The decision by Los Angeles officials to increase the minimum wage in the city to $15 an hour by 2020 is just another example of a growing trend of municipal activism in the area of employment law. Let's be clear: This is a new phenomenon and a big problem for employers.
Multistate employers must already comply with a robust body of federal law on everything from discrimination to wage and hour requirements. And they must also follow the varying laws of 50 states, which address these same issues in different ways. And because cities across the country from Tacoma, Wash., to Trenton, N.J., are also passing local ordinances that impact employers in areas like paid sick leave and minimum wage, employers now have to comply with three levels of regulation and the added complexity that comes with it.
Even airports are getting into the act. On May 18, the Metropolitan Airports Commission decided to raise the minimum wage for the lowest-paid employees at the Minneapolis-St. Paul International Airport to $10 an hour.
Action by states as well as cities on issues such as minimum wage are understandable in light of congressional gridlock and rising concerns over income inequality. Having multiple minimum wages, phased in over time, with special rules for certain occupations and certain sized employers at the city level does, however, create a lot of complexity. This issue is perhaps best left to the states.
Employers are struggling to keep up. A 2011 survey by ADP showed that half of responding small- to midsize businesses lacked confidence that they would be able to keep up with constantly changing workplace laws and regulations, and more than half saw this landscape becoming more challenging over the next few years. Noncompliance, however, is risky and potentially expensive, especially when employers face large class actions and collective actions over technical wage and hour issues.
Historically, employers in the United States have not been legally required to provide paid sick leave to employees, although most do. In 2006, San Francisco became the first locality in the nation to guarantee access to earned paid sick days. Since then, numerous jurisdictions have also enacted laws requiring employers to provide paid sick leave, including San Diego and Long Beach, Calif.; Washington, D.C.; New York City; Seattle, and Portland and Eugene, Ore. Eight cities in New Jersey have also passed ordinances requiring employers to provide sick leave. In April of this year, Minneapolis Mayor Betsy Hodges announced she would take part in championing a Minneapolis Working Families Agenda, including earned sick time for city employees.
But these efforts are not limited to paid sick leave and minimum wage. Madison, Wis., recently passed an ordinance prohibiting discrimination against atheists. Boulder, Colo., and Berkeley, Calif., have laws on employee drug testing. Many cities, like New York and Philadelphia, are enacting laws regarding credit and background checks or "ban-the-box" prohibitions on criminal background questions on employment applications.
In Minnesota, discrimination claims can be handled by the federal EEOC, the Minnesota Department of Human Rights or the city human rights commissions for Minneapolis, St Paul, etc.
These multiple levels create challenges for employers that extend far beyond the cost of higher wages or paid sick time, per se.
First, the mere task of tracking new developments in thousands of cities instead of 50 states is overwhelming. Second, employers also must track where each employee lives, or moves to, and works. (Whether choice of applicable law is based on where one works or where one lives is surprisingly unclear and inconsistent.) Third, complying with this three-tiered patchwork of regulation means more opportunity for contradiction as some laws have requirements that are the opposite of other laws. For instance, changing a national payroll system to comply with the paid sick leave ordinance in Passaic, N.J., might violate the law in San Francisco.
The rise of cities in employment lawmaking has created a backlash. Twelve states have enacted laws barring local governments from requiring businesses to provide paid sick leave and 15 states have banned local minimum wages. Similar discrepancies between statehouses and city halls have involved regulation of plastic shopping bags and fracking, but employment law is at the forefront.
Minnesota has a number of Fortune 500 companies across the country. Their employment law compliance challenges are growing by the day. A Minnesota ban on municipal lawmaking in this area would be one step toward mitigating this regulatory burden.