Last November we wrote about Austin’s progress as the first city in Texas to pass a paid sick leave ordinance requiring employers to provide a minimum number of paid sick leave days to their employees each year. That article focused on the 3rd Court of Appeals of Austin’s holding that the law is unconstitutional and preempted by the state’s minimum wage law. However, since that time a petition for review has been filed and appeal of the case is currently pending before the Texas Supreme Court.
Despite the ongoing challenge to the Austin law, two other cities in Texas – San Antonio and Dallas – have since followed Austin’s lead and passed their own paid sick leave ordinances. Both are teed up to take effect on August 1, 2019. Below is an overview of the Dallas ordinance, including its application, requirements, and potential penalties that employers who fail to comply may face.
Timing, Scope and Definitions
Starting August 1, employers with six or more covered employees must comply with the new ordinance. For purposes of determining covered “employees,” only those who perform a minimum of 80 hours of work a year in the City of Dallas are included. For example, if an employer has a business located outside of the City of Dallas, but employees often travel to different job sites or offices throughout the metroplex, only the employees who work within the city limits of Dallas for at least 80 hours a year are covered and counted, not all employees in the company. In addition, independent contractors and unpaid interns are not considered covered “employees.”
From a timing standpoint, the ordinance gives smaller businesses (those with five or fewer employees) more time to adjust: their compliance is not required until August 1, 2021.
Government employers are excluded entirely from the ordinance’s scope, regardless of employee size; however, the ordinance does apply to private-sector temporary agency and staffing companies (meaning that leased employees are covered so long as they meet the 80-hours in Dallas hurdle).
Accrual Rate and Limits
For all employers, covered employees accrue one hour of paid sick leave for every 30 hours worked. For employers with fewer than 16 employees, the minimum accrual limit per year is 48 hours of paid sick leave per year. For employers with 16 or more employees, the accrual limit increases to a minimum of 64 hours of paid sick leave per year.
Employers have two options when deciding how to comply with these minimum guidelines:
- they can simply allow for accrual over time, at the rate of one hour per 30 hours worked, for a minimum each year of either 48 or 64 hours, depending on employer size; or
- employers can “frontload” the minimum amounts (48 or 64 hours) at the beginning of each year.
If employers choose to stick with option #1 (the standard accrual of one per 30 hours), then employees are permitted to carry over their minimum guaranteed number of hours to the next year. However, if employers choose option #2 and frontload the minimum hours, employees are not permitted to carry over any hours to the next year – rather, unused hours will simply be erased, and the employee will start with a clean slate of the minimum frontloaded hours the next year.
For union employers, under the ordinance, the above minimum accrual rates and limits can be modified by a collective bargaining agreement (CBA) between an employer and labor organization; There are, however, other requirements that the CBA must meet under the ordinance to permit such modification.
Also, employers should keep in mind that the above rate and limits are minimums – meaning that if an employer has a more generous leave policy that satisfies the minimum provided hour limits, then the policy does not need to be changed. However, even employers with more generous leave policies still are required to abide by certain signage, notice, and recordkeeping requirements under the ordinance (described below). In addition, existing leave policies may need to be updated to include expanded definitions for permissible uses of leave.
Availability and Permissible Uses of Leave
Any covered employee is eligible to start accruing leave after working for 80 hours. Therefore, after an employee has worked 80 hours in Dallas, the employer must choose one of the above accrual options for that employee, and the employee can begin using paid leave time immediately after it is accrued. The only exception to this is when an employee has a contract with a minimum one-year term, then the employer may require the employee to wait 60 days before using accrued leave.
Accrued paid sick leave can be used by employees for absences due to illness, injury, preventive care, mental healthcare, stalking, domestic abuse, or sexual assault of either the individual employee or someone in his or her family. Employers are prohibited from retaliating against an employee who requests or uses accrued leave for the above-listed reasons.
In addition, employers are only allowed to demand verification (i.e. a doctor’s note) from an employee after their fourth consecutive absence from their scheduled work days. Therefore, employers who have company policies requiring doctor’s notes for a single-day work absence need to consider revising such policies because such a requirement can be seen as retaliatory and in violation of the ordinance.
Signage, Notice and Recordkeeping Requirements
Under the ordinance, employers must display a poster in a visible area of their workplace (i.e. near the other required federal and state labor employment rights posters), describing the ordinance requirements. In addition, if employers have an provide employee handbooks, such handbooks must now be revised to include a notice of employee’s rights under the ordinance.
To comply with recordkeeping requirements, employers must provide each covered employee with a monthly written or electronic statement with the amount of their available earned paid sick leave. Such statement can be included on an employee’s pay stub. Employers are also required to maintain records regarding earned paid sick time accrued for each employee for a three-year lookback period.
Limitations Period and Penalties
An employee has two years to file a complaint against an employer for violation of the ordinance. If it is determined that a violation has occurred, a notice will be sent out to the employer with an assessed civil penalty amount, not to exceed $500 per violation. The employer will then have 10 days to voluntarily fix such violation and restore compliance. If such compliance is not achieved after the 10th day, the employer is liable for the assessed civil penalty amount.
Open Questions
Dallas has yet to publish regulations regarding its planned administration of the paid sick leave ordinance. The ordinance will be administered by the City of Dallas Office of Fair Housing and Human Rights. Although the City has conducted two Q&A information sessions, it has yet to fully develop regulations designed to facilitate administration of the ordinance. As the Dallas ordinance largely mirrors San Antonio’s ordinance, it is anticipated that the Dallas FAQ and Regulations document will mirror that published by San Antonio.
On Monday, July 15, just 2 weeks before the San Antonio ordinance was scheduled to take effect, a coalition of business groups filed a lawsuit against the city of San Antonio, claiming the ordinance is an unconstitutional violation of the Texas minimum wage act. The coalition has asked a Bexar County court to enjoin implementation of the ordinance. With the backdrop of the Austin and San Antonio lawsuits, it remains to be seen whether a similar legal challenge will be lodged in Dallas.
UPDATE: On July 30, The Texas Tribune reported that the Texas Public Policy Foundation has filed a lawsuit on behalf of two businesses to block the ordinance from going into effect, arguing that the ordinance “extends regulatory power outside of its city limits.” We’ll continue sharing updates here as news develops.
More Pushback from Business Is Likely
Local laws, like the Dallas ordinance, are being enacted by cities in an effort to protect employees’ health and welfare because there is no federal statute currently mandating paid sick leave for employees in the United States.
In fact, as shown by the Center for Economic and Policy Research’s (CEPR) study of 22 of the highest developed countries across the globe, the U.S. was the only country that does not have some form of guaranteed paid sick leave for employees. This lack of unified protection means that most employees have no legal recourse if they are fired for missing a day of work because they are sick. Therefore, cities are stepping up to fill the lack of protection and provide more stability for employees who need to take time off work due to illness.
Although there will continue to be pushback by businesses, the upward trend of enacting local or state laws to provide paid sick leave will likely continue because as the CEPR study demonstrates, the U.S. lags far behind other highly developed nations in this respect.
For assistance with employment and workplace disputes contact Clouse Brown PLLC. Our attorneys are available to advise employers and business owners on how to comply with federal, state, and local employment leave laws. We also counsel executives who may be affected by laws mandating various types of employee leave, such as vacation leave, sick leave, or medical leave.
