Business Groups Urge Court to Block Austin’s Paid-Sick-Leave Law


Business Groups Urge Court to Block Austin’s Paid-Sick-Leave Law

A paid-sick-leave ordinance in Austin, Texas, should be blocked because it violates the state's minimum wage law, the state attorney general's office and lawyers who represent business groups argue.

The challenged ordinance would require 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. The law was to take effect Oct. 1, but a state appeals court temporarily halted it.

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. The groups are seeking to leave in place a temporary injunction that will prevent the law from taking effect while the courts consider the merits of the challenge.

"SHRM is optimistic that the court will ultimately reject Austin's one-size-fits-all sick-leave mandate, but because other state and local governments are likely to push more of these mandates, SHRM will continue to push for a national solution as outlined in the Workflex in the 21st Century Act," said Lisa Horn, SHRM's vice president of congressional affairs.

The Society worked with Rep. Mimi Walters, R-Calif., to develop the Workflex in the 21st Century Act (H.R. 4219), which would simplify paid-leave options and offer employees generous paid leave and increased flexible work arrangements.

State Law Pre-Emption

The Texas Minimum Wage Act bars cities from setting or regulating private-sector employees' wages. The state attorney general's office and the business groups that oppose Austin's mandate contend that paid-leave benefits are wages.

"The legislature told cities that local ordinances are pre-empted to the extent that they establish or govern wages," said Andrew Davis, a state assistant solicitor general, during oral argument on Oct. 17. "Nevertheless, the city enacted and plans to enforce an ordinance that effectively raises wages by requiring employers to pay employees more for the same amount of work."

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

Paul Matula, an attorney with the city of Austin, argued that the Texas Minimum Wage Act's pre-emption clause applies only to wages and that paid-sick-leave benefits are not wages. Legislators know how to express their intent to pre-empt local laws, he said, and they must use "unmistakable clarity" when doing so.

Davis disagreed. He noted that the Austin law would require employers to pay employees at their "ordinary rate" when they take accrued sick leave. By directing employers to pay workers a certain rate, the city has attempted to regulate wages, he argued.

Lawsuit Timing

Matula argued that the lawsuit challenging the ordinance was brought too soon, before it could be shown that the new law would cause any harm. He said that most employers would not face any enforcement penalties until June 2019, and that small employers would have until 2020 before the enforcement mechanism kicks in.

"But is there any doubt that [the ordinance] was going to be implemented and that it would be enforced and that there would be consequences if businesses did not comply?" asked Justice David Puryear of the Texas Third District Court of Appeals. He noted that employers presented evidence that they may need to alter their business models, make arrangements with third-party administrators and take other steps to prepare for implementation.

More City-Level Laws

The San Antonio City Council passed a similar ordinance several months after Austin lawmakers approved theirs. However, advocates for paid sick leave in Dallas fell short of the signatures needed to put the issue on November's ballot.

Some Republican lawmakers in Texas have said that local paid-sick-leave laws hurt small businesses, and they may introduce bills to block such ordinances, according to the Texas Tribune

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.

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.


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