United States: Texas Paid Sick Leave Question Of The Hour: What Do Employers Do Now?

Just when Texas employers were about to breathe a sigh of relief, believing a reprieve from mandatory compliance with three separate municipal paid sick leave ordinances was on its way, the Texas Legislature failed to pass a seemingly well-supported bill to preempt all such ordinances from taking effect and being enforced. Now paid sick leave ordinances in San Antonio and Dallas are scheduled to take effect on August 1, 2019. With open questions remaining, employers are left to decide how and when to comply.

In this article, we give some background information to help answer the lingering question: "What happened?" and answer certain questions employers may have while they consider their options.

What happened in the 86^th Texas Legislative Session?

The ink was barely dry after Austin passed Texas' first paid sick leave ordinance in February 2018 when speculation began that, by the end of the 86^th Texas Legislative Session in June 2019, the Legislature would have sent Governor Greg Abbott a bill to preempt the Austin ordinance from taking effect, and any other municipal paid sick leave ordinances that might be contemplated. Indeed, this was the thinking until May 2019. After all, Senate Bill 2487, which sought to prohibit any local government from "enforce[ing] an order, role, regulation, or policy regulating a private employer's terms of employment relating to any form of employment leave, including paid days off from work for holidays, sick leave, vacation, and personal necessity," was fast-tracked through the Senate and sent to the House within a month of its introduction.

This trajectory took a turn when language, meant to protect local anti-discrimination ordinances from being preempted, was removed. The bill became embroiled in heavy controversy from both business and public-interest groups for fear that passage would negatively impact individual equal employment opportunity rights, and in particular LGBT rights. The bill then stalled, and although the exemption language for local anti-discrimination ordinances was added back on the eve of the last week of the legislative session, the bill never made it to the final House Agenda.

Some retained hopes that a Special Session would be called to address this bill specifically, but on May 27, 2019, the final day of the 86^th Session, Governor Abbott announced the session's conclusion, tweeting: "Thanks Senators for your work with the House to pass legacy legislation that will improve the lives of every generation. See you in 2 years. NO SPECIAL SESSION. #txlege."

Without a Special Session, there is no other procedural method to revive the bill, and the Texas Legislature will not have an opportunity to address the sick leave preemption issue until the next session in January 2021.

Is there any possibility of court intervention?

Yes, but it is possible that intervention will not occur, if at all, before the San Antonio and Dallas ordinances are slated to take effect on August 1, 2019.

The only pending lawsuit against a sick leave ordinance in Texas is against the Austin ordinance. This ordinance has been enjoined from taking effect since November of last year, pursuant to an appellate court order. In the same ruling, the appellate court held that the ordinance violated the Texas Constitution, which portends the possible nullification of the ordinance, should this ruling stand. The City of Austin has since appealed to the Texas Supreme Court, where even if the court decides to review the appeal, a final decision is likely still months away since the state's responsive brief of the issues is not due until June 28, 2019. Even then, the court may leave a final decision on the constitutionality of the Austin ordinance for another day.

We anticipate similar lawsuits will be filed against San Antonio and Dallas within the next 30 days, seeking to enjoin those cities' ordinances from taking effect. It is questionable, however, whether there will be sufficient time for the courts to rule on any motions seeking preliminary injunctions before the August 1, 2019, effective date.

What about the cities' activities—could San Antonio and/or Dallas delay the ordinances' effect?

It is possible that the status of the aforementioned appeal could convince leadership in San Antonio and/or Dallas to delay the effective date of their respective ordinances until, at least, the Texas Supreme Court decides the fate of the injunction against the Austin ordinance. However, the signs thus far have pointed in the opposite direction, toward application of the ordinances on August 1, 2019.

San Antonio Mayor Ron Nirenberg has made clear that the city intends to move forward with implementation on August 1, 2019. Moreover, the city has created an ad hoc committee to review the ordinance for potential revisions. Work is also reportedly underway by the Metropolitan Health District director to prepare policies and procedures to help clarify and implement the ordinance.

Dallas' path is less clear. It was the last of the three cities to enact its ordinance, and news on its implementation plan has been quieter. However, Dallas's newly elected Mayor, Eric Johnson, is expected to support implementation of the ordinance, and it would not be surprising if Dallas followed San Antonio by sticking with the August 1, 2019, effective date.

Even if the ordinances' effective dates are not delayed voluntarily by municipal leadership and/or intervening lawsuits, portions of the laws will not be effective until April 1, 2020. For example, certain civil penalties will not apply until later. The Dallas ordinance specifies that no penalties shall be assessed for violations until April 1, 2020, except violations of the ordinance's anti-retaliation provision. The San Antonio ordinance is not as explicit in removing the threat of civil penalties, but it does state that for violations occurring after the effective date but before April 1, 2020, the Health Department "may" issue a "notice" that a civil penalty may be assessed on or after April 1, 2020. In addition, neither ordinance is effective as against small employers (i.e., employers with five or fewer employees during the preceding 12 months) until August 1, 2021.

With all of this in mind, what actions should an employer take?

Employers that may be covered under any of the paid sick leave ordinances for Austin, San Antonio, or Dallas should immediately consider their compliance needs. For those employers that may be affected by the San Antonio or Dallas ordinances, and in consideration of the intervening legal challenges that may prevent the laws from going into effect, immediate consideration needs to be given to (1) developing leave policies and procedures and (2) determining the timing and rolling out of such policies. Regardless of an employer's immediate steps, it would be wise to set reminders to review the statuses of the applicable ordinances and to be prepared to roll out a compliant leave program as required by the August 1, 2019, effective date. Similar advice holds for employers that may be affected by the Austin ordinance. Although the ordinance is currently enjoined, employers may wish to invest in developing compliant policies and procedures to prepare for a rollout should the injunction be dissolved and the ordinance go into effect.

Regardless of the approach taken, employers with operations in any of these major cities in Texas are strongly encouraged to consult with knowledgeable employment counsel to help them consider options for their business.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.