A divided Minnesota Court of Appeals panel upheld Minneapolis' $15 minimum wage ordinance, marking another victory for the city as it implements and enforces new labor laws designed to help low-wage workers.

Graco Inc., an international manufacturing supplies and marketing company based in Minneapolis, filed a lawsuit trying to stop the city's minimum wage ordinance from taking effect in 2017. After a Hennepin County judge sided with the city last year, Graco appealed the decision, arguing the city's law is pre-empted by the state's minimum wage law.

Writing for the majority, Judge Renee Worke rejected the argument that validating the city's ordinance would allow for a "patchwork" of regulations that would be detrimental to the state. In the 2-1 ruling, Worke and Judge Louise Dovre Bjorkman found that state law doesn't undercut the power of cities to create their own minimum wages.

"Our minimum wage ordinance is here to stay," Minneapolis Mayor Jacob Frey, who supported the law as a City Council member, said in a statement. "After more than a year of litigation, thousands of Minneapolis workers and families can rest a little easier knowing that the ordinance protecting their livelihoods is on firm legal ground."

Graco issued a statement saying it was "disappointed" with the ruling. Because of Judge Matthew Johnson's dissent, the company may appeal.

"We hold firm to our belief that individual cities mandating wages and benefits creates an unworkable patchwork of employee compensation standards harmful to our business and employees," the company said. "… Both employees and employers need the flexibility to define what they need in compensation and benefits programs to address these specific situations and allow businesses to be competitive in their respective markets."

In 2017, Minneapolis became the first Midwestern city to adopt a $15 minimum wage, which will be phased in over the next several years. Other cities across the country, including Seattle, San Francisco and Washington, D.C., have adopted a $15 minimum wage, and St. Paul leaders voted last year to do the same. Minneapolis also passed an ordinance guaranteeing safe and sick time for all workers.

Enforcing new laws

As the city has defended the ordinance in court, investigators from the city Department of Civil Rights have worked to make sure businesses are complying.

Last year, the city investigated 139 complaints of potential violations of its new labor ordinances, most around employers failing to abide safe and sick time rules, according to data presented to a City Council committee Monday. Of those, 89 resulted in a settlement, 39 were withdrawn or dismissed and 29 were unsubstantiated. Nine ended with an order and 14 were outside the city's jurisdiction.

Employers have paid out just under $40,000, mostly in two cases, according to the city. Most of them — 42 percent — came from complaints in the restaurant industry. This includes McDonald's at 210 E. Lake St., which agreed to pay workers $20,000 after an investigation found they were paid below the minimum wage.

Andy Mannix • 612 673-4036