The Austin Earned Sick Time Ordinance is unconstitutional because it is preempted by the Texas Minimum Wage Act (TMWA), the Texas Court of Appeals, Third District, ruled on Friday. A state district court judge earlier this year said that the challenge to the Austin PSL ordinance had “the aroma of a good political blood fight,”
The court’s ruling focused largely on whether the sick days required by the Austin ordinance were a “wage,” a term not defined in the TMWA. Relying on dictionary definitions to discern the “plain meaning” of that word, the court noted that the Austin Ordinance establishes a wage because it “increases the pay of those employees who use paid sick leave.”
The court explained that employees who use sick leave are paid a higher rate of pay for hours actually worked. For example, the court noted, an hourly employee earning $10 per hour who works 15 hours per week for 50 weeks (750 hours total) will have earned $7500 for that work. If that same employee uses the 25 hours of sick leave earned during that period under the Austin ordinance, the employee’s hourly wage for hours worked would increase to $10.33.
The court concluded that since “the Ordinance increases the pay of those employees who use paid sick leave,” it is a “wage” under the TMWA and, for that reason, is preempted by that state law.
The court’s decision comes just a few days after a Texas legislator pre-filed a bill to preempt local paid sick leave laws. My post on that pre-filing is here.
San Antonio is the only other Texas city to have enacted a PSL law. It is scheduled to be effective on August 1, 2019.
Yesterday was opening day of the pre-filing season in the Texas Legislature and one of the 400+ pre-filed bills would preempt municipalities from adopting or enforcing any ordinance requiring an employer to provide paid sick leave to an employee. House Bill 222 also voids any ordinance that requires an employer to provide paid sick leave, such as the Austin and San Antonio PSL ordinances.
The legislative session opens on January 8, 2019. Given that Texas has a GOP trifecta—Governor Greg Abbott and Republican majorities in the House and Senate—the political stars seem aligned for this bill to have a good chance of passing. If enacted, the bill would be effective September 1, 2019.
That the bill was pre-filed comes as no surprise. The ink was barely dry on the Austin ordinance when state legislators promised to introduce a bill to preempt it. The Austin ordinance had been scheduled to go into effect on October 1, 2018 but its implementation has been enjoined pending the outcome of the litigation challenging its validity. The San Antonio ordinance is effective August 1, 2019.
The pending legal challenge to the Austin Ordinance argues that it is already preempted by the Texas Minimum Wage Law. The legislature’s passing this preemption bill would remove any doubt about that.
If enacted, House Bill 222 would make Texas a PSL preemption state, the 22nd such state according to my count.
It happened last night, while you slept, and it happened in New Jersey. The Garden State had passed the New Jersey Earned Sick Leave Law last May; it is effective today. A provision of that law nullifies—preempts is the legal term–the thirteen municipal PSL laws that had been passed in the state, for a net reduction of twelve PSL laws. That reduces the total number of PSL laws nationwide by almost thirty percent. Of course, despite this reduction, many more Garden State employees are now covered by the single statewide PSL law than had been covered by the thirteen municipal ordinances.
PSL states in which political subdivisions had enacted a PSL law have taken different approaches to those local laws. Oregon, like New Jersey, preempted local PSL laws. California and Washington did not. Maryland’s law preempted local PSL laws but grandfathered in the Montgomery County law.
Gazing into my PSL crystal ball, I see Albany County (NY) becoming the fourth county in the nation to adopt a paid sick leave law. The only question is when it will be adopted. The Law Committee of the County Legislature held a public hearing earlier this week on an amended proposed Albany County Paid Sick Leave Act. The political stars are aligned: the County Executive is a Democrat and Democrats have a roughly a 2-1 majority in the legislature.
While noting in the “legislative intent” that the bill is being implemented “in a manner that is feasible for employers,” the bill includes some of the more pro-employee provisions. For example:
Employees accrue PSL time at the rate of one hour for every 30 hours worked.
Employees of employers with at least 100 employees can accrue up to 72 hours in a 12 month period, one of the largest PSL annual accrual amounts nationwide. Employees of employers with more than five but less than 100 employees can accrue up to 40 hours. Employees carryover their unused time unless the employer pays it out at the end of the period and frontloads the following 12-month period’s allotment.
Its definition of “family member” extends beyond a broad definition of family members to include individuals who are akin to family members, including “any individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.”
PSL time may be used for a litany of reasons. It almost seems that the drafters compiled a list of every reason listed in every other safe and sick leave law nationwide.
The proposed law also shortchanges union-represented employees through what I call the “comparable benefit fiction,” which allows an employer and union to deny bargaining unit employees all of the benefits and protections of the PSL law by including in their agreement a “comparable benefit.” One of the listed examples of a comparable benefit” is “holiday and Sunday time pay at a premium rate.” That premium time on holidays and Sunday is not comparable to paid sick leave is self-evident. Beyond that, the law does not define “premium rate”, does not require that an employee ever be offered the opportunity to earn that premium and does not even require that the employer be open for business on a holiday or Sunday! Help me understand that one.
The “County of Albany” will enforce the law. Employees must file a complaint with the County within one year of when the employee knew or should have known of the alleged violation. An employee may bring a civil action after 120 days have passed from either the filing or the final County action.
The other three counties to have enacted a PSL law are Montgomery County, MD, Cook County, IL and Westchester County, NY.
The Northbrook Village (IL) Board of Trustees were against the Cook County Earned Sick Leave Ordinance before they were for it. Last year, the Board voted to opt out of the County law. Earlier this week, the Board repealed its opt-out ordinance, opting in to the County sick leave law effective January 1, 2019.
Approximately 80% of the County’s municipalities opted out of the its Earned Sick Leave Law. Two other Cook County villages have revisited their initial opt out decisions. The Village of Western Springs in April reversed its opt out decision while Wilmette Village voted to continue to opt out of the County sick leave law.
None, though some introduced previously are still pending.
Paid Sick Leave Preemption Developments
Alabama: Marnika Lewis v. State of Alabama et al. (11th Cir) (Case No.17-11009)(11th Cir. July 25, 2018). The Alabama Uniform Minimum Wage and Right-to-Work Act bars municipalities from requiring employers to provide employees wages or “employment benefits,” including leave, unless required by federal or state law. It was passed the day after Birmingham increased the minimum wage within the city. The plaintiffs brought various race-based challenges to the Act, all of which were rejected by a federal district court last year. In July, the Eleventh Circuit affirmed the dismissal of all claims except the “equal protection” constitutional claim, holding that the plaintiffs have plausibly alleged both that the Act “burdens black citizens more than white ones” and that it was enacted with a discriminatory purpose. The court remanded that claim to the district court.
Pennsylvania: House Bill 861 prohibits a municipality from requiring “employer policies or practices,” which include paid or unpaid employee leave. The bill, which would negate Philadelphia’s paid leave law, was approved by the House Committee on Labor and Industry on October 1, 2018. Even if the bill were to be passed by the House and the Senate, Democratic Governor Tom Wolf has vowed to veto it. Republicans do not have the two-thirds majority in both legislative chambers necessary to override a veto.
Proposed federal bill: The Workflex in the 21st Century Act, introduced in the House of Representatives in November, 2017, would expand ERISA preemption to override the patchwork of paid sick leave laws for an employer which voluntarily adopts a written qualified flexible workplace arrangement” (QWFA) that provides the required minimum amount of “compensable leave” and offers employees at least one of the listed “workflex options.” The bill has been referred to U.S. House Committee on Education and the Workforce. A subcommittee held a hearing on the bill on July 24, 2018. The bill’s future is uncertain; support for it is mixed.
Paid Sick Leave Litigation
Challenges to state PSL laws
Massachusetts: The Railroad Unemployment Insurance Act (RUIA) preempts the Massachusetts Earned Sick Time Law (MESTL) in its entirety as it applies to interstate rail carriers, according to a decision in August by a Massachusetts federal district court on remand from the First Circuit. The First Circuit had held previously that the MESTL provision dealing with benefits for an employee’s own medical condition was preempted by the RUIA but remanded the case to have the district court decide whether any other sections of MESTL were preempted by the RUIA or the Railway Labor Act or ERISA and whether any sections of the MESTL can survive as applied to interstate rail carriers. CSX Transp. v. Healey, 861 F.3d 276 (1st Cir. 2017).
Massachusetts and Washington: The Massachusetts Earned Sick Time Law (MESTL) and Washington State Paid Sick Leave Act (WPSL) as applied to flight crew are unconstitutional and preempted by the federal Airline Deregulation Act (ADA), according to complaints filed by the Air Transport Association of America, an association of airline carriers. The plaintiff claims these state laws violate the dormant Commerce Clause–the implicit restriction on a state or local government’s ability to unreasonably burden interstate commerce–and the Fourteenth Amendment of the Constitution. The plaintiff also alleges that the Airline Deregulation Act (ADA) preempts the state PSL laws with regard to both flight crew and ground crew because they relate to a “price, route or service of an air carrier.” Air Transport Association of America, d/b/a Airlines For America v. Maura Healey in her capacity as Attorney General of the Commonwealth of Massachusetts (D.MA); Air Transport Association of America, d/b/a Airlines For America v. The Washington Dep’t of Labor and Industries et al (W.D. WA).
Challenges to local PSL laws
Pittsburgh, PA: The Supreme Court of Pennsylvania will decide whether Pittsburgh had authority to adopt the Sick Days Act, which it enacted three years ago. Last year, an appellate court affirmed a lower court’s decision that the city did not have the authority to enact it and invalidated the law. The appeal will focus on an interpretation of the Home Rule Charter Law, which limits the City’s authority to regulate business “except as expressly provided by statutes….” The briefing by the parties was completed on April 4, 2018. Pennsylvania Restaurant and Lodging Ass’n v. City of Pittsburgh and Service Employees Int’l Union, Local 32 BJ. (Pa. Supreme Court, 227 WAL 2017).
Austin, TX: A cadre of business interests had sued to enjoin implementation of the Austin Earned Sick Time Ordinance, which is scheduled to go into effect on October 1, 2018. The plaintiffs claim that the Austin Ordinance is preempted by the Texas Minimum Wage Law which requires employers to follow the federal minimum wage law, which does not require employers to pay for time not worked as the Austin PSL ordinance does; violates the due process clause of the state constitution; and violates the state constitution’s equal protection clause because it allows employers and unions to modify the yearly cap in their labor contracts but does not afford non-union employers the right to modify the cap. Noting that the case “has the aroma of a good political blood fight,” a state district court judge denied the injunction request. On appeal, the Texas Court of Appeals in August reversed that decision and enjoined the implementation of the Ordinance to maintain the status quo while the legal challenge proceeded. The City of Austin is appealing the order enjoining the implementation of its Earned Sick Time Ordinance to the state Supreme Court, according to a news report. Texas Ass’n of Business et al v City of Austin, Texas et al (TX Ct of Appeals, Third District, August 17, 2018).
Other Paid Sick Leave Developments To Watch
Albany County, NY: The County’s Paid Sick Leave Act was introduced in March, referred to the Legislature’s Law Committee and has been wending its way through the legislative process. A hearing on an amended bill will likely occur in late October.
Cook County Earned Sick Leave Ordinance: The County Board of Supervisors have decided to include an advisory referendum question on the November 6, 2018 ballot to ask voters in municipalities that had opted out of the Cook County Earned Sick Leave Ordinance whether their municipality should “match the Cook County earned sick time law which allows for workers to earn up to 40 hours (5 days) of sick time a year to take care of their own health or a family member’s health?” More than 80% of the municipalities within Cook County had opted out of the County PSL ordinance.
Westchester County, NY: The Westchester County Board of Legislators passed an Earned Sick Leave Law on October 1, 2018. The bill awaits the County Executive’s signature. The bill has the typical PSL architecture: employees will accrue one hour of sick time for every 30 hours worked and may earn and use up to 40 hours in a year for itemized reasons. For employees of employers with at least 5 employees, the earned time is paid.
Westchester County (NY) last night enacted an Earned Sick Leave law, becoming the third county nationwide to do so. Montgomery County, Maryland and Cook County, Illinois also have enacted PSL laws. The Westchester County law is effective in 180 days. .
The law has the typical PSL architecture: employees will accrue one hour of sick time for every 30 hours worked and may earn and use up to 40 hours in a year for itemized reasons. For employees of employers with at least 5 employees, the earned time is paid. Unused time may be carried over to the following year, although the employer can cap the maximum amount of sick leave taken in any given year at 40 hours.
The law will be enforced by the Department of Weights and Measures-Consumer Protection. An aggrieved employee has the option to pursue a private right of action in court against the employer. Damages available include up to three times the amount of sick time taken but not paid, $500 for sick time denied and not taken, and other relief including actual damages, attorneys’ fees, the costs of the administrative hearing, and other appropriate monetary and equitable relief. Continue reading →
Michigan this week could become the eleventh state to enact a paid sick leave law. It all depends on how the politics play out in the Wolverine State.
PSL proponents collected enough signatures to have voters decide in November whether to enact a PSL initiative. The Michigan Constitution gives the legislature the option to enact or reject the initiative and sets a deadline for its doing so. That deadline expires this Friday, September 7. If the legislature enacts the initiative, it becomes law; if it rejects the initiative, it will be presented to the voters in November. the legislature could also present an alternate PSL proposal to voters in November.
Why would a state with a Republican trifecta—-a Republican governor and GOP control of both the House and Senate—choose to enact a PSL law rather than let the voters decide whether to enact it in November?
Just speculating, of course, but one reason might be that a bill enacted by the legislature is easier to amend than one enacted through an initiative. Amending a legislative enactment requires a majority vote in each chamber; amending a law enacted through an initiative requires a three-fourths vote in each chamber. The legislature could enact the initiative and then promptly amend it, the speculation goes.
Another possible reason is that there are three voter initiatives slated for November. in addition to the PSL initiative, the ballot will also include initiatives to legalize recreational marijuana and increase the minimum wage. This combination of initiatives could lead to a large voter turnout in November, which might be detrimental to some candidates, the speculation goes.
With each passing day, the PSL-suspense in Michigan grows. Three days to go.
In 2015, a railroad sued the Massachusetts Attorney General, arguing that the MESTL was preempted by three laws as it applied to interstate rail carriers: the RUIA, the Railway Labor Act and ERISA. The parties agreed that the court would address the RUIA argument initially. In 2016, the federal district court agreed that “RUIA preempt[s] all state laws, including the [Earned Sick Time Law] that relate to sickness benefits for railroad workers.” CSX Transportation, Inc. v. Healey (D. MA, July 13, 2016).
On appeal, the First Circuit held that the MESTL provision dealing with benefits for an employee’s own medical condition was preempted by the RUIA but remanded the case to have the district court decide whether any other sections of MESTL were preempted by the RUIA or the Railway Labor Act or ERISA and whether any sections of the MESTL can survive as applied to interstate rail carriers. CSX Transp. v. Healey, 861 F.3d 276, 284 (1st Cir. 2017).
On remand, the district court concluded once again that “Congress intended RUIA to serve as the ‘exclusive’ source of all sickness benefits for railroad employees and to preclude the employees from claiming rights to sickness benefits under any state sickness law.” The fact that MESTL allows time off for reasons other than the employee’s own sickness does not change the result, the court said. “In short, the breadth of the state law does not save it from RUIA preemption. Such a reading would allow a state to legislate creatively around the RUIA and thereby thwart the objective of Congress to create a uniform federal scheme of sickness benefits for railroad workers.”
Similar preemption challenges brought by an airline industry group to the Washington and Massachusetts PSL laws are pending.
With a GOP trifecta–the governor is a Republican and both chambers of the legislature have a Republican majority–one would not expect much PSL activity in Texas. But PSL turbulence continues in the Lone Star State and was on full display last week.
Last Friday, a Texas Court of Appeals enjoined the implementation of the Austin Earned Sick Time Ordinance pending the outcome of the legal challenge to it. The Austin Ordinance had been scheduled to go into effect on October 1, 2018. In reversing last month’s district court decision, the Court said that “enjoining the ordinance is necessary to preserve the parties’rights until disposition of the appeal.”
In San Antonio, PSL proponents had collected enough signatures to have voters decide in November whether to adopt a PSL ordinance. On Thursday, the San Antonio City Council passed the PSL proposal, nullifying the ballot initiative. The San Antonio PSL ordinance is scheduled to go into effect on August 1, 2019.
Here is where the GOP trifecta is a factor. The Texas Legislature convenes in January 2019. It is widely anticipated that the legislature will consider a bill to prohibit political subdivisions from enacting a leave law. If enacted, such a law would likely negate both the Austin and San Antonio ordinances.
I suspect that San Antonio business interests are huddling this week to decide whether to file a challenge similar to that pending in Austin or sit on the sidelines and hope that the Austin ordinance (and, in turn, the San Antonio ordinance) will be negated by either the court or the legislature.
There’s more PSL turbulence in Texas, and more to come.