Texas Court of Appeals for the Third District Delivers Opinion Regarding City of Austin’s Sick Leave Ordinance

The City of Austin enacted an ordinance in February of 2018 that would require private employers to provide paid sick leave to their employees. The ordinance included civil and criminal penalties for employers who violated it. A number of private parties sued the city to prevent the city from enforcing the ordinance. The state intervened in the case, also asking for an injunction to prevent enforcement of the ordinance. The ordinance was scheduled to take effect October 1, 2018, but the Texas Court of Appeals for the Third District granted a temporary stay to prevent the law from going into effect pending the outcome of the case.

The Court delivered its opinion in which it declared the City of Austin’s sick leave ordinance violated the Texas Constitution because it was preempted by the Texas Minimum Wage Act (TMWA). The TMWA prevents municipalities from regulating wages that are subject to the Fair Labor Standards Act. The issue in this case turned on whether the sick leave requirement was a wage. The Court reasoned that because the way the ordinance worked it increased the pay of employees that used the paid sick leave, thus increasing their wages. Therefore, the City of Austin’s ordinance is preempted by the TMWA. The ordinance further violates the Texas Constitution because of Article XI, Section 5 states cities may not pass ordinances that are “inconsistent with the Constitution of the State, or of the general laws enacted by the Legislature of this State.”

San Antonio passed a similar sick leave ordinance in August of this year, which has not yet been challenged in the courts. San Antonio sits in the Fourth District, so while the recent ruling regarding Austin’s sick leave is persuasive, the Fourth District is not bound by the decision. Additionally, at least one bill has already been filed for the 86th Legislative Session preventing any municipality from passing a sick leave ordinance.