Court Strikes Down Austin’s Paid Sick Leave Ordinance

Foley & Lardner LLP

Earlier this year, the city of Austin became the first Texas city to join the growing number of localities throughout the nation passing legislation requiring employers to provide paid sick leave to their employees.

However, this past Friday, November 16, 2018, the Austin-based 3rd Court of Appeals issued an opinion that will prevent the local ordinance’s enforcement. The Austin ordinance set out to provide employees who worked at least 80 hours for a single employer in a calendar year with one paid hour of sick leave for every 30 hours worked. The ordinance was set to go into effect on October 1, 2018, but a legal challenge brought by several local business-aligned groups and the state of Texas sought a temporary injunction to enjoin the ordinance from taking effect.

In their challenge, the state and the local businesses argued that the ordinance should be struck because it unconstitutionally establishes a “wage” in conflict with the Texas Minimum Wage Act, which preempts “wages” established by local governments. The city of Austin alternatively argued that the ordinance established an employment benefit, not a “wage,” and was thus constitutional. Ultimately, the 3rd Court of Appeals sided with the state and the local businesses, holding that the ordinance violated the Texas constitution and was preempted by Texas’ minimum wage law. The Court of Appeals’ order also instructs the trial court to enter an injunction prohibiting the ordinance’s enforcement.

While this ruling is currently limited to the Austin ordinance that was at issue in that case, it could have a larger impact on challenges to existing or proposed paid sick leave laws nationally. As we’ve written several times before, at least nine states (Arizona, California, Connecticut, Maryland, Massachusetts, Oregon, Rhode Island, Vermont, and Washington) and numerous major U.S. cities (including Chicago, the District of Columbia, Los Angeles, New York City, Oakland, Philadelphia, Portland [Oregon], San Diego, and San Francisco) already have some form of paid sick leave laws on the books.

Employers throughout the country should remain vigilant of local paid leave law developments and consult with counsel as necessary to ensure they are complying with the minimum sick leave requirements in their places of operation.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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