The new Minneapolis minimum wage will start going into effect Jan. 1 as scheduled, after a judge denied a request for a temporary injunction against the ordinance and dealt a blow to the key lawsuit challenging the municipal wage hike.

The Minnesota Chamber of Commerce filed a lawsuit challenging the ordinance in November, and asked Judge Susan Burke to block the city from phasing in the $15 minimum wage starting next month, arguing the ordinance conflicts with the state minimum wage and would cause harm to businesses.

But Burke denied the injunction, citing "plaintiffs' failure to show a likelihood of success on the merits and their failure to show that they are likely to suffer more harm if an injunction is denied than the public and the City will suffer if an injunction is granted."

Susan Segal, the Minneapolis city attorney, said she was "very pleased" with Burke's decision.

"She straight out ruled, and correctly, that they are not likely to succeed on the merits," Segal said. "She found that there is no conflict between the city ordinance and state law, and that there was no evidence of an intent by the legislature for the state minimum wage to be the exclusive law on this issue."

Wage increases will start in Minneapolis for large employers on New Year's Day, when they must pay at least $10 an hour. The wage for all businesses will rise each year on July 1.

Large businesses — those with 100 or more employees — will have to pay the $15 per hour minimum by summer 2022. Small businesses have until 2024. Employers outside the city who send people into Minneapolis for work will also be required to pay those workers the Minneapolis minimum wage.

The chamber's lawsuit will go forward, despite the judge's ruling on the injunction. Co-plaintiffs include Graco, Inc., the Minnesota Recruiting and Staffing Association, and TwinWest Chamber of Commerce, which represents several western suburbs.

Businesses in the suburbs are paying as much attention as those in Minneapolis, said Jonathan Weinhagen, president of the Minneapolis Regional Chamber of Commerce. Employers in the west metro already complain of worker shortages, he said, and they are worried it will be harder to find people when Minneapolis businesses are paying dramatically more than they do.

"We're not going to understand the impacts until the ordinance is well into its phase-in period," Weinhagen said.

Debate shifts to St. Paul

Minneapolis was the first big city in the Midwest to pass a $15 minimum wage, joining Seattle, San Francisco, Los Angeles and Washington, D.C.

Now attention shifts to St. Paul, where the City Council is expected to take up a municipal minimum wage by summer's end and Mayor-elect Melvin Carter has advocated for $15 per hour with no exemption for tipped workers.

Jennifer Schellenberg, a bartender now working at Northbound Smokehouse & Brewpub who campaigned unsuccessfully for tips to count toward the minimum wage in Minneapolis, said she thinks the public debate is shifting in favor of a tip carveout, even though the minimum wage passed in June without it.

"It wasn't given thoughtful scrutiny," she said. "Now that the dust is settling, people are listening more."

One Minneapolis establishment, rock and blues club Whiskey Junction, closed in November and blamed the minimum wage ordinance, especially the absence of an exemption for tipped workers.

Schellenberg said without the tip credit, restaurants will start switching to counter service or charging customers a service fee rather than accepting tips when they have to pay around $12 per hour plus tips.

"I'm really counting on St. Paul to take a more pragmatic look at the minimum wage," she said. "Then Minneapolis will have made itself an island and will have to reassess."

Weinhagen, who represents businesses all over the metropolitan area, said he is watching St. Paul closely, too, and believes the city will address the issue in its own way. Businesses who operate in both cities won't relish the task of complying with two different minimum wages.

"It could be a challenge if the ordinances are different," Weinhagen said.