Wisconsin Court of Appeals upholds Milwaukee ordinance mandating paid sick leave

By Joe Forward, Legal Writer, State Bar of Wisconsin

March 25, 2011 – The District I Wisconsin Court of Appeals recently reversed the Milwaukee County Circuit Court and upheld the City of Milwaukee’s Paid Sick Leave Ordinance, which nearly 70 percent of voters approved in 2008.

The ordinance requires private employers in the City of Milwaukee to provide employees with paid sick leave at a minimum rate of one hour for every 30 hours worked. The ordinance also lets employees accrue at least 72 hours paid sick leave per year (40 hours for small businesses).

The Metropolitan Milwaukee Association of Commerce (MMAC), an association of 1,800 member businesses throughout Wisconsin, challenged the validity of the ordinance based largely on the argument that voting ballots did not contain a “concise statement of its nature,” as required by Wis. Stat. section 9.20(6).

MMAC asserted the ballot should have contained language to alert voters that employees would be able to use paid sick leave “to seek relocation due to domestic or sexual violence or stalking and to prepare for or participate in a civil or criminal legal proceeding related to domestic or sexual violence,” and other more specific language.

The Milwaukee Chapter of 9to5 National Association of Working Women, an intervening defendant in MMAC’s lawsuit against the City of Milwaukee, had obtained the signatures necessary to place the proposed ordinance before voters.

The decision in Metropolitan Milwaukee Association of Commerce, Inc. v. City of Milwaukee, 2009AP1874-AC (March 24, 2011) forces the Milwaukee County Circuit Court to vacate a permanent injunction it ordered in February 2009 to suspend the ordinance and directs the circuit court to grant summary judgment in favor of 9to5.

The Wisconsin Supreme Court split 3-3 after accepting the case on certification last year, sending it back to the appeals court. The case could be appealed to the supreme court. However, a bill currently pending in the Wisconsin Assembly would void certain provisions of the ordinance. Senate Republicans passed SB-23 on March 3 without Senate democrats.

Concise statement of the nature of the ordinance

In an opinion written by Judge Margaret Vergeront, the three-panel appeals court addressed several arguments, including whether the paid sick leave ballot complied with the requirement that it contain a concise statement of the nature of the ordinance.

MMAC had argued that under Wisconsin case law, a ballot question “must reasonably, intelligently, and fairly compromise or have reference to every essential of the amendment.” State. Ex. Rel. Thomson v. Zimmerman, 264 Wis. 644, 60 N.W.2d 416 (1953).

Thomson, the appeals court noted, concerned a constitutional amendment, and City of Milwaukee v. Sewerage Commission, 268 Wis. 342, 67 N.W.2d 624 (1954), a municipal referendum case decided the year after Thomson, “persuades us that the supreme court has not adopted the ‘every essential’ standard outside the context of constitutional amendments.”

The appeals court concluded that section 9.20(6) only requires a “brief statement of the general purpose of the proposed ordinance,” relying largely on case law and the statutory scheme.

The court examined the common meaning of the words “concise” and “nature” and keyed on the 1913 case of State ex. rel. Elliot v. Kelly, 154 Wis. 482, 143 N.W. 153 (opinion penned by Justice Roujet D. Marshall) as “the only case brought to our attention that involves the validity of a ballot statement under a direct legislation statute.”

In Elliot, the Wisconsin Supreme Court explained that the direct legislation statute “requires the ballot in such a case to contain ‘a concise statement of the nature’ of the ordinance. Any brief collection of words which will fairly accomplish that, is sufficient.” Id. at 486.

In MMAC v. Milwaukee, the appeals court noted Elliot and highlighted the statutory scheme that requires a proposed ordinance to be published in its entirely in a newspaper of wide circulation and posted at each polling place, which was done.

“Elliot supports 9to5’s position that the notices required by statute are intended to perform the function of informing voters of the specifics of the ordinance and, if the required notice has been given, the adequacy of the ballot question is evaluated in that context.”

The appeals court also noted that MMAC’s proposed ballot statement at oral argument “was a decidedly non-brief 220-word, five paragraph question” and requiring “every essential element” to be stated on the ballot would be particularly problematic for complex legislation.

A statement in the ballot question describing it as an “ordinance requiring employers within the city to provide paid sick leave to employees,” without more, satisfied section 9.20(6)’s requirement for a “concise statement of [the ordinance’s] nature,” the court concluded.

Substantive due process

The appeals court rejected MMAC’s and the circuit court’s suggestion that employee leave for purposes of relocation and legal action cannot reasonably be considered sick leave, concluding that these provisions are rationally related to the health of the City of Milwaukee’s residents.

Substantive due process requires the legislative means chosen have a rational relationship to the exercise of police power for the general health, safety and welfare, the court explained.

“The fundamental inquiry is not whether the challenged provisions in an ordinance are rationally related to the stated purpose of the ordinance but whether the challenged provisions are rationally related to any legitimate municipal objective …”

The appeals court concluded that MMAC did not meet its burden to prove beyond a reasonable doubt that the entire ordinance or the specific provisions challenged have no rational relationship to the health, safety, and welfare of the city.

Addressing the relocation and legal action provisions specifically, the court stated that “it is a reasonable assumption that a person who has been a victim of domestic abuse, sexual assault, or stalking will have better physical and mental health in the future if the abuse, assault, or stalking does not occur again,” Judge Vergeront wrote.

MMAC also challenged the requirement that employers allow employees to annually accrue at least 72 hours paid sick leave (40 hours for small businesses) as opposed to unpaid sick leave.

“With respect to paid versus unpaid sick leave, it is reasonable to conclude that paid sick leave will induce more employees to take time off work when necessary for their health and the health of their families,” Judge Vergeront wrote. “The choice of paid sick leave is not unreasonable simply because unpaid sick leave might achieve many of the ordinance’s goals.”

Court rejects MMAC’s other arguments

The appeals court rejected MMAC’s argument that the ordinance is preempted by the state Minimum Wage Law, the Family/Medical Leave Act (FMLA), and the Worker’s Compensation Act. The court also rejected the argument that federal law – the National Labor Relations Act and the Labor Management Relations Act – preempt the ordinance.

MMAC argued the ordinance impaired existing collective bargaining agreements, violating the Contract Clauses of the U.S. and Wisconsin constitutions. The court disagreed, concluding that the ordinance has a legitimate public purpose and any contract impairment, substantial or not, is reasonable and necessary to achieve that purpose.

Finally, MMAC argued the ordinance regulates extra-territorial activities and a city may not regulate activities outside their boundaries. Again, the court rejected this argument, concluding the ordinance clearly regulates only employers within the city.

Two-year repeal safe harbor

Section 9.20(8) provides that a city ordinance adopted under direct legislation is not subject to the veto power of the mayor and cannot be repealed or amended within two years of adoption except by a vote of the electors.

MMAC argued the two-year calculation should begin from the time the ordinance was originally enacted by publication on Nov. 4, 2008, regardless of the injunction that was in effect. That would currently allow the ordinance to be repealed locally.

But the court concluded that the two-year time period guaranteed by section 9.20(8) excludes injunction period, which started Feb. 6, 2009, and will end on the date the circuit court enters its order vacating the permanent injunction.