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Sick-Leave Ordinances by Texas Cities Face Opposition by State, Private-Sector Employers

At some point in our lives, we’ve all been under the weather and had to take a day or two off of work. Many employers offer paid sick leave for their employees when the inevitable stomach bug or flu strikes. However, millions of Texas workers are not so fortunate. For those without paid sick leave, missing a day of work even for a serious illness can mean falling behind on bills or other financial hardship.  Some major Texas cities have recently stepped in and passed ordinances which would require employers to offer paid sick leave to their employees.

The City of Austin passed a mandatory paid-sick-leave ordinance in February 2018, but the ordinance immediately faced legal and constitutional challenges from opponents. Under the Austin ordinance, employers were required to grant an employee one hour of earned sick time for every 30 hours worked. The ordinance also gave the City the authority to subpoena employers’ records to ensure compliance, and provided both civil and criminal penalties for employers who failed to follow the rules.

The City faced challenges from both private employers and the State. The Plaintiffs sought a temporary injunction and a permanent injunction to keep the new law from going into effect by arguing that the Ordinance was preempted by the Texas Minimum Wage Act (TMWA). The District Court originally sided with the City of Austin, but the case was appealed to the 3rd Court of Appeals in Austin. On appeal, the court largely focused on the question of preemption. The Texas Constitution prohibits city ordinances from containing any provision which is inconsistent with the Constitution, or inconsistent with the general laws enacted by the State legislature. The Court found that the TMWA expressly prohibits cities from regulating the wages of employers that are subject to the federal minimum-wage requirements of the Fair Labor Standards Act. The TMWA explicitly provides that “the minimum wage provided by [the TMWA] supersedes a wage established in an ordinance… governing wages in private employment.”

Since establishing a “wage” is clearly preempted by the TMWA, the Court then turned to the question of whether or not paid-sick-leave constitutes a “wage”. The City argued that paid sick leave was a benefit, not a wage. The State and private employers, however, argued that the paid sick leave must necessarily be considered a wage since employees who use paid sick leave would receive more pay per hour, for actual hours worked, if they receive the same pay as employees who do not use paid sick leave:

For example, two employees regularly work 40-hour weeks and each receive $10 per hour, or $400 weekly; Employee A uses a day of paid sick leave, working 32 hours rather than the usual 40 hours. Employee B works the typical 40-hour week. Under the Austin ordinance, both employees would receive the same $400 in pay for the week. Meaning that Employee A received $12.50 per hour for actual hours worked, while Employee B received $10 per hour for actual hours worked.

The Appellate Court sided with the Appellants’ argument and held that the City’s Ordinance establishes a wage, which is preempted by TMWA and thus unconstitutional. The Appellate Court reversed the District Court’s order and remanded the case with the instruction that the District Court grant the requested temporary injunction. The parties are now briefing their arguments for an appeal to the Texas Supreme Court, which would serve as the final authority on the issue.

In the meantime, the City of San Antonio has passed a very similar ordinance mandating paid-sick-leave for employees. The San Antonio Ordinance is set to take effect on December 1, 2019, but it has faced similar challenges in the 225th District Court. The judge in the San Antonio case is expected to rule on whether or not to grant an injunction by the end of this month. Since the 225th District Court is not bound by the decision of the 3rd Court of Appeals in Austin, it will be interesting to see how the judge rules. This has become a hot-button issue which will lack clarity until the Texas Supreme Court steps in and renders a decision. At least for now, however, it appears Texas cities will face an uphill battle if they try to mandate paid sick leave for private employees.

Please do not rely on this article as legal advice. We can tell you what the law is, but until we know the facts of your given situation, we cannot provide legal guidance. This website is for informational purposes and not for the purposes of providing legal advice. Information about our municipal law practice can be found here.

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