Appeals Court Blocks Austin’s Paid-Sick-Leave Law

San Antonio’s ordinance may face similar challenge

Lisa Nagele-Piazza, J.D., SHRM-SCP By Lisa Nagele-Piazza, J.D., SHRM-SCP November 20, 2018
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Austin's paid-sick-leave ordinance is pre-empted by the Texas Minimum Wage Act, a state appeals court found on Nov. 16 in a lawsuit seeking to stop the city's mandate.

The state's minimum wage statute bars cities from setting or regulating private-sector employees' wages, and the appeals court held that the paid-sick-leave ordinance attempted to establish a wage. The law would require businesses to pay employees at their "ordinary rate" when they take accrued sick leave.

"The effective result is that employees who take sick leave are paid the same wage for fewer hours worked," the appeals court said.

The district court has yet to rule on the merits of the case, but it had denied a temporary injunction to freeze the ordinance during litigation. The appeals court reversed the decision and instructed the lower court to grant the temporary injunction and to proceed in a way that is consistent with its ruling.

"The court's decision signals trouble ahead for other Texas cities experimenting with mandatory sick-leave laws," said Adam Sencenbaugh, an attorney with Haynes and Boone in Austin and San Antonio. "In August, San Antonio passed a similar paid sick leave ordinance which will likely face a copycat challenge."

SHRM Supports Challenge

The Society for Human Resource Management (SHRM) joined the state attorney general's office, the Texas Association of Business and several other business groups in the lawsuit against the city of Austin. "Creating different rules in different locations makes it very difficult for employers who may have employees in multiple locations," said Nancy Hammer, SHRM's vice president of regulatory affairs and judicial counsel. 

(SHRM Online)

Benefits Based on Employer Size

The ordinance was supposed to take effect on Oct. 1, but the appeals court had put the local mandate on hold while it considered arguments in the lawsuit. The city law would have required employers in Austin to provide paid-sick-leave benefits to employees who work for that employer 80 or more hours in Austin in a calendar year. Workers would accrue one hour of sick leave for every 30 hours worked in the city, and employers could cap annual accruals at either 48 or 64 hours, depending on employer size.

(SHRM Online)

[SHRM members-only state coverage: Texas Employment Law]

Debate Continues

Austin is reviewing its options, according to city spokesperson Andy Tate. "Ensuring workers are able to take time off work when they are sick is simply the right and responsible thing to do, as many cities have already acknowledged," Tate said. However, Annie Spilman, the state director for the National Federation of Independent Business, one of the business groups that sued the city, said that the justices "were just doing their job." She noted that the business group will use the court's decision to also fight the San Antonio ordinance. Additionally, state Rep. Matt Krause, R-Fort Worth, introduced a bill that would explicitly prohibit cities from enacting paid-sick-leave mandates.

(The Texas Tribune)

San Antonio Could See Different Result

San Antonio's paid-sick-leave ordinance is slated to take effect in January 2019 and will require employers to provide covered workers with one hour of paid sick leave for every 30 hours worked. As with Austin's ordinance, businesses will be permitted to cap annual accruals at either 48 or 64 hours, depending on employer size. Although the law may also be challenged under the Texas Minimum Wage Act, the result could be different. "This will go up to the San Antonio Court of Appeals. It has different judges thinking different ways. They may read it differently," said St. Mary's University School of Law professor Wayne Scott.

(KSAT 12)

State and Local Conflicts

More than 20 states have passed laws that prohibit local governments from imposing their own paid-leave mandates. Nonetheless, state and local paid-sick-leave laws continue to proliferate. In some states, such as California, Maryland and Washington, employers must comply with state and local sick-leave laws that have different accrual rates, caps and administrative rules. Employers must generally comply with the most-generous mandate when more than one law applies.

While worker advocates say that paid-sick-leave ordinances guarantee that employees will be able to care for themselves and their families, business groups argue that inconsistent paid-sick-leave rules at the state and local levels make compliance difficult for employers.

(SHRM Online)

[Visit SHRM's resource page on paid time off.]

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