Paid Sick Leave Ordinances Blocked by Texas Courts
The Texas Supreme Court has denied a petition to review a Third Circuit decision enjoining the Austin Sick Leave ordinance. Thus, all three city ordinances passed in San Antonio, Austin, and Dallas have now been blocked at various court levels. See the following from the Texas Construction Association:
Three Texas cities have adopted municipal ordinances requiring private employers to provide paid sick leave to employees.
The City of Austin enacted the first ordinance on February 15, 2018, the City of San Antonio followed on August 16, 2018, and the City of Dallas on April 24, 2019.
Austin – Not effective. Review denied by the Texas Supreme Court. Third Court of Appeals injunction remains in place.
San Antonio – Not effective. Review pending by the Fourth Court of Appeals.
Dallas – Not effective. Injunction Order issued by federal Court on March 30, 2020.
The Austin ordinance was the first to be adopted and the first to be challenged in court; therefore, it is the furthest along in the legal system, pending before the Texas Supreme Court. Several private business organizations filed a lawsuit in 2018. The Austin District Court denied their request for a temporary injunction and the plaintiffs appealed to the Third Court of Appeals. The Court of Appeals reversed the denial of the temporary injunction and remanded the case back to the trial court for further proceedings.
The Third Court of Appeals held that (1) the Texas Minimum Wage Act preempts local regulations that establish a wage; (2) the Austin Ordinance establishes a wage; (3) the Act preempts the Austin Ordinance as a matter of law as a result; and (4) the Austin Ordinance is therefore unconstitutional (see Texas Constitution Art. XI, § 5 no city ordinance “shall contain any provision inconsistent with the Constitution of the State, or of the general laws enacted by the Legislature of this State.”).
This sets up a showdown in next year's legislature between the proponents of these types of mandated employment benefits and their opponents who want to preserve employers' flexibility to offer them. The same showdown (sort of) took place last session when the supporters of bills designed to preempt these local ordinances could not agree on language that pass the Texas senate and house.
We suspect the challenge may be more formidable next session. Proponents of these mandates believe the COVID-19 stay at home orders have made people more sympathetic to the need for mandatory PTO policies pointing to the emergency leave bills passed at the federal level with strong bi-partisan support. However, this ignores the unique circumstances that led to those leave laws (such as the fact they were the result of government orders). Moreover, the businesses most hurt by these types of mandatory PTO arrangements (restaurants and retail to name just two categories) have taken huge economic hits in the last 90 days. The last thing they need are additional and costly state government rules.