Austin Paid Sick Time Ordinance Ruled Unconstitutional

By Robert G. Chadwick, Jr., Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.

As noted in an earlier blog post, Austin enacted a paid sick time ordinance on February 16, 2018 applicable to private employers. The ordinance had been scheduled to become effective on October 1, 2018, but had been temporarily enjoined from taking effect in an August 17, 2018 Order by the Third Court of Appeals.

The suit which preceded the August 17th Order was filed by five companies and six business organizations in Travis County District Court seeking a declaratory judgment that the Austin ordinance violated the Texas Constitution. The State of Texas also intervened. Temporary and permanent injunctions were sought prohibiting Austin from enforcing the ordinance. On June 26, 2018, the Travis County District Court denied the application for temporary injunction.

In a November 16, 2018 Opinion, the Third Court of Appeals reversed the Travis County District Court order and held that the paid sick time ordinance “violates the Texas Constitution because it is preempted by the Texas Minimum Wage Act.”

On What Basis Did The Third Court of Appeals Rule the Ordinance Unconstitutional? 

The Texas Constitution prohibits city ordinances from “contain[ing] any provision inconsistent with … the general laws enacted by the Legislature of the State.” Tex.Const. art XI, § 5(a).

In this regard, the Third Court of Appeals noted that the Texas Minimum Wage Act explicitly provides that “the minimum wage provided by [the Act] supersedes a wage established in an ordinance … governing wages in private employment.” Texas Labor Code § 62.0515(a)Texas Labor Code § 62.0515(a).  The Court found the Austin sick time ordinance to be superseded under this language, and therefore violative of the Texas Constitution, because “it establishes the payments a person receives for services rendered.”  The Court cited the following example:

A part-time hourly employee who makes $10 per hour and who works an average of 15 hours a week for 50 weeks (a total of 750 hours) earns $750 for that work. Under the Ordinance, that employee will have earned 25 hours of sick leave over the course of 50 weeks. If that employee uses all of that earned sick leave, she will have earned $250 for time she did not work, making her actual hourly wage $10.33 (total yearly pay with paid sick leave of $7,750 divided by 750 total hours worked). Stated differently, she will receive $250 more than she would have received without the Ordinance for the same hours of work.

Where Does the Case Go From Here?

For now, the case heads back to Travis County District Court for trial.  The Third Court of Appeals, however, has already determined that opponents of the Austin ordinance have “established a probable right to the relief sought on their preemption claim.”

Austin certainly has the right to request rehearing. After all, two of the justices issuing the Opinion, Scott Field and David Puryear, lost their bids for reelection on November 6th to Democratic challengers. Such a request, however, would likely be ruled upon before January 2019, and denied.

Austin may also file a petition for review with the Texas Supreme Court. Since the Texas Supreme Court has the discretion to deny a petition for review and is comprised entirely of Republican justices, this route is problematic for Austin.

What Does the Opinion Mean For the San Antonio Paid Sick Time Ordinance?  

As noted in another post on this blog, San Antonio enacted its own paid sick time ordinance on August 16, 2018. This ordinance has not yet been challenged in court. Moreover, the Third Court of Appeals Opinion is not necessarily binding in San Antonio, which falls within the jurisdiction of the Fourth Court of Appeals. Accordingly, it remains to be seen how the Third Court of Appeals Opinion will impact the San Antonio ordinance.

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