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.
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.
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.
In Dallas, PSL proponents submitted to city officials what they believed were sufficient signatures to allow voters to decide in November whether to adopt a PSL ordinance. Their challenge grew yesterday when city officials said, according to a news report, that the number of valid signatures was 871 signatures fewer than the required number.
PSL proponents in San Antonio also submitted what they believe are more than enough signatures to put PSL on the ballot in November. The city clerk must inform the City Council whether sufficient valid signatures have been submitted. If so, the City Council could choose to enact the PSL ordinance rather than send it to the voters. The next Council meeting is August 2.
In Austin, in April, a cadre of business interests sued to enjoin the implementation of the Austin Earned Sick Time Ordinance, which is effective in October. Noting that the case “has the aroma of a good political blood fight,” a state district court judge last month denied the injunction request, according to a news report. The denial does not end the litigation. The plaintiffs might appeal the district judge’s decision or proceed to litigate the substance of their claims.
The threat of state preemption of local PSL ordinances taints all of these PSL efforts. In the Austin case, the Texas Attorney General has intervened to argue that the Austin ordinance is preempted by the state’s minimum wage law. He has also written to San Antonio officials to inform them that they do not have authority to enact a PSL law, whether by ballot initiative or the legislative process, according to a local report. Even if state law now does not preempt local PSL laws, there is concern that the Texas Legislature will enact a law preempting local PSL ordinances when it convenes next year. Texas preemption laws have recently banned local ride-share regulations, plastic ban bans, fracking bans and sanctuary city ordinances.
There’s PSL turbulence in Texas, and it is not likely to end soon.
There’s paid sick leave turbulence in the Lone Star State. Austin passed its PSL ordinance in February, the first PSL law in the South. Last month, PSL advocates in San Antonio submitted signatures to support their effort to have voters decide in November whether to enact a PSL ordinance. And this week, PSL advocates in Dallas have submitted signatures in support of a similar November ballot initiative there.
PSL opponents have been busy as well. In April, a cadre of business interests sued to enjoin the implementation of the Austin ordinance, which is effective in October. It claims the ordinance violates the state constitution and is preempted by the Texas Minimum Wage Law which requires employers to pay the federal minimum wage under the FLSA and does not require employers to pay for time not worked as the Austin PSL ordinance does. The State of Texas has intervened in support of the minimum wage argument. PSL advocates have intervened to defend the ordinance.
Beyond that, Texas Governor Greg Abbott has been vocal in his displeasure with local PSL laws (see here), raising the possibility that if the Austin ordinance survives the litigation, the next threat to its existence may be a preemption law. Texas preemption laws have recently banned local ride-share regulations, fracking bans and sanctuary cities.
The first PSL ordinance in the South, two ballot initiatives, a PSL litigation cloud , and a possible preemption law combine to create PSL turbulence in Texas.
As we turned the PSL page to a new year, the vast and complex patchwork of PSL laws consisted of more than 40 laws: 8 state laws, the District of Columbia, 2 county laws and about 30 municipal laws.
The Rhode Island Healthy and Safe Families and Workplace Act was the only PSL law enacted in 2017, the fewest number of PSL laws enacted in a year since 2011. The Maryland and Nevada legislatures passed PSL bills last year but, in each case, the governor vetoed the bill. On January 11, 2018, the Maryland legislature overrode that veto, making Maryland the ninth PSL state.
In the only 2017 PSL referendum, Albuquerque voters very narrowly rejected the Healthy Workforce Ordinance. Prior to the vote, lawsuits challenged the manner in which the proposal would be printed on the ballot and its constitutionality.
Paid Sick Leave Laws Effective in 2017
Nine PSL laws went into effect in 2017. While the Spokane ordinance is one of these, it “sunset,” became null and void, on January 1, 2018. Also, while the Cook County ordinance went into effect in 2017, approximately 80% of the municipalities within the County have opted out of complying with the Ordinance. The nine are: