Appeals court voids Austin's paid sick leave ordinance

Handing conservatives a victory over Austin progressives, a state appeals court on Friday struck down a city ordinance requiring most businesses to provide paid sick leave to employees.

The Austin ordinance, which never took effect amid challenges from conservative and pro-business groups, is void because it improperly counteracts a state law, the Texas Minimum Wage Act, that bars cities from regulating wages paid by private businesses, the Austin-based 3rd Court of Appeals ruled.

Friday's decision returned the case to the trial court and ordered District Judge Tim Sulak to issue the temporary injunction blocking the ordinance that was sought by employers, business groups and the Texas Public Policy Foundation, a conservative think tank.

City of Austin spokesman Andy Tate said officials were reviewing their options in the case.

“Ensuring workers are able to take time off work when they are sick is simply the right and responsible thing to do, as many cities have already acknowledged,” Tate said.

City Council Member Greg Casar, the lead sponsor of the ordinance, vowed to challenge the ruling.

“We’re going to fight on," said Casar, who noted that two of the three judges who issued Monday’s ruling — Justices David Puryear and Scott Field — were among four Republicans on the court who were voted out of office, losing to Democrats in the Nov. 6 election.

“We anticipated that they may rush out some anti-worker rulings before they are replaced in January,” he said. “It’s clear common sense that the minimum wage is different than sick days, so we look forward to having the chance to argue the full merits in front of another court soon."

Lawyers for Austin argued that the term "wages" applies only to compensation for labor or services, not fringe benefits such as paid vacation and paid sick leave, but the appeals court rejected that idea.

Writing for the three-judge panel, Chief Justice Jeff Rose said Austin’s sick leave requirement would increase the wages paid to workers. In doing so, he said, the ordinance violated the Minimum Wage Act, which bans city rules that regulate the wages of private employers.

“An employer subject to the ordinance must pay employees who use sick leave for hours that they did not actually work,” Rose wrote. Therefore, he added, “the ordinance increases the pay of those employees."

Because the Texas Constitution prohibits city ordinances that supersede laws enacted by the Legislature, the Austin ordinance also violates the constitution, he wrote.

Under the ordinance, workers would earn one hour of paid sick leave for every 30 hours worked, up to a total of 64 hours, or eight days a year. Small businesses with 15 or fewer employees have a paid sick leave cap of 48 hours, or six days.

Approved in February and scheduled to take effect Oct. 1, the requirement was temporarily blocked by the appeals court in August to give it time to issue a ruling.

Texas Attorney General Ken Paxton, who joined legal efforts to overturn the sick leave ordinance, praised the ruling, saying cities cannot pass laws simply because they disagree with the judgment of state lawmakers.

“The Legislature has established the minimum amount of compensation for workers, and the Texas Constitution prohibits local municipalities from ignoring the Legislature’s decision," he said.

Annie Spilman, Texas director of the National Federation of Independent Business — which filed the lawsuit with the Texas Association of Business and five Austin companies — called the decision a victory for small businesses.

“The court affirmed our position that when cities overplay their regulatory hand by creating local ordinances that interfere with employers’ ability to run their businesses, they cause imminent and irreparable harm to those businesses,” Spilman said.

But Casar said Austin officials were trying to address inequality and help tens of thousands of families who, thanks to Friday's ruling, will have to continue choosing between losing money and going to work sick or sending sick children to school, spreading illness to others.

"We hear about the economy growing, but a lot of folks across Austin are struggling more and more," he said. "This flies in the face of good policy, worker rights ... and equality."