Global Compliance Desk – Austin, Texas

Texas Court of Appeals Rules Austin’s Paid Sick Leave Ordinance Unconstitutional

The Austin-based 3rd Court of Appeals declared Austin’s paid sick leave ordinance unconstitutional on November 16, 2018, saying the ordinance is preempted by the State’s Minimum Wage Law.  The Texas Minimum Wage Act specifically precludes municipalities from regulating the wages paid by employers who are subject to the Fair Labor Standards Act (FLSA) and specifically provides that the Texas Minimum Wage Act supersedes a “wage” established in an ordinance governing wages in private employment.

In a 24-page opinion, a three-judge panel ordered a district court judge who originally heard the case to issue a temporary injunction against the ordinance. The ordinance was passed by the Austin City Council in February, it was the first of its kind in Texas. It requires most employers to offer eight days of earned sick leave for a year of work, or six days for employees of businesses with fewer than 15 employees.

The ordinance was originally scheduled to take effect on Oct. 1, 2018, but was temporarily blocked by a Texas appeals court on Aug. 17, 2018. Several business organizations argued it directly violates the Texas Minimum Wage Act and would cost too much to implement its requirements.

The district court will not be able to enter an order contrary to the court of appeals’ order. The City of Austin can ask for reconsideration by the entire court of appeals or seek review by the Supreme Court of Texas.