Update on the Paid Sick Leave Ordinance

I am writing today to give you all an update on the City of Austin’s Mandatory Paid Sick Leave Ordinance.

With all the legislative chatter and court actions it is difficult to know where it stands and what is expected of businesses in Austin.

As you may know, during the recent Legislative session the seemingly well-supported statewide bill intended to undo the city’s ordinance failed for lack of a vote in the House. The Governor has said that there will be no special session. So for now, there will be no statewide legislation that will address the ordinance, and therefore, the fate of the ordinance rests in the courts.

In November of 2018, the appellate court ruled that the City of Austin’s sick leave ordinance violated the Texas Constitution by violating the Texas Minimum Wage Act. At that time, the court issued an injunction preventing the ordinance from going into effect. That is where it stands today.

The City of Austin has filed an appeal of that decision to the Texas Supreme Court. The Texas Court is expected to decide whether or not they will take up that appeal by later this summer. If the Court chooses to do so, the possible outcomes are as follows (and expected to be decided before the end of the year):

  1. The Court could rule against the appellate court and overturn the injunction; or
  2. The Court could uphold the injunction; or
  3. The Court could choose not to rule on the appeal.

Under the second two options (which appear to be the most likely scenarios), the case would go back to District Court for arguments on the merits of the lawsuit. This would essentially start the process all over again with the injunction still in place. Until the Texas Supreme Court says otherwise, businesses in Austin cannot be forced to provide paid sick leave. At this point, this seems like an unlikely outcome, but you never know.

As a reminder, businesses with 15 or more employees at any time during the year much provide 8 days of paid sick leave. Businesses with fewer than 15 employees must provide 6 days.

In the meantime, while this is being worked out in the courts, you can take the following steps to prepare your business for the ordinance going into effect. (1) develop paid sick leave policies and procedures that suit your business; and (2) determine the timing and how you would roll out such policies. Another option is to turn your current paid sick days and paid vacation days into personal time. As long as the combined days meet or exceed the required standards, you will be in compliance.

To learn more about the proposed ordinance and rules, you can visit the City’s website: http://www.austintexas.gov/EarnedSickTime

To read more about AIBA’s position on Paid Sick Leave, see:
City of Austin Mandated Paid Sick Leave Ordinance
Business Coalition Challenges Austin’s Burdensome and Unconstitutional Paid Sick Leave Ordinance
Increased Fines for a Bad Attitude? This Devil is in the Details of Paid Sick Leave
Paid Sick Leave Survey Results
Earned Sick Time Update: The Final Rules
Is This How We Govern? Letter to City Council
The Damage Done

Michael Searle, Board Member, Austin Independent Business Alliance, CEO of Aro Group, LLC, an Austin-Based Consulting Firm, and Executive Director of the Austin Civic Fund contributed to this article.

Thoughts on Predictive Scheduling? 3 Minute Survey

Several employee benefit issues are being brought before the Austin City Council for new regulation such as the Paid Sick Leave ordinance in February. AIBA is seeking to engage our members and the larger local business community in dialogue about possible upcoming issues with the intent of having a voice in the larger community debate.
The process for the Paid Sick Leave ordinance was destructive and divisive. We want to help steer the next process to be one where all parts of our community come together to produce better policies.
So what is coming? It is called many things, but some of the common names are: “Predictive scheduling”, “fair scheduling” or “secure scheduling”. We will call it “predictive scheduling”.
What is it? Predictive scheduling, as it is commonly called, is a policy being proposed across the nation that requires business owners provide employees with their schedule a certain number of days in advance (in some municipalities it is X days and others are proposing as much as 60 days in advance). This type of policy can be especially problematic for many on-call employees, including restaurants and  landscaping. The policy says, if the employee is not given their schedule that many days in advance, the business must pay time and a half for those shifts without adequate advanced notice. Since the Austin policy has not been written yet, we don’t know what the advance notice is or the penalty for non-compliance but those are the key provisions.
The City Council will likely address this issue with specific parameters that must be adhered to or penalties will be applied. The specific ordinance is yet to be written but it will determine specifications such as how much advance notice is required (could be a few days to several weeks), what happens if an employer needs to change the schedule after it is set and what penalties will apply.
We would really value your input on this issue. Please take a few minutes to give us your thoughts. We will share your voice with our elected officials.
This survey was created by AIBA’s Better Process Committee. The Committee seeks to add civility and respect to the governance of our city and the creation of its policies. The information gathered in this survey will help us advocate for local business. All indetity and contact information will be kept confidential.

Increased Fines for a Bad Attitude? This Devil is in the Details of Paid Sick Leave.

On February 15, the City Council passed the Paid Sick Leave Ordinance mandating specified paid sick days for all employees working within the city limits. (See City of Austin Mandated Paid Sick Leave Ordinance). The ordinance takes effect on October 1, 2018.
The Rules for Investigation of Complaints and Assessment of Penalties has been issued and it appears to be more cause for concern. The administrative rules are the details of how the city will investigate complaints regarding the paid sick leave policy and what they will do about it in what time frame.
One large looming question is what defines a violation. I called Jonathan Babiak, City of Austin contact for this issue, and posed a scenario question. If an employee is sick for four days and thinks that they have earned those four days as paid sick leave but the employer thinks they haven’t, is this one violation or is it four violations (one per day). They answer was that a violation wasn’t defined so the city doesn’t know. This has been logged in as an official question now.
It’s important because the business could be fined and increasing amount per incident. According to the Rules (Section 6) the business could be fined $150 the first day, $300 the second day and $500 for each day thereafter. I’ll keep you posted on the official answer.
But the more alarming language comes in Section 6B which states that the Administrator(the city employee who oversees the complaint) can increase or decrease the amount of the penalty under certain circumstances. Examples cited are a demonstrated hardship to the business or, on the increased side, a repeat offender. However Section 6B(1)c, states “the Respondent’s (the business) indifference toward…its obligations…” In other words, you can face an increased fine because of your attitude. The ordinance was very punitive to business but this is the only case I know of where fines can increase because of attitude.
This may not be what was intended. Mr. Babiak repeatedly stated that it was for people who clearly weren’t going to follow the policy. But this is one of the results of unintended consequences from an ordinance passed in 17 days. As with so many city policies, what is intended is not necessarily what is implemented. Or is it?
I urge every business to read these rules and comment to Jonathan Babiak, 512-972-3200, jonathan.babiak@austintexas.gov. You have the opportunity to ask questions and leave comments but the deadline is 5pm, July 19.

Business coalition challenges Austin’s burdensome and unconstitutional paid sick leave ordinance

While AIBA was involved with advocacy on this issue, we have no role in the resulting lawsuit.
TPPF seeks temporary injunction preventing implementation of city paid sick leave ordinance
AUSTIN – Today, the Texas Public Policy Foundation filed a lawsuit against the City of Austin challenging the sick leave ordinance set to go into effect Oct. 1. TPPF, through its litigation Center for the American Future, represents a coalition of Austin businesses and business associations, including the Texas Association of Business, the National Federation of Independent Business and the American Staffing Association.
“With its mandatory paid sick leave ordinance, the City of Austin once again violates Texas state law and infringes upon the rights of Austin businesses protected by the Texas Constitution,” said Robert Henneke, general counsel and director of the Center for the American Future at TPPF. “The City’s ordinance is preempted by the Texas Minimum Wage Act. Furthermore, the City lacks evidence to support any legitimate governmental interest that would support imposing this regulatory burden on all business owners.”
The undue strain put on businesses was a thought echoed by the lead plaintiff.
“The Texas Association of Business is proud to be lead plaintiff and to partner with the Texas Public Policy Foundation, NFIB and several staffing agency members in filing this lawsuit against the City of Austin,” said Jeff Moseley, CEO of Texas Association of Business. “Austin and Texas business leaders know how to run their businesses and can do so more productively without over-reaching regulations that stifle the economy and cost jobs.”
The nature of the ordinance could be especially burdensome for small businesses.
“Local measures purporting to regulate employment practices, like Austin’s paid sick leave ordinance, create a patchwork of rules and regulations that are difficult for small businesses to navigate, especially for companies with mobile employees,” said Nation Federation of Independent Business state executive director Will Newton. “These ordinances create extra work and significantly drive up the cost of doing business in Texas.”
Stephen Dwyer, general counsel of the American Staffing Association, concurred, stating, “In enacting the Texas Minimum Wage Act, the Texas legislature specifically sought to relieve Texas employers of the burden of keeping track of and complying with myriad burdensome local laws.”
Other problems include the one-size-fits-all nature of the ordinance and the inability for businesses to offer flexible solutions for sick leave.
The mandate, if it goes into effect, will require businesses with more than 15 employees to provide eight days of paid sick leave and businesses with less than 15 employees to provide 6 days of sick leave.
For more information, please contact Alicia Pierce at apierce@texaspolicy.com or 512-472-2700.
The Texas Public Policy Foundation is a non-profit free-market research institute based in Austin that aims to foster human flourishing by protecting and promoting liberty, opportunity and personal responsibility.
Primary website: www.TexasPolicy.com

City of Austin Mandated Paid Sick Leave Ordinance

The City of Austin has proposed a policy that requires all businesses to provide paid sick leave to employees. The draft ordinance is now available and is scheduled for City Council action in mid February. Read the ordinance here.  AIBA polled our members to determine our position by asking for a support or oppose vote on the draft ordinance. If the respondent was against the ordinance, we asked what changes would make the ordinance acceptable. In addition, we asked for verification of business name to assure that the answers were being provided by existing businesses. The poll was conducted January 25 and 26. Read the results and comments here.
AIBA is a nonprofit organization of local businesses. Most of our members are small businesses who understand that taking care of their employees is both a philosophical value and a necessity. They cannot succeed without a dedicated, reliable and happy workforce. Turnover in any business is costly. We do not view the world as workers against business or business against workers. As small local businesses, we are the workers. We see all of us in this together. Businesses provide jobs and workers help local businesses to grow. We are a team. The health and well being of the team is important. But the team is the best source for business benefits, not local government.
88% of respondents opposed the ordinance. The vast majority who opposed had no changes that would make the ordinance acceptable. As the voice of local business, we will follow our members’ lead and oppose this ordinance.
• This is a serious overreach of local government. The study supporting this was a national study conducted several years ago. There is no indication that the study eliminated independent contractors. Following a national trend, Austin has a large and growing number of independent contractors. Paid sick days cannot apply to independent contractors as it jeopardizes their standing as independents.
• The study conducted by Public Policy Polling for Work Strong Austin interviewed 600 Austin voters. 49% of those interviewed aren’t even subject to paid or unpaid sick days because they don’t work. According to the study, 29% are retired, 13% are self employed and 7% are students and homemakers. Of course they have an opinion. But should our City Council make decisions based on the opinion of those unaffected by that policy? We think not.
•  Let’s assume there is a problem with some in our community not being able to afford to take a day off when they are sick. These are primarily construction, maintenance and lower-wage hourly workers. If this is a problem, let’s find a way to fix the problem. Mandating a citywide policy has the potential to degrade or destroy the systems already in place by the majority of employers doing the right thing. Doing the right thing for employees and employer is a benefits policy that works to the benefit of both. Many AIBA members voiced that they have a system in place that provides the benefits their employees wanted which may or may not include specified sick leave. A broad policy like this destroys the ability for Austin’s entrepreneurs to be flexible and accommodating.
• Since this cannot by law apply to independent contractors, are we opening up a loophole that will encourage unscrupulous employers to reclassify employees as independent contractors to avoid compliance? The unintended consequences could be the loss of benefits enjoyed now by their employee status.
• Small employers will be hit hardest by this policy. Many struggle with rising property taxes and unaffordable leases. A small employer must juggle all aspects of their business just to survive. Most have told us in our surveys that they would be laying people off or cutting back hours to pay for an extensive sick leave policy. How will this help the most vulnerable business and employees when they no longer have a job?
• The unemployment rate in Austin is so low that employers are having to compete to attract qualified employees. This policy will tie their hands in bringing innovation to that competition. Let the marketplace drive better benefits. As an employee, if you’re not satisfied with your current benefits, another job is not hard to find. Look at local businesses…they’re looking for you.
• Many employers utilize Personal Time Off. It’s flexible, it’s measurable and it’s honest. By mandating paid sick time, our local government is encouraging a deceptive relationship between employer and employee. Have sick days but haven’t used them? Why let your coworkers get time off that you don’t get? Just call in sick. It’s dishonest and a system that encourages this shouldn’t be forced on businesses who are building honest relationships with employees.
No  one wants to go to work sick. No one wants sick employees sharing their illness in the workplace. But this heavy-handed ordinance is not the answer. AIBA opposes this ordinance, as currently written, on behalf of local business.