Texas Employment Law Letter
June 2018 7
Austin’s paid sick leave ordinance challenged
by John Duke
Constangy, Brooks, Smith & Prophete, LLP
Austin’s much-ballyhooed sick leave ordinance is
under attack. The ordinance mandates that private-
sector employers with more than 15 employees allow
their workers to accrue one hour of paid sick leave for
every 30 hours they work in Austin, amassing up to
64 hours per year. Employees at small businesses with
15 or fewer workers can accrue up to 48 hours each
year. The ordinance is scheduled to go into effect on
October 1, 2018, for employers with six or more em-
ployees and on October 1, 2020, for employers with
five or fewer employees. Although the Texas Legis-
lature seems poised to overturn the ordinance when
it reconvenes in January 2019, many employers have
questioned what to do in the meantime.
On April 24, 2018, several business groups and
staffing organizations jumped into the fray and sued
Austin to prevent the ordinance from taking effect.
According to the lawsuit:
The Texas Minimum Wage Act prohibits mu-
nicipalities . . . from regulating the wages of
employees of private businesses, incorporat-
ing the standards of the federal Fair Labor
Standards Act [FLSA] into state law, but fur-
ther [preempts] any municipal ordinances
from going beyond those standards. Through
the Texas Minimum Wage Act and FLSA,
Texas state law caps the minimum wage at
the federal rate. In direct conflict, the Paid
Sick Leave Ordinance requires that employ-
ers must pay [minimum wage] to employees
for hours not actually worked. The effect is to
push their hourly wage above the minimum-
wage ceiling set by Texas law.
The business groups also argue that the ordi-
nance violates their “due course of law” rights under
the Texas Constitution because “its actual, real-world
effect . . . is so burdensome as to be oppressive in
light of the alleged governmental interest” since it
requires employers whose employees work both
inside and outside of Austin to keep track of how
many hours their employees work in Austin to de-
termine their paid sick leave entitlement. Not to be
left out, the Texas Attorney General’s Office (AG) has
intervened in the case, arguing that since Austin is
a “home rule” city, it cannot enact ordinances that
conflict with state statutes. The AG notes that Aus-
tin’s ordinance requires employers to pay employees
for hours not worked and therefore increases wages
beyond those required by state law.
As far as I am aware, only two other municipali-
ties’ paid sick leave ordinances have been challenged
to date, and they haven’t fared well. Minneapolis
enacted an ordinance requiring employers with six
or more employees to allow workers to accrue one
hour of paid sick leave for every 30 hours they work
in Minneapolis, up to a maximum of 48 hours per
year. A trial court struck down the ordinance on
May 8, 2018, but not on preemption grounds. In fact,
the court held that the ordinance wasn’t preempted
but instead was invalid because of the burdens it
would impose on employers that have employees
who work in Minneapolis sporadically. Similarly, on
May 17, 2017, a Pennsylvania appellate court held that
Pittsburgh lacked the authority to mandate paid sick
leave under Pennsylvania’s home rule statute. That
case is currently pending before the Supreme Court
of Pennsylvania.
What could this mean for Austin’s ordinance?
The Minneapolis and Pittsburgh decisions suggest it
may have a problem. After all, the Austin ordinance
is similar to the Minneapolis ordinance in that it ap-
plies to employers that have employees who work
sporadically in Austin, and as a result, it may impose
significant burdens on those employers. Likewise, the
argument that the ordinance is preempted is similar
to the argument accepted by the Pennsylvania court:
Austin is a home rule city and therefore cannot enact
ordinances that conflict with state statutes. To be sure,
Texas home rule cities have greater autonomy than
Pennsylvania home rule cities, but the concept re-
mains the same.
The upshot of the legal challenge to Austin’s or-
dinance is that employers that might be affected by
it may not have to wait for the legislature to act be-
cause the ordinance could be prevented from taking
effect before the legislature reconvenes. A hearing on
the business groups’ application for a
temporary injunction is set for June 25.
John Duke is senior counsel in both the
Boston and Austin offices of Constangy,
Brooks, Smith & Prophete, LLP. He can be
reached at jduke@constangy.com. D
AUSTIN LEGAL LIMITS