September 22, 2020

Volume X, Number 266

September 21, 2020

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Uncertainty Remains for Texas Paid Sick Leave Ordinances

Over the past two years, city councils in three of the four largest cities in Texas — Austin, San Antonio, and Dallas — each have passed ordinances requiring local employers to provide their employees with paid sick leave. In each instance, the new proposed ordinance was met with fierce resistance from local businesses, staffing agencies and professional associations. Those aligned against the ordinances promised that their adoption would be followed swiftly by lawsuits. What’s more, the opposition was supported by none other than Texas Attorney General Ken Paxton, who took a hardline stance that such ordinances violate the Texas Minimum Wage Act. The purpose of the Minimum Wage Act, Paxton argued, was to set a uniform statewide policy with respect to wage requirements that municipal governments had no right to circumvent. Despite all of this pushback, the city council in each city overwhelmingly voted to adopt the ordinance.

The ordinances in all three cities are similar and contain some of the same key features but each also has its own distinguishing characteristics:

Accruing Earned Sick Time

  • All three ordinances provide that an employee earns 1 hour of sick time for every 30 hours worked.

  • The Dallas and Austin ordinances apply to employees who perform at least 80 hours of work for pay within the city limits in a year. The San Antonio ordinance does not include an 80-hour threshold but specifies that employees who work outside the city for more than 50 percent of their work hours during a year are covered by the ordinance only if they perform more than 240 hours of work in San Antonio within the year.

  • The Dallas and San Antonio ordinances permit earned sick time to accrue in increments of a fraction of an hour if the employer has adopted a written policy to that effect, but the Austin ordinance prohibits fractional hour increments.

  • Under all three ordinances, earned sick time begins to accrue at the commencement of employment and is available for use as soon as it accrues. But under the Dallas and Austin ordinances, employers may restrict an employee’s use of leave during the first 60 days of employment if the employer establishes the employee’s term of employment is at least one year. The San Antonio ordinance permits employers to restrict or limit use of leave during an established benefit eligibility period not to exceed 90 days from the start of employment.

  • Paid sick leave is available under all three ordinances for absences caused by an employee’s:

    • Physical or mental illness or injury, preventative medical or health care or health condition

    • Need to care for a family member’s physical or mental illness, preventative medical or health care, injury or health condition

    • Need to seek medical attention, seek relocation, obtain services from a victim services organization, or participate in legal or court-ordered action related to an incident of victimization from domestic abuse, sexual assault, or stalking involving the employee or the employee’s family member.

Using Earned Sick Time

  • All three ordinances provide that earned sick time is payable in an amount equal to what the employee would have earned if the employee had worked the scheduled work time, exclusive of any overtime premium, tips or commissions, but no less than the state minimum wage.

  • All three ordinances bar employers from preventing an employee from using earned sick time for an unforeseeable qualified absence.

  • Under all three ordinances, sick time an employee does not use in any given year rolls over to the next year up to an annual cap. The San Antonio ordinance sets the cap at 56 hours, while the Austin and Dallas ordinances establish separate annual caps depending on the size of the employer. For medium and large employers — defined as those with at least 15 employees at any time in the preceding 12 months — the cap is 64 hours. For small employers with less than 15 employees, the cap is 48 hours.

  • All three ordinances provide that neither the amount of earned sick time nor the right to use earned sick time shall be affected by an employee’s transfer to a different facility, location, division or job position with the same employer.

  • All three ordinances specify that a former employee rehired by an employer within six months following a separation from that employer may use any earned sick time that was available to the employee at the time of separation.

  • The Dallas and Austin ordinances specifically provide that employers are not required to allow an employee to use earned paid sick time on more than eight days in a year. The San Antonio ordinance, though, includes no such provision.

Verification/Recordkeeping Requirements

  • All three ordinances permit employers to adopt reasonable verification procedures where an employee requests to use earned paid sick time for more than three consecutive work days, so as to ensure an employee’s request to use earned sick time meets the ordinance requirements. The Dallas and San Antonio ordinances, however, specify that employers may not adopt verification procedures that would require an employee to explain the nature of domestic abuse, sexual assault, stalking, illness, injury, health condition or other health need.

  • All three ordinances require employers to maintain records establishing the amount of earned sick time accrued and used by each of their employees and to provide each employee with electronic or written notices on not less than a monthly basis showing the amount of the employee’s available earned sick time.

  • All three ordinances require employers who provide employees with company handbooks to include in their handbooks notices of an employee’s paid sick leave rights and remedies.

  • The Dallas and Austin ordinances require employers to post signage describing the paid sick leave requirements. The San Antonio ordinance requires signage to be posted if the Director of the San Antonio Metropolitan Health District makes such signage available on the district’s public website, and to date, it has not.

Prohibition against Retaliation/Enforcement

  • All three ordinances prohibit retaliation against employees who request or use paid sick leave or report violations of the ordinance.

  • The Austin and San Antonio ordinances provide for the imposition of civil penalties against employers who are found to have violated the ordinances’ requirements. Under both, the penalty is $500 per violation.

At least with respect to Austin and San Antonio, though, employers need not race to conform their leave policies to these new requirements. True to their word, opponents filed lawsuits seeking to enjoin implementation of all three cities’ ordinances, and they obtained injunctions temporarily blocking the ordinances in Austin and San Antonio. While a federal lawsuit regarding the Dallas ordinance is pending, the court has not yet ruled on the plaintiffs’ request for a temporary injunction, and so the Dallas ordinance went into effect on August 1, 2019. The State of Texas has intervened in all three lawsuits to join the fight against the ordinances.

The City of Austin has appealed to the Texas Supreme Court the temporary injunction preventing the city from implementing its paid sick leave ordinance. While the Supreme Court has not yet decided whether to review the case, the Court did order the parties to file briefs in support of their positions.  If the Court ultimately opts to grant review, it will likely hear oral argument this spring and could issue a ruling before taking its summer recess at the end of June.

Predicting how the Court may decide the case is something of a “sticky wicket.” It may issue only a narrow decision finding that the plaintiffs will suffer no irreparable harm — as they must show they will — if the ordinance goes into effect while the parties continue to litigate the fundamental question of its enforceability.  But since a temporary injunction can be issued only if the parties seeking it have shown they are probably entitled to the relief they seek — here, only if the ordinance opponents have shown that more likely than not the ordinance violates the Texas Minimum Wage Act or the Texas Constitution — the Court’s opinion may enable employers to read the tea leaves regarding the Court’s legal assessment of paid sick leave ordinances.

No matter its reasoning, though, the only question before the Texas Supreme Court at this time is whether the temporary injunction should stand. Put otherwise, to one degree or another, uncertainty will persist in all three cities until one of the lawsuits is tried and the appeals process is exhausted, which will likely take another one to two years.

© 2020 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.National Law Review, Volume X, Number 27

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About this Author

Alex Harrell DrinkerBiddle Attorney Dallas Litigation
Associate

Alex Harrell represents businesses and individuals in complex litigation matters, ranging from simple negligence actions to complex intellectual property and employment disputes. He has a broad litigation background and significant experience assisting employers with drafting and enforcing restrictive covenants, such as non-compete agreements. His work in the employment sphere often intersects with intellectual property, as he counsels employers and employees in drafting agreements, policies and procedures designed to safeguard their ideas and work.

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