On June 5, 2020, the Texas Supreme Court refused to review a case that could have decided whether municipal paid sick leave ordinances in Texas were lawful. Specifically, it denied a petition from the City of Austin to review a state appellate court decision holding that Austin’s paid sick leave ordinance is unconstitutional and preempted by the Texas Minimum Wage Act. The decision not to act is somewhat perplexing given the court’s previous request to the parties on August 30, 2019, for full briefing on the merits. But after months without any further movement, the court offered no reason for its refusal to review the case.
By way of background, three major Texas cities – Austin, Dallas, and San Antonio – each passed municipal ordinances requiring private employers to provide paid sick leave to their employees in 2018 (Austin) and 2019 (Dallas and San Antonio). All three ordinances were challenged in separate lawsuits. Preliminary injunctions were issued in each case, preventing each city from enforcing their respective ordinances, after the courts concluded that the ordinances were (likely) unlawful.
The issue of whether the Austin ordinance should have been enjoined was appealed to the Texas Supreme Court, where many had hoped the court would provide definitive guidance on the legality of the ordinance. Such a decision would have almost certainly answered the same question regarding the ordinances in Dallas and San Antonio, given how similar the ordinances are to one another. However, the court refused to weigh in on the issue by denying the petition for review, leaving undisturbed the Third Court of Appeals’ decision to enjoin the Austin ordinance.
The parallel lawsuits in each city will now continue without any further guidance from the Texas Supreme Court. The decision by the Third Court of Appeals effectively ends the controversy in Austin since the court held that the ordinance is unconstitutional as a matter of law, effectively leaving no true path forward for the city to defend the lawsuit. By contrast, the Fourth Court of Appeals has not yet rendered a decision regarding the San Antonio ordinance, as it still must decide whether to uphold the district court’s preliminary injunction. If it strikes the injunction down by deciding that the ordinance is legal, then the Texas Supreme Court might be more likely to grant a petition for review because this would create a split of authority among the appellate courts. Finally, the litigation in Dallas will continue, but it is unknown whether the city will appeal the preliminary injunction that issued in its case. Such an appeal would go to the U.S. Court of Appeals for the Fifth Circuit. In summary, final decisions about the fate of these Texas paid sick leave ordinances are unlikely to be rendered in the near future.
What should employers do?
At this point and despite ample opportunity, both the state legislature (during the last session) and the Texas Supreme Court have failed to resolve the open question as to whether municipal paid sick leave ordinances are lawful in Texas. Therefore, employers must continue to monitor these three separate lawsuits. Although all three ordinances are enjoined, it would be wise to periodically check in with employment counsel to review the statuses of these ordinances, and to be prepared to roll out compliant leave programs if these ordinances are allowed to take effect.