid Sick Leave Quarterly: 1Q 2017

There have been so many PSL developments in 2017 that a summary seemed appropriate. This summary includes:

Paid Sick Leave Laws Effective in Q1 2017

Paid Sick Leave Laws Effective After Q1 2017

*Legal challenge pending.

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Photo by Mike Soltis

Paid Sick Leave Bills Introduced During Q1 2017

  • Alaska: House Bill No. 30, An act relating to the payment of sick leave by employers; and providing for an effective date.
  • Hawaii: SB 425 (untitled).
  • Illinois: HB 2771, Healthy Workplace Act.
  • Indiana: House Bill No. 1183 (untitled), to add an “Employee Paid Sick Leave” Chapter to the Indiana Code; Senate Bill No. 3 (untitled), to assign the issue of “paid personal leave from employment” to a study commission.
  • Maine: SP380/LD1159, An Act To Support Healthy Workplaces and Healthy Families by Providing Paid Sick Leave to Certain Employees.
  • Maryland: House Bill 1, The Maryland Healthy Working Families Act, and Senate Bill 230 both passed. Differences need to be reconciled. Governor Hogan’s Commonsense Paid Leave Act has not moved out of committee.
  • Michigan: Senate Bill No. 212, the “paid sick leave” act.
  • Minnesota: SF 1794, Earned Safe and Sick Time Act.
  • Nevada: Senate Bill 196 (untitled) to require every employer in private employment to provide paid sick leave to each employee.
  • North Carolina: Senate Bill 174/House Bill 238, the Economic Security Act of 2017.
  • Oklahoma: House Bill 1310, Healthy Families and Workplaces Act.
  • Rhode Island: House Bill H.5413, Healthy and Safe Families and Workplace Act.
  • South Carolina: S. 361, the Earned Paid Sick Leave Act.
  • Virginia: SB 824, Paid Medical Leave Act (rejected in Committee).
  • Westchester County (NY) Paid Sick Leave Law.

Paid Sick Leave Preemption Developments

Alabama: Marnika Lewis v. Robert J. Bentley et al. USDC, N.D. AL, (Case No. 2:16-CV-690-RDP)  In February 2017. A federal court judge rejected challenges to the Alabama Uniform Minimum Wage and Right-to-Work Act, which bars political subdivisions from requiring employers to provide employees with wages or “employment benefits” not required by federal or state law.  An“employment benefit” includes paid and unpaid leave. The plaintiffs have appealed the dismissal to the U.S. Court of Appeals for the Eleventh Circuit.

Georgia, House Bill 243, a typical preemption bill, passed by the House, pending in the Senate.

Iowa: House File 295, a typical preemption bill, was passed by both the House and the Senate. Will be sent to Republican Governor Terry Branstad for his signature.

Maryland, House Bill 1 and Senate Bill 230, which provide sick and safe time, preempt political subdivisions from legislating on this topic effective January 1, 2017.  Due to this date, Montgomery County’s PSL law would be grandfathered in.

Minnesota: The House passed the Uniform State Labor Standards Act, House File 600, which would prohibit political subdivisions from enacting certain employment regulations, including paid leave requirements. It would void the Minneapolis and St. Paul PSL ordinances.  The companion bill, SF580, is pending in the Senate. House Bill 2107 would impose a financial penalty on any city that enacted a PSL law.A companion bill, SF2157, has been introduced in the Senate.

Ohio: Senate Bill 331 was enacted, making Ohio a PSL preemption state.

Pennsylvania: Senate Bill 128, a typical preemption bill, is pending.

South Carolina: Senate Bill 218, a typical preemption bill, is pending. The Senate Committee on Labor, Commerce and Industry has recommended that the bill be passed.

Paid Sick Leave Litigation

 Challenges to state PSL laws

Arizona: Arizona Chamber of Commerce et al v. Hon. Kiley et al. Arizona Supreme Court (Case No. 16-0314-SA). A cadre of business interests sought unsuccessfully to enjoin implementation of Proposition 206, which increased the minimum wage and required most Arizona employers to provide paid sick days. On March 14, the Arizona Supreme Court rejected the plaintiffs’ argument that the Proposition violated the state constitution’s Revenue Source Rule.

Massachusetts: CSX Transportation, Inc. v. Healey (D.MA, July 13, 2016). A railroad argued that it was not subject to the Massachusetts Earned Sick Time Law because that law was preempted by the Railroad Unemployment Insurance Act (RUIA), the Railway Labor Act and ERISA. The court concluded that the RUIA “reflects clear congressional intent that the RUIA preempt all state laws, including the [Earned Sick Time Law] that relate to sickness benefits for railroad workers.” This case is on appeal to the United States Court of Appeals for the First Circuit.

Massachusetts: Labor Relations Division of Construction Industries of Massachusetts v. Healey (D. MA, July 9, 2015). In 2015, a group of construction contractors whose employees were represented by labor unions argued that the Massachusetts Earned Sick Time Law was preempted by Section 301 of the Labor Management Relations Act because resolution of claims under the state paid sick law depended upon an interpretation of their collective bargaining agreements. The federal district court judge rejected the contractors’ claim. The United States Court of Appeals for the First Circuit affirmed the district court’s decision on December 16, 2016.

Oregon: County of Linn et al vs. Kate Brown as Governor, et al (16CV17209). If a local government must spend more than .01% of its budget on a new law, it is an unfunded liability and the local government need not comply with it, according to the state Constitution. Eight counties sued, arguing that the Oregon Paid Sick Leave was an unfunded liability. The judge agreed and gave the plaintiffs 90 days (which is approximately the end of March) to produce records to establish that their costs to comply with that law exceed the .01% threshold.

Washington: Haberman et al v. State of Washington,  Kittitas County Superior Court (Case No. 17-2.00041-1). Plaintiffs claim that Initiative 1433, passed by voters in November 2016 and which increases the minimum wage and requires employers to provide paid sick time, violates the state constitution because initiatives must contain a single subject and must adequately describe the content of the initiative. The lawsuit was filed in February 2017. A court date is set for April 21.

Challenges to local PSL laws

Pittsburgh, PA: Pennsylvania Restaurant and Lodging Ass’n v. City of Pittsburgh and Service Employees Int’l Union, Local 32 BJ. Commonwealth Court of Pennsylvania (Case No. 7 2016). Appeal of December 2015 decision of Court of Common Pleas, holding that Pittsburgh did not have the authority to enact its paid sick leave law and invalidating that law. Oral argument was held in mid-November 2016. Awaiting a decision.

Minneapolis, MN:  Minnesota Chamber of Commerce et al vs City of Minneapolis et al Minnesota Court of Appeals (Case No. A17-0131). The plaintiffs sought to enjoin enforcement of the Minneapolis Sick and Safe Time Ordinance.  In January 2017, a Hennepin County District Court judge declined to enjoin the Ordinance with regard to businesses within the geographic boundaries of Minneapolis but enjoined its enforcement with regard to businesses outside of those boundaries.  The case is on appeal in the Minnesota Appellate Court.

Other Paid Sick Leave Developments To Watch

On Labor Day 2015, then-President Obama signed Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors, which requires certain government contractors to provide certain employees with paid sick leave. The EO applies to certain government contractors who enter into certain government contracts after January 1, 2017. While there has been speculation about the plight of EO 13706 in the Trump administration, no steps have yet been taken to negate it and, unless and until it is voided, the EO is in effect.

Last year, the Duluth, MN City Council created a task force to collect information, hold public hearings, and make recommendations to the City Council concerning sick and safe time.  The task force has been meeting twice monthly, has scheduled eight public hearings (three hearings remain) and has posted online PSL surveys for employers and employees. The Task Force must make its recommendations no later than November.  Of course, the outcome of the Minnesota Melee will affect Duluth as well.

This report notes Q1 2017 developments in twenty-three states, seven municipalities, two counties and the federal government. (If I have missed any, please let me know.). Makes one look forward to Q2! All part of life’s rich paid sick leave pageant!

A Minnesota Paid Sick Leave Preemption Bill That Isn’t

One more piece to the Minnesota Melee I had posted about here.  In addition to the preemption and PSL bills that have been introduced in Minnesota, another bill, a bill of a type I have never seen in all my meanderings through PSL bills, has been introduced. House Bill 2107 does not prohibit a city from enacting a PSL law. To that extent, it is not a preemption bill. However, it directs that if a city enacts a PSL law (or increases the minimum wage or adopts scheduling restrictions) for employees other than its own city employees, the city forfeits the local government aid it would otherwise receive from the state. The amount of aid to each city is determined annually according to a statutory formula. More than $519 million in local government aid will be distributed in 2017, according to the state Department of Revenue.

cash-1296585_1280The financial forfeiture makes this non-preemption bill feel like a preemption bill. While legislators would be able to say that they did not prevent cities from enacting a PSL law, the reality is that the forfeiture will likely prevent cities from enacting a PSL law!  The concept of using financial forfeiture to coerce compliance is not new. The federal government uses this approach with states often. A state’s application of the concept to PSL would be new.

Pittsburgh and Philadelphia: A Tale of Two Paid Sick Leave Laws

Why was Pittsburgh’s Paid Sick Days Act struck down by a court yet the Philadelphia PSL law has not even been challenged in court?  An Allegheny County judge struck down the Pittsburgh PSL ordinance in December pgh-america-2053302_12802015 after finding that the city did not have the authority to enact it under the Pennsylvania Home Rule Charter and Optional Plans law. That law prohibits Home Rule Charter municipalities from determining “duties, responsibilities or requirements placed upon business, occupations and employers,” with limited exceptions.  An appeal of the judge’s decision is pending.

The Allegheny Institute for Public Policy, a non-profit research and education organization, recently issued a “Policy Brief” entitled “Time for Pennsylvania to Rein Muliberty-bell-656871_1280nicipal Regulations on Business.” It notes that the Home Rule Charter law specifically exempts Philadelphia from its prohibitions and recommends that the Commonwealth remove that exemption and bar municipalities “from enacting regulations not expressly permitted by the state,” i.e., a type of preemption law.

The Policy Brief notes that the Senate is considering a preemption bill, SB 128, as I had noted here.  The Policy Brief opined, as did I in my post, that even if both chambers of the legislature were to pass SB 128,  the Republicans do not have sufficient numbers in the House to overturn Democratic Governor Tom Wolf’s likely veto.

Preemption, Preemption, Preemption of Paid Sick Leave Laws

We all know the primary rule when buying a home is location, location, location. Municipalities are learning that when it comes to considering a paid sick leave ordinance, the primary concern is preemption, preemption, preemption. Has its state “preempted,” or negated, its authority to enact a PSL ordinance? If yes, the municipality might want to reconsider whether to step into the paid sick leave arena.  If it enacts an ordinance nonetheless, litigation challenging the ordinance is almost inevitable.

I have posted about numerous PSL do-44167_1280preemption developments. Most recently, a federal judge in Alabama upheld the state’s preemption law, passed in response to the City of Birmingham’s enacting an increase in the minimum wage. The law preempts municipal sick leave laws as well. Missouri and Ohio have enacted preemption laws within the past three months. The Maryland paid sick leave debate includes the issue of whether a state law, if one were to be enacted, will preempt Montgomery County’s paid sick leave ordinance. Preemption bills are pending in Minnesota and Pennsylvania. Pittsburgh’s appeal of a judge’s decision that it did not have authority to enact its paid sick leave law is pending.

Cities oppose preemption laws for obvious reasons. The National League of Cities, an organization which advocates for cities, recently issued a comprehensive report about the preemption law trend, entitled City Rights in an Era of Preemption: A State-by-State Analysis, available here. It addresses numerous types of state preemption laws; the PSL section begins on page 8.

The “Preemption States” tab on the menu bar of my blog, as its name suggests,  lists the states that have enacted preemption laws. The list has grown since I created it just a few months ago.  More states will be added to the list. That is a near certainty.

South Carolina May Ban Local Paid Sick Leave Laws

South Carolina may join the growing list of states that prohibit political subdivisions from requiring employers to provide paid sick leave.  Senate Bill 218 would ban political subdivisions from requiring employers to provide employees an “employee benefit”, defined as “anything of value that an employee may receive from an employer in addition to wages.”  The list of examples of employee benefits includes paid sick leave and paid personal necessity leave.  No political subdivision of South Carolina has enacted a PSL law.

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As I have noted in a prior post, the political composition of a state legislature, and its status as a red or blue state, are significant factors in determining whether to enact a PSL law or, in this case, preemption of such a law. South Carolina was a red state last November, giving President Donald Trump 54.9% of the vote. The state government is a “trifecta: Governor Henry McMaster is a Republican and Republicans have majorities in both houses of the legislature. Based on the political makeup of the state government, it would be a reasonable bet that South Carolina will soon be added to my list of preemption states.